___________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended January 1, 1994
Commission File Number 1-5480
Textron Inc.
(Exact name of registrant as specified in charter)
______________
Delaware 05-0315468
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
40 Westminster Street, Providence, R.I. 02903
(401) 421-2800
Address and telephone number of principal executive offices)
______________
Securities registered pursuant to Section 12(b) of the Act:
Each Exchange on
Title of Class
Registered
Common Stock - par value $.125; (88,605,596 shares New York Stock Exchange
outstanding at March 4, 1994) Pacific Stock Exchange
Preferred Stock Purchase Rights Chicago Stock Exchange
$2.08 Cumulative Convertible Preferred Stock, New York Stock Exchange
Series A - no par value
$1.40 Convertible Preferred Dividend Stock, Series B New York Stock Exchange
(preferred only as to dividends) - no par value
9.25% Debentures due March 15, 2016
9.25% Subordinated Debentures due April 1, 2017 New York Stock Exchange
8 % Debentures due July 1, 2022
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter
period that the registrant was required to file such reports) and (2) has
been subject to such filing
requirements for the past 90 days. Yes X . No .
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not
contained herein, and will not be contained, to the best of registrant's
knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form
10-K. [ ]
The aggregate market value of voting stock held by non-affiliates
of the registrant is $5,140,665,797
as of March 4, 1994.
Portions of Textron's Annual Report to Shareholders for the
fiscal year ended January 1, 1994
are incorporated by reference in Parts I and II of this Report. Portions
of Textron's Proxy Statement for
its Annual Meeting of Shareholders on April 27, 1994 are incorporated by
reference in Part III of this Report.
__________________________________________________
<PAGE> 2
PART I
ITEM 1. BUSINESS OF TEXTRON*
Textron is a multi-industry company which at the end of 1993 re-
aligned its operations into six segments in two business sectors - Manufactur-
ing and Financial Services. The Manufacturing sector consists of four busi-
ness segments - Aircraft, Automotive, Industrial, and Systems and Components.
The business segments of the Financial Services sector are Finance and Paul
Revere. Information concerning each sector and the Divisions within each sec-
tor is set forth or referred to below.
Textron's focus on selected businesses and markets is intended to
achieve balanced diversification in order to afford protection against economic
cycles and to provide a means to concentrate on growth opportunities and tech-
nologies in these businesses.
Each Textron Division conducts its business under its own name with
its own organization. Each Division's management has direct responsibility for
its own operations, and for achieving its business plan as accepted after re-
view with Textron's management. Centralized coordination and control to assure
overall standards and performance are provided by Textron's executive staff
from its corporate office at 40 Westminster Street, Providence, Rhode
Island 02903; its telephone number is (401) 421-2800.
____________________
* Reference herein to "Textron" includes Textron Inc., its divisions and subsid-
iaries. A Textron "Division" is a management-designated operating unit which
may be comprised of an unincorporated division of Textron, a subsidiary of
Textron, or an unincorporated division of a subsidiary.
<PAGE> 3
Financial information by business segment and geographic area is
incorporated herein by reference to pages 33, 59 and 60 of Textron's 1993
Annual Report to Shareholders.
MANUFACTURING
Information regarding the Manufacturing sector is contained on pages 2, 3,
7 through 19, 24, 25, 34 through 36, 45, 46 and 67 through 69 of Textron's 1993
Annual Report to Shareholders, which pages are incorporated herein by reference.
The Aircraft segment consists of Bell Helicopter and Cessna. Bell
Helicopter is among the largest domestic manufacturers of light and medium
helicopters for military and civil uses, although certain of its competitors
are substantially larger and more diversified aircraft manufacturers. In the
light and medium helicopter market, Bell Helicopter has two major U.S.
competitors and one major European competitor. Bell Helicopter markets its
products worldwide through its own sales force as well as through independent
representatives. Price, financing terms, aircraft performance and product
support are significant factors in the sale of helicopters. Revenues of Bell
Helicopter accounted for approximately 13%, 11% and 16% of Textron's total
revenues in 1993, 1992 and 1991, respectively.
Cessna is the world's largest designer and manufacturer of light and
mid-sized business jets and single-engined utility turboprop aircraft.
Cessna markets its products worldwide primarily through its own sales force as
well as through independent representatives. Cessna has five major
competitors, two of which are located in the U.S. and three overseas.
Cessna's fanjets and turboprops compete with other aircraft that are
comparable in size, speed, range, capacity, handling characteristics and price.
The Divisions of the Automotive segment supply products primarily to
automotive original equipment manufacturers. Products are marketed through the
sales force of each Division. In general, these Divisions operate in markets
<PAGE> 4
that are very competitive. These Divisions compete in their markets on the
basis of price, product quality and delivery.
The Divisions of the Industrial segment sell products to the industrial
and consumer markets. Products are marketed through the sales force of each
Division, and, where applicable, independent distributors, sales
representatives and retailers. In general, these Divisions operate in markets
that are very competitive. In varying degrees, these Divisions compete in
their markets on the basis of price, product quality and performance, brand
image, service and delivery. In 1993, Textron's Townsend Division was merged
into the Camcar Division.
Textron Lycoming Turbine Engine, the major line of business in the Systems
and Components segment, is a supplier of propulsion systems and related
products, with six major competitors in the gas turbine engine market. These
competitors are based in the United States, Canada and Europe. Several of its
competitors are substantially larger than Textron Lycoming Turbine Engine. All
Divisions of the Systems and Components segment are subject to keen
competition. Each Division markets its products through its own sales force
and, where applicable, independent representatives. The principal competitive
factors are price, reliability, product performance and, where applicable,
product support. The Cadillac Gage Combat Vehicle Operations and the Cadillac
Gage Control Systems Operations are being transferred to the Textron Marine
and Land Systems Division and the HR Textron Division, respectively.
FINANCIAL SERVICES
Information regarding the Financial Services sector is contained on pages
3, 7, 20 through 22, 31, 32, 36, 37, 46, 63, 64 and 70 of Textron's 1993 Annual
Report to Shareholders, which pages are incorporated herein by reference.
Products of the Financial Services sector are marketed through
company-owned sales offices and, where applicable, independent brokers. The
insurance and consumer and commercial finance businesses are highly competitive
and subject to regulation by various government authorities.
<PAGE> 5
The Finance segment consists of Avco Financial Services and Textron
Financial Corporation. Avco Financial Services competes with other consumer
finance companies as well as companies which finance the sale of their own
merchandise or the merchandise of others, industrial banks, and the personal
loan departments of commercial banks and credit unions. Revenues of Avco
Financial Services accounted for approximately 15%, 16% and 17% of Textron's
total revenues in 1993, 1992 and 1991, respectively. Textron Financial
Corporation competes with other commercial finance companies as well as
institutional lenders, primarily banks. Price and service are the principal
competitive factors in the Finance segment.
Paul Revere is the leading provider of individual non-cancellable
disability insurance in North America. Paul Revere competes with many other
insurance companies offering similar products. Insurance companies compete on
the basis of many factors including financial strength, pricing and other terms
and conditions of products, commission structure, perceived stability of the
insurer, claims paying ratings, service, name recognition and reputation.
BACKLOG
Information regarding Textron's backlog of government and commercial
orders by business segment at the end of the past two fiscal years is contained
on page 33 of Textron's 1993 Annual Report to Shareholders, which page is
incorporated herein by reference.
Approximately 47% of Textron's total backlog at January 1, 1994 represents
orders which are not expected to be filled within the 1994 fiscal year. Approx-
imately 76% of the total backlog is funded.
GOVERNMENT CONTRACTS
In 1993, 23% and 43% of the revenues of the Aircraft and Systems and Compo-
nents segments, respectively, were generated by or resulted from contracts
<PAGE> 6
with the United States Government. U.S. Government business is subject to
competition, changes in procurement policies and regulations, the continuing
availability of Congressional appropriations, world events, and the size and
timing of programs in which Textron may participate. A substantial portion of
Textron's government contracts are fixed-price or fixed-price incentive con-
tracts, including some which are fixed-price incentive development contracts.
Contracts which contain incentive pricing terms provide for upward or downward
adjustments in the prices paid by the U.S. Government thereunder upon comple-
tion of the contract or any agreed portion thereof, based on cost or other
performance factors. U.S. Government contracts generally may be terminated in
whole or in part at the convenience of the U.S. Government or if the contractor
is in default. Upon termination of a contract for the convenience of the U.S.
Government, the contractor is normally entitled to reimbursement for allowable
costs incurred and an allowance for profit (up to a maximum equal to the con-
tract price) or adjustment for loss if the contractor would have incurred a
loss had the entire contract been completed. If, however, a contract is termi-
nated for default: (i) the contractor is paid such amount as may be agreed
upon for manufacturing materials and partially completed products accepted by
the U.S. Government; (ii) the U.S. Government is not liable for the contrac-
tor's costs with respect to unaccepted items and is entitled to repayment of
advance payments and progress payments, if any, related to the terminated por-
tions of the contract; and (iii) the contractor may be liable for excess costs
incurred by the U.S. Government in procuring undelivered items from another
source. Additional information regarding defense expenditures is contained on
pages 34 through 36 of Textron's 1993 Annual Report to Shareholders, which
pages are incorporated herein by reference.
RESEARCH AND DEVELOPMENT
Information regarding Textron's research and development expenditures is
contained on pages 45 and 53 of Textron's 1993 Annual Report to Shareholders,
which pages are incorporated herein by reference.
<PAGE> 7
PATENTS AND TRADEMARKS
Textron owns, or is licensed under, a number of patents and trademarks
throughout the world relating to methods of manufacturing and products. Pat-
ents and trademarks have been of value in the past and are expected to be of
value in the future; however, the loss of any single patent or group of patents
would not, in the opinion of Textron, materially affect the conduct of its
business.
ENVIRONMENTAL CONSIDERATIONS
Textron's operations, like those of other companies engaged in similar
businesses, are subject to numerous laws and regulations designed to protect
the environment. Compliance with such laws has not had, and is not expected
to have, a material effect on capital expenditures, earnings or the competitive
position of Textron. Expenditures for environmental control facilities have
not had, and are not expected to have, a material effect on capital expendi-
tures, earnings or the competitive position of Textron. Additional information
regarding environmental matters is contained on pages 30, 45 and 59 of
Textron's 1993 Annual Report to Shareholders, which pages are incorporated
herein by reference.
EMPLOYEES
At January 1, 1994, Textron had approximately 56,000 employees.
ITEM 2. PROPERTIES
At January 1, 1994, Textron operated a total of 146 plants located through-
out the United States and 6 plants outside the United States. Of the total of
152 plants, Textron owned 112 and the balance was leased. In the aggregate,
the total manufacturing space was approximately 27 million square feet.
<PAGE> 8
In addition, Textron owns or leases offices, warehouse and other space at
various locations throughout the United States and outside the United States.
Textron also owns or leases such machinery and equipment as is necessary in the
operation of its Divisions. Textron considers the productive capacity of the
plants operated by each of its business segments to be adequate. In general,
the plants and machinery are in good condition, are considered to be adequate
for the uses to which they are being put, and are substantially in regular use.
A material portion of the plant, machinery and equipment used by Textron
Lycoming Turbine Engine at Stratford, Connecticut, is owned by the U.S. Govern-
ment and is provided pursuant to facilities contracts which authorize the Divi-
sion to use it without charge in the performance of government contracts. In
addition, use is permitted under certain limited circumstances in the perfor-
mance of commercial work if governmental approval is obtained and appropriate
rentals are paid to the government. These facilities contracts are terminable
by the U.S. Government at any time, but Textron does not anticipate that any
such termination will occur so long as the facilities are required in the per-
formance of material U.S. Government contracts, or that it will be prevented
from using the facilities for commercial work so long as all governmental re-
quirements are met.
ITEM 3. LEGAL PROCEEDINGS
In early 1989, Textron acquired Avdel plc, a fastening systems manufactur-
ing business based in England, the total cost of which approximated $250 mil-
lion. In February 1989, the U.S. Federal Trade Commission ("FTC") challenged
the acquisition under antitrust law. On October 28, 1993, the FTC conditional-
ly approved Textron's offer to settle the matter by licensing a new competitor
for Avdel's MONOBOLT non-aerospace blind rivet and selling the licensee cer-
tain manufacturing equipment of Avdel's U.S. operation. The settlement and
approval of the license/divestiture are expected to become effective in 1994.
Until the settlement becomes effective, Textron is precluded from consolidating
in its financial statements the results of operations of Avdel and is therefore
carrying its investment in Avdel at cost.
<PAGE> 9
Since 1979, Textron has been engaged in arbitration in Switzerland with
the Government of Iran concerning conflicting claims and counterclaims arising
out of a 1975 helicopter coproduction agreement between its Bell Helicopter
Division and the Government of Iran. The contract was terminated in 1978 and
the arbitration started in 1979. Bell Helicopter and the Government of Iran
are currently engaged in settlement discussions. In the opinion of management
any costs incurred by Bell associated with the arbitration in excess of amounts
previously reserved will not be material to Textron's net income or financial
condition.
On October 5, 1993, the Ohio Environmental Protection Agency ("Ohio EPA")
issued a proposed consent order concerning compliance issues related to air
emissions from Textron's Randall Division plant in Wilmington, Ohio. The Ohio
EPA is seeking a civil penalty of $579,000. Textron is negotiating with the
Ohio EPA to resolve the matter.
In addition, there are pending or threatened against Textron and its sub-
sidiaries lawsuits and other proceedings, some of which allege violations of
federal government procurement regulations, involve environmental matters, or
are or purport to be class actions. Among these suits and proceedings are some
which seek compensatory, treble or punitive damages in substantial amounts;
fines, penalties or restitution; the cleanup of allegedly hazardous wastes; or,
under federal government procurement regulations, could result in suspension or
debarment of Textron or its subsidiaries from U.S. Government contracting for a
period of time. These suits and proceedings are being defended or contested on
behalf of Textron and its subsidiaries.
On the basis of information presently available, Textron believes that any
liability for the suits and proceedings mentioned above, or the impact of the
application of relevant government regulations, would not have a material ef-
fect on Textron's net income or financial condition.
<PAGE> 10
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of Textron's security holders during
the last quarter of the period covered by this Report.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information concerning the executive
officers of Textron as of March 15, 1994. Unless otherwise indicated, the
employer is Textron.
Name Age Position
James F. Hardymon 59 Chairman since 1993, and Chief Execu-
tive Officer since 1992; formerly
President, 1989 through 1993, and
Chief Operating Officer, 1989 through
1991; Director since 1989.
CORPORATE OPERATING MANAGEMENT
Lewis B. Campbell 47 President and Chief Operating Officer
since January 1994; formerly Execu-
tive Vice President and Chief Operat-
ing Officer, 1992 to 1993; Vice Presi-
dent of General Motors (1988 to 1992)
and General Manager of its GMC
Truck Division (1991 to 1992), and
General Manager of the Flint Automo-
tive Division Buick - Oldsmobile
- Cadillac Group (1988 to 1991);
Director since January 1994.
<PAGE> 11
Gary E. Atwell 50 Group Vice President since 1986.
Richard H. Campbell 58 Group Vice President since 1992;
formerly Group Vice President and
President - Hardware Home Improvement
Group of Black & Decker Corporation,
1989 to 1992.
Herbert L. Henkel 45 Group Vice President since October
1993; formerly President of the
Greenlee Textron Division, 1987 to
October 1993.
Fred L. Hubacker 49 Group Vice President and President
Textron Acustar Plastics Inc. since
May 1993; formerly Group Controller,
Procurement and Supply Operations
(1991 to April 1993) and Vice Presi-
dent Finance, Acustar Inc. unit (1989
to 1991) of Chrysler Corporation.
Derek Plummer 60 Group Vice President since 1986.
Terry D. Stinson 52 Group Vice President since 1991;
formerly President of the Hamilton
Standard Division of United Technolo-
gies Corporation, 1986 to 1991.
Richard A. Watson 49 Group Vice President since 1990;
formerly Vice President Textron and
President Textron Investment Manage-
ment Company Inc., 1986 to 1990.
<PAGE> 12
CORPORATE STAFF MANAGEMENT
Thomas P. Hollowell 50 Executive Vice President Corporate
Development since 1992; formerly
Managing Director of Bowles Hollowell
Conner & Co., an investment banking
firm, 1975 to 1992.
Richard A. McWhirter 59 Executive Vice President and Chief
Financial Officer since 1993; former-
ly Senior Vice President and Secre-
tary, 1991 to 1993; Senior Vice Presi-
dent - Insurance and Environmental
Affairs, 1988 to 1991.
Thomas D. Soutter 59 Executive Vice President and General
Counsel since 1985.
William F. Wayland 58 Executive Vice President Administra-
tion and Chief Human Resources Offi-
cer since 1993; formerly Executive
Vice President - Human Resources,
1989 to 1993.
Frank Gulden 57 Senior Vice President - Human Resourc-
es, since December 1993; formerly
Group Vice President, 1990 to Decem-
ber 1993; Vice President North and
South America, Fastening Systems
Group of Emhart Corporation, 1989 to
1990.
Mary L. Howell 41 Senior Vice President Government and
International Relations since 1993;
<PAGE> 13
formerly Vice President - Government
Affairs, 1985 to 1993.
Edward C. Arditte 38 Vice President - Investor Relations
and Risk Management since 1993; for-
merly Vice President - Investor Rela-
tions, 1991 to 1993; Director - Inves-
tor Relations, 1990 to 1991; Assis-
tant Treasurer, 1986 to 1990.
Raymond W. Caine, Jr. 61 Vice President - Corporate Communica-
tions since 1980.
Robert B. Clendenen 51 Vice President - Audit and Business
Ethics since 1988.
Brian T. Downing 46 Vice President and Treasurer since
1986.
Arnold M. Friedman 51 Vice President and Deputy General
Counsel since 1984.
Gregory E. Hudson 47 Vice President - Taxes since 1987.
William P. Janovitz 51 Vice President and Controller since
1983.
Cecil W. Labhart 61 Vice President - Information Systems
Services since 1986.
Karen A. Quinn-Quintin 36 Vice President and Secretary since
1993; formerly Director, Corporate
Office Human Resources, 1992 to 1993;
Manager, Corporate Office Personnel,
<PAGE> 14
1991 to 1992; Manager, Group Insur-
ance, 1989 to 1991.
No family relationship exists between any of the individuals named above.
PART II
ITEM 5. MARKETS FOR THE REGISTRANT'S COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS
Textron's common stock is traded on the New York, Chicago and Pacific
Stock Exchanges. Additional information regarding "Markets for the Regis-
trant's Common Equity and Related Stockholder Matters" is contained on pages
65, 66 and on the inside back cover of Textron's 1993 Annual Report to Share-
holders, which pages are incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
Information regarding "Selected Financial Data" is contained in the Five
Year Summary on page 66 of Textron's 1993 Annual Report to Shareholders, which
page is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
"Management's Discussion and Analysis of Financial Condition and Results
of Operations" is contained in the Financial Review on pages 29 through 37 of
Textron's 1993 Annual Report to Shareholders, which pages are incorporated
herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements and the supplementary information
listed in the accompanying index to financial statements and financial state-
ment schedules are filed as part of this Report.
<PAGE> 15
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding Textron's directors is contained on pages 2 through
6 of Textron's Proxy Statement for the 1994 Annual Meeting of Shareholders on
April 27, 1994, which pages are incorporated herein by reference.
Information regarding Textron's executive officers is included on pages 10
through 14 of Part I of this Report.
ITEM 11. EXECUTIVE COMPENSATION
Information regarding "Executive Compensation" is contained on pages 15
through 20 of Textron's Proxy Statement for the 1994 Annual Meeting of Share-
holders on April 27, 1994, which pages are incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
Information regarding "Security Ownership of Certain Beneficial Holders"
is contained on page 9, and information regarding "Security Ownership of Manage-
ment" is contained on pages 9 through 11, of Textron's Proxy Statement for the
1994 Annual Meeting of Shareholders on April 27, 1994, which pages are incorpo-
rated herein by reference.
<PAGE> 16
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information regarding certain relationships and related transactions is
contained on page 20 of Textron's Proxy Statement for the 1994 Annual Meeting
of Shareholders on April 27, 1994, which page is incorporated herein by refer-
ence.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT
SCHEDULES, AND REPORTS ON FORM 8-K
(A) Financial Statements and Schedules
The consolidated financial statements, supplementary information and finan-
cial statement schedules listed in the accompanying index to financial state-
ments and financial statement schedules are filed as part of this Report.
Exhibits
3.1 Restated Certificate of Incorporation of Textron as filed
March 24, 1988. Incorporated by reference to Exhibit 3.1 to
Textron's Annual Report on Form 10-K for the fiscal year ended
January 2, 1988.
3.2 By-Laws of Textron, restated December 10, 1992. Incorporated
by reference to Exhibit 3.2 to Textron's Annual Report on Form
10-K for the fiscal year ended January 2, 1993.
NOTE: Exhibits 10.1 through 10.19 below are management contracts or
compensatory plans, contracts or agreements.
10.1A Supplemental Benefits Plan for Textron Key Executives effec-
tive from and after December 16, 1987 ("Supplemental Plan").
<PAGE> 17
Incorporated by reference to Exhibit 10.1 to Textron's Annual
Report on Form 10-K for the fiscal year ended January 2, 1988.
10.1B Market Square Profit Sharing Plan Schedule to Supplemental
Plan effective as of January 1, 1989, amended and restated as
of December 10, 1991. Incorporated by reference to Exhibit
10.1(b) to Textron's Annual Report on Form 10-K for the fiscal
year ended December 28, 1991.
10.1C Amendment to Market Square Profit Sharing Plan Schedule to
Supplemental Plan effective December 30, 1992. Incorporated
by reference to Exhibit 10.1(f) to Textron's Annual Report on
Form 10-K for the fiscal year ended January 2, 1993.
10.1D Ex-Cell-O Salaried Retirement Plan Schedule to Supplemental
Plan effective as of July 1, 1989, amended and restated as of
July 1, 1991. Incorporated by reference to Exhibit 10.1(c) to
Textron's Annual Report on Form 10-K for the fiscal year ended
December 28, 1991.
10.1E First Amendment to Supplemental Plan effective as of April 25,
1990. Incorporated by reference to Exhibit 10.1(d) to
Textron's Annual Report on Form 10-K for the fiscal year ended
December 29, 1990.
10.1F Second Amendment to Supplemental Plan effective as of Septem-
ber 25, 1991. Incorporated by reference to Exhibit 10.1(e) to
Textron's Annual Report on Form 10-K for the fiscal year ended
December 28, 1991.
10.2 Survivor Benefit Plan for Textron Key Executives effective
from and after December 16, 1987. Incorporated by reference
to Exhibit 10.2 to Textron's Annual Report on Form 10-K for
the fiscal year ended January 2, 1988.
<PAGE> 18
10.3A Deferred Income Plan for Textron Key Executives effective from
and after December 16, 1987. Incorporated by reference to
Exhibit 10.3 to Textron's Annual Report on Form 10-K for the
fiscal year ended January 2, 1988.
10.3B First Amendment to Deferred Income Plan for Textron Key Execu-
tives effective as of October 27, 1992. Incorporated by refer-
ence to Exhibit 10.3(b) to Textron's Annual Report on Form
10-K for the fiscal year ended January 2, 1993.
10.4A Corporate Office Annual Incentive Compensation Plan executed
on December 23, 1987. Incorporated by reference to Exhibit
10.4 to Textron's Annual Report on Form 10-K for the fiscal
year ended January 2, 1988.
10.4B First Amendment to Corporate Office Annual Incentive Compensa-
tion Plan effective as of December 10, 1992. Incorporated by
reference to Exhibit 10.4(b) to Textron's Annual Report on
Form 10-K for the fiscal year ended January 2, 1993.
10.5A Textron 1982 Long-Term Incentive Plan ("1982 Plan"). Incorpo-
rated by reference to Exhibit 10.5(a) to Textron's Annual
Report on Form 10-K for the fiscal year ended December 31,
1988.
10.5B First Amendment to 1982 Plan effective as of
February 25, 1987. Incorporated by reference to Exhibit
10.5(b) to Textron's Annual Report on Form 10-K for the fiscal
year ended January 3, 1987.
10.5C Second Amendment to 1982 Plan effective as of December 16,
1987. Incorporated by reference to Exhibit 10.5(c) to
Textron's Annual Report on Form 10-K for the fiscal year ended
January 2, 1988.
<PAGE> 19
10.6A Textron 1987 Long-Term Incentive Plan ("1987 Plan") effective
as of February 25, 1987, amended and restated as of April 27,
1988. Incorporated by reference to Exhibit 10.6 to Textron's
Annual Report on Form 10-K for the fiscal year ended December
30, 1989.
10.6B First Amendment to 1987 Plan effective as of September 25,
1991. Incorporated by reference to Exhibit 10.6(b) to
Textron's Annual Report on Form 10-K for the fiscal year ended
December 28, 1991.
10.7A Textron 1990 Long-Term Incentive Plan ("1990 Plan") effective
as of April 25, 1990. Incorporated by reference to Exhibit
10.7 to Textron's Annual Report on Form 10-K for the fiscal
year ended December 30, 1989.
10.7B First Amendment to 1990 Plan effective as of September 25,
1991. Incorporated by reference to Exhibit 10.7(b) to
Textron's Annual Report on Form 10-K for the fiscal year ended
December 28, 1991.
10.7C Second Amendment to 1990 Plan effective as of December 10,
1992. Incorporated by reference to Exhibit 10.7(c) to
Textron's Annual Report on Form 10-K for the fiscal year ended
January 2, 1993.
10.8 Employment Agreement between Textron and James F. Hardymon
dated November 24, 1989 ("Employment Agreement"). Incorporat-
ed by reference to Exhibit 10.9 to Textron's Annual Report on
Form 10-K for the fiscal year ended December 30, 1989.
10.9 Employment Agreement between Textron and Lewis B. Campbell
dated as of September 22, 1992. Incorporated by reference to
<PAGE> 20
Exhibit 10.9 to Textron's Annual Report on Form 10-K for the
fiscal year ended January 2, 1993.
10.10 Employment Agreement between Textron and Thomas P. Hollowell
dated as of January 1, 1993. Incorporated by reference to
Exhibit 10.10 to Textron's Annual Report Form 10-K for the
fiscal year ended January 2, 1993.
10.11 Employment Agreement between Textron and Mary L. Howell dated
as of May 4, 1993.
10.12 Employment Agreement between Textron and Richard A. McWhirter
dated as of February 16, 1993. Incorporated by reference to
Exhibit 10.11 to Textron's Annual Report on Form 10-K for the
fiscal year ended January 2, 1993.
10.13 Employment Agreement between Textron and Thomas D. Soutter
dated as of March 1, 1985, as amended by Amendment to Employ-
ment Agreement dated as of February 1, 1987 and Amendment to
Employment Agreement dated as of February 1, 1988. Incorporat-
ed by reference to Exhibit 10.11 to Textron's Annual Report on
Form 10-K for the fiscal year ended December 30, 1989.
10.14 Employment Agreement between Textron and William F. Wayland
dated January 1, 1989. Incorporated by reference to Exhibit
10.12 to Textron's Annual Report on Form 10-K for the fiscal
year ended December 30, 1989.
10.15 Form of Indemnity Agreement between Textron and its directors
and executive officers. Incorporated by reference to
Exhibit A to Textron's Proxy Statement for its Annual Meeting
of Shareholders on April 29, 1987.
<PAGE> 21
10.16 Textron Executive Severance Plan effective December 16, 1987.
Incorporated by reference to Exhibit 10.13 to Textron's Annual
Report on Form 10-K for the fiscal year ended January 2, 1988.
10.17A Pension Plan for Directors originally effective as of March 8,
1986, as amended by a First Amendment effective as of August
26, 1987. Incorporated by reference to Exhibit 10.14 to
Textron's Annual Report on Form 10-K for the fiscal year ended
December 31, 1988.
10.17B Second Amendment to Pension Plan for Directors effective as of
October 1, 1990. Incorporated by reference to Exhibit
10.16(b) to Textron's Annual Report on Form 10-K for the fis-
cal year ended December 29, 1990.
10.18 Deferred Income Plan for Textron Directors effective May 26,
1993.
10.19 Additional Benefits for certain executive officers. Incorpo-
rated by reference to Exhibit 10.16 to Textron's Annual Report
on Form 10-K for the fiscal year ended January 2, 1988.
10.20A Credit Agreement dated as of November 1, 1993 among Textron,
the Lenders listed therein and Bankers Trust Company as Admin-
istrative Agent.
10.20B Line of Credit dated as of November 1, 1993 among Textron, the
Lenders listed therein and Bankers Trust Company as Administra-
tive Agent.
12.1 Computation of ratio of income to fixed charges of the Textron
Parent Company Borrowing Group.
<PAGE> 22
12.2 Computation of ratio of income to fixed charges of Textron
Inc. including all majority-owned subsidiaries.
13 Textron's 1993 Annual Report to Shareholders. Except for
pages or items specifically incorporated by reference herein,
Textron's 1993 Annual Report to Shareholders is furnished for
the information of the Commission and is not filed as part of
this Report.
21 Certain subsidiaries of Textron. Other subsidiaries, which
considered in the aggregate do not constitute a significant
subsidiary, are omitted from such list.
23 Consent of Independent Auditors.
24.1 Power of attorney.
24.2 Certified copy of a resolution of the Board of Directors of
Textron.
(B) Reports on Form 8-K
No reports on Form 8-K were filed during the last quarter of the
period covered by this Report.
SIGNATURES
Pursuant to the requirement of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Annual Report
on Form 10-K to be signed on its behalf by the undersigned, thereunto
duly authorized on this 28th day of March, 1994.
<PAGE> 23
TEXTRON INC.
Registrant
By: S/Arnold M. Friedman
Arnold M. Friedman
Attorney-in-fact
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below on this 28th day of March, 1994, by the following
persons on behalf of the registrant and in the capacities indicated:
NAME TITLE
* Chairman and Chief Executive Officer,
James F. Hardymon Director (principal executive officer)
* President and Chief Operating
Lewis B. Campbell Officer, Director
* Director
H. Jesse Arnelle
* Director
Joseph R. Carter
* Director
R. Stuart Dickson
* Director
B.F. Dolan
* Director
William M. Ellinghaus
* Director
Webb C. Hayes, III
<PAGE> 24
* Director
John D. Macomber
* Director
Barbara Scott Preiskel
* Director
Sam F. Segnar
* Director
Jean Head Sisco
* Director
John W. Snow
* Director
J. Paul Sticht
* Director
Martin D. Walker
* Director
Thomas B. Wheeler
* Executive Vice President and
Richard A. McWhirter Chief Financial Officer (principal)
financial officer)
* Vice President and Controller
William P. Janovitz (principal accounting officer)
*By: S/Arnold M. Friedman
Arnold M. Friedman
Attorney-in-fact
<PAGE> 25
TEXTRON INC.
INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
Item 14(a)
Form Annual Report
Textron Inc. 10-K to Shareholders
Report of Independent Auditors 38
Consolidated Statement of Income for each of the
three years in the period ended January 1, 39
1994
Consolidated Balance Sheet at January 1, 1994
and January 2, 1993 40
Consolidated Statement of Cash Flows for each of
the three years in the period ended January 1, 41
1994
Consolidated Statement of Changes in
Shareholders' Equity for each of the three
years in the period ended January 1, 1994 42
Summary of Significant Accounting Policies 43 - 45
Notes to Consolidated Financial Statements 45 - 64
Revenues and Income by Business Segment 33
Supplementary Information (Unaudited):
Quarterly Financial Information 1993 and 1992 65
Financial Statement Schedules for each of the
three years in the period ended January 1,
1994
III Condensed financial information of 26
registrant
VIII Valuation and qualifying accounts 27
IX Short-term borrowings 28
X Supplementary income statement 29
information
All other schedules are omitted because the conditions requiring the filing
thereof do not exist or because the information required is included in the
financial statements and notes thereto.
<PAGE> 26
TEXTRON INC.
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
For each of the three years in the period ended January 1, 1994
Financial information of the Registrant is omitted because condensed
financial information of the Textron Parent Company Borrowing Group, which
includes the Registrant and all of its majority-owned subsidiaries other than
its finance and insurance subsidiaries, is shown on pages 61-62 of Textron's
Annual Report to Shareholders. Management believes that the disclosure of
financial information on the basis of the Textron Parent Company Borrowing
Group results in a more meaningful presentation, since this group constitutes
the Registrant's basic borrowing entity and the only restrictions on net assets
of Textron's subsidiaries relate to its finance and insurance subsidiaries.
The Registrant's investment in its finance and insurance subsidiaries is
reflected under the caption "Investments in finance and insurance
subsidiaries."
The Textron Parent Company Borrowing Group received dividends of $93.5
million, $78.4 million and $78.2 million from its finance and insurance
subsidiaries in 1993, 1992 and 1991, respectively. The portion of the net
assets of Textron's finance and insurance subsidiaries available for cash
dividends and other payments to the Textron Parent Company Borrowing Group is
restricted by the terms of lending agreements and insurance statutory
requirements. As of January 1, 1994, approximately $311 million of their net
assets of $2.2 billion was available to be transferred to the Textron Parent
Company Borrowing Group pursuant to these restrictions.
For information concerning the Textron Parent Company Borrowing Group's
long-term debt and restrictions contained in its debt agreements, see Note 8 to
the consolidated financial statements appearing on pages 50-51 of Textron's
1993 Annual Report to Shareholders.
<PAGE> 27
TEXTRON INC.
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
For each of the three years in the period ended January 1, 1994
(In millions)
<TABLE>
<CAPTION>
Allowance for credit losses on finance receivables 1993 1992 1991
<S> <C> <C> <C>
Balance at beginning of year $ 212.4 $ 183.3 $ 176.0
Additions charged to income (a) 171.2 188.6 160.2
Deductions from reserves (b) (158.8) (176.1) (152.9)
Acquisitions and other items (.2) 16.6 -
Balance at end of year $ 224.6 $ 212.4 $ 183.3
</TABLE>
(a) Exclude the effect of recoveries on accounts previously written off of
$28.9 million, $28.2 million and $25.4 million in 1993, 1992 and 1991,
respectively, which have been credited directly to income.
(b) Consist primarily of receivables written off.
<PAGE> 28
TEXTRON INC.
SCHEDULE IX - SHORT-TERM BORROWINGS
For each of the three years in the period ended January 1, 1994
(In millions)
<TABLE>
<CAPTION>
End of year Maximum Average Weighted
Weighted amount amount average
average outstanding outstanding interest
interest during the during the rate during
Balance rate year year* the year*
Year ended January 1, 1994
<S> <C> <C> <C> <C> <C>
Commercial paper $ 2,778.0 3.7% $ 2,778.1 $ 2,557.1 3.7%
Debt to banks 82.1 4.4% $ 203.2 133.0 3.8%
TOTAL $ 2,860.1 3.7% $ 2,860.1 $ 2,690.1 3.7%
Year ended January 2, 1993:
Commercial paper $ 2,145.3 4.5% $ 2,510.3 $ 2,242.1 4.4%
Debt to banks 269.6 4.4% $ 582.8 427.1 4.5%
TOTAL $ 2,414.9 4.5% $ 3,043.4 $ 2,669.2 4.4%
Year ended December 28, 1991:
Commercial paper $ 1,948.2 5.6% $ 1,954.5 $ 1,841.5 6.8%
Debt to banks 133.5 5.6% $ 170.3 120.3 8.5%
TOTAL $ 2,081.7 5.6% $ 2,081.7 $ 1,961.8 6.9%
</TABLE>
* The average amount outstanding during each year was computed by averaging the
daily ending balances during the year. The weighted average interest rate
during each year was determined based on daily outstanding principal amounts
and excludes the cost of maintaining the lines of credit.
NOTE: This schedule excludes borrowings under or supported by long-term credit
facilities of the Textron Parent Company Borrowing Group.
<PAGE> 29
TEXTRON INC.
SCHEDULE X - SUPPLEMENTARY INCOME
STATEMENT INFORMATION
For each of the three years in the period ended January 1, 1994
(In millions)
<TABLE>
<CAPTION>
Charged to costs and expenses
1993 1992 1991
<S> <C> <C> <C>
Maintenance and repairs $ 104.2 $ 100.2 $ 113.8
</TABLE>
TEXTRON INC.
Index of Exhibits
Annual Report on Form 10-K
for the Fiscal Year Ended January 1, 1994
Exhibit Description
10.11 Employment Agreement between Textron and Mary L.
Howell dated as of May 4, 1993.
10.17 Deferred Income Plan for Textron Directors
effective May 26, 1993.
10.20A Credit Agreement dated as of November 1, 1993
among Textron, the Lenders listed therein
and Bankers Trust Company as Administrative
Agent.
10.20B Line of Credit dated as of November 1, 1993 among
Textron, the Lenders listed therein and Bankers
Trust Company as Administrative Agent.
12.1 Computation of ratio of income to fixed charges
of the Textron Parent Company Borrowing Group.
12.2 Computation of ratio of income to fixed
charges of Textron Inc. including all
majority-owned subsidiaries.
13 Textron's 1993 Annual Report to Shareholders.
Except for pages or items specifically
incorporated by reference herein, Textron's
Annual Report to Shareholders is furnished for
the information of the Commission and is not
filed as part of this Report.
21 Certain subsidiaries of Textron. Other
subsidiaries, which considered in the aggregate
do not constitute a significant subsidiary, are
omitted from such list.
23 Consent of Independent Auditors.
24.1 Power of Attorney.
24.2 Certified copy of a resolution of the Board
of Directors of Textron.
EXHIBIT 10.11
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of May 4, 1993 between Textron Inc., a
Delaware corporation (the "Corporation"), and Mary L. Howell
(the "Executive").
WHEREAS, the Corporation currently employs the Executive in
the position of Senior Vice President Government and
International Relations and desires to continue such employment
during the term of this Agreement, and the Executive is willing
to continue such employment upon the terms and conditions set
forth below;
NOW THEREFORE, in consideration of the mutual promises
contained herein and other good and valuable consideration, the
parties hereto hereby agree as follows:
1. Employment.
The Corporation hereby employs and engages the services of
the Executive as one of its key principal executive
officers with the position of Senior Vice President
Government and International Relations of the Corporation
for the "term of employment" set forth in Section 2 of this
Agreement. The Executive agrees to serve the Corporation
in such position as set forth in Section 3 of this
Agreement for the term of employment.
2. Term of Employment.
The Executive's "term of employment" (as that phrase is
used herein) shall continue in effect through and including
December 31, 1995, provided, however, that on January 1
of each year during the term of employment, commencing
January 1, 1994, the term of employment shall automatically
be extended for an additional year unless prior to such
January 1 the Corporation gives written notice to the
Executive of the Corporation's intention not to so extend
the term of employment, and provided, further, that in
the event the Executive's status is converted to that of an
employee-consultant pursuant to Section 6(b) of this
Agreement, the Executive's term of employment shall expire
no earlier than the second anniversary of the effective
date of such conversion.
3. Position and Duties.
(a) During the term of employment the Executive's
position, authority and responsibilities, the type of
work she is asked to perform, and the status and
stature of the people with whom she is asked to work,
shall not be diminished during the term of employment,
and the Executive's services shall be performed at the
Corporation's Washington, D.C. office or at such other
location as may be mutually agreed between the
Corporation and the Executive.
(b) The Executive agrees to devote her full business time
during normal business hours to the business and
affairs of the Corporation (except as otherwise
provided herein) and to use her best efforts to
promote the interests of the Corporation and to
perform faithfully and efficiently the
responsibilities assigned to her in accordance with
the terms of this Agreement, to the extent necessary
to discharge such responsibilities, except for (i)
services on corporate, civic or charitable boards or
committees not significantly interfering with the
performance of such responsibilities and (ii) periods
of vacation and sick leave to which she is entitled.
It is expressly understood and agreed that the
Executive's continuing service on any boards and committees with
which she shall be connected, as a member or otherwise, as of
the date hereof, or any such service approved by the Corporation
during the term of employment, shall not be deemed to interfere
with the performance of the Executive's services to the
Corporation pursuant to this paragraph (b).
4. Compensation and Other Terms of Employment.
(a) Base Salary. During the term of employment, the
Executive shall receive an annual base salary ("Base
Salary"), payable in equal monthly installments, at an
annual rate at least equal to the aggregate annual
base salary payable to the Executive by the
Corporation at the commencement of the term of
employment. The Base Salary shall be reviewed and may
be increased at any time and from time to time in
accordance with the Corporation's regular practices.
Any increase in the Base Salary shall not serve to
limit or reduce any other obligation of the
Corporation hereunder, and after any such increase the
Base Salary shall not be reduced from such increased
level.
(b) Incentive Plans. As further compensation, the
Executive will be eligible during the term of
employment for participation in the Corporation's
short-term incentive compensation plan in a
participation level commensurate with her level of
employment. The Executive shall also be eligible
during the term of employment for awards of stock
options and performance units under the Corporation's
long-term incentive plan. In the event such plans are
amended or superseded, the Executive shall be entitled
to participate in the amended or successor plan at a
level substantially equivalent to her participation in
the plans immediately prior to such amendment or
^L succession. Any agreements existing as of the date
hereof between the Corporation and the Executive
providing for special incentive or similar benefits
are continued by this Agreement.
(c) Retirement, Savings and Other Executive Plans. In
addition to the Base Salary and incentive plans as
hereinabove provided, during the term of employment
the Executive shall be entitled to participate in all
savings, retirement, employee benefit and key
executive plans generally available to executive
officers of the Corporation. Nothing herein shall be
construed to prevent the Corporation from amending or
terminating any such plans to the extent currently
permitted by the terms of such plans. Any agreements
existing as of the date hereof between the Corporation
and the Executive providing for special pension,
retirement or similar benefits are continued by this
Agreement.
(d) Expenses. During the term of employment, the
Executive shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by
the Executive in accordance with the policies and
procedures of the Corporation in effect as of the date
hereof.
(e) Office and Support Staff. During the term of
employment, the Executive shall be entitled to an
office or offices of a size and with furnishings and
other appointments, and to secretarial and other
assistance, commensurate with her level of employment.
(f) Vacation and Fringe Benefits. During the term of
employment, the Executive shall be entitled to paid
vacation and fringe benefits (including, but not
limited to, travel facilities) in accordance with the
policies of the Corporation in effect as of the date
hereof.
5. Termination.
(a) Death. Except for the obligations of the
Corporation set forth in this paragraph (a), this
Agreement shall terminate automatically upon the
Executive's death. In the event of such termination,
the Corporation shall pay to the Executive's estate
all benefits and compensation accrued hereunder
through the end of the month in which the Executive
died.
(b) Cause. The Corporation may terminate the
Executive's employment for Cause. For purposes of the
Agrement, "Cause" shall mean (i) an act or acts of
dishonesty on the Executive's part which are intended
to result in her substantial personal enrichment at
the expense of the Corporation or (ii) any material
violation by the Executive of her responsibilities set
forth in Section 3 or Section 6(c) hereof which are
demonstrably willful and deliberate on the Executive's
part and which result in material injury to the
Corporation or (iii) any material violation by the
Executive of Textron's Business Conduct Guidelines.
If the Executive's employment is terminated for Cause,
the Corporation shall pay the Executive her full
accrued Base Salary through the date of such
termination at the rate in effect at the time of such
termination, and the Corporation shall have no further
obligations to the Executive under this Agreement.
6. Consulting Services.
(a) In the event of the Executive's Disability (as
hereinafter defined), the Executive's status shall
automatically become that of an employee-consultant
for the remainder of the term of employment. During
such period, the Executive shall be required to
provide services to the Corporation in accordance with
paragraph (c) of this Section 6, but only to the
extent the Executive has the ability to provide such
services. Upon the completion of the term of
employment, the Executive shall be entitled to receive
(in addition to any other payments and benefits
accrued as of such time) such disability benefits and
other benefits as may be payable to the Executive
under the terms of the employee benefit plans referred
to in Section 4(c) hereof. "Disability' shall mean a
disability which prevents the Executive from
performing the services contemplated by Section 3
hereof for the entire remainder of the term of
employment.
(b) Notwithstanding any other provisions contained in this
Agreement, the Corporation, at its option for any
reason, or the Executive, for Good Reason (as
hereinafter defined), may convert the Executive's
status into that of an employee-consultant for the
remainder of the term of employment in accordance with
the procedures set forth in this paragraph (b). In
the event the Corporation determines that the
Executive shall no longer hold her present position or
the Corporation intends to effect any change in the
Executive's employment status that would constitute
Good Reason, the Corporation shall give notice to the
Executive of such determination or intention. In the
event that the Executive claims that the Corporation
has taken any action constituting Good Reason, the
Executive shall give notice to the Corporation of such
claim. In either event, the parties shall meet and
attempt to reach a mutually satisfactory adjustment of
the terms of the Executive's employment; provided,
however, that the Executive shall not be obligated
to accept any change in the terms of her employment
proposed by the Corporation. If the Corporation and
the Executive cannot reach a mutually satisfactory
adjustment, either the Corporation or the Executive
may then convert the Executive's status to that of an
employee-consultant
"Good Reason" shall mean:
(i) without the express written consent of the
Executive, (A) the assignment of the Executive to
any duties or location inconsistent in any
significant respect with the provisions of
Section 3(a) hereof, or (B) any other significant
change in the position, authority or
responsibilities of the Executive (except as
permitted by this Section 6);
(ii) any failure by the Corporation to comply
with any of the provisions of Section 4 hereof,
other than an insubstantial and inadvertent
failure remedied by the Corporation promptly
after receipt of notice thereof given by the
Executive; or
(iii) any purported termination by the Corporation
of the Executive's employment hereunder other
than in accordance with, and as permitted by,
this Agreement, it being understood and agreed
that any such purported termination shall not be
effective for any purpose of this Agreement.
(c) In the event the Executive's status is converted to
that of an employee-consultant as provided in this
Section 6, the Executive shall continue to be a
full-time employee of the Corporation and shall,
except as limited by paragraph (a) of this Section 6,
provide such advisory services concerning the business
of the Corporation, of the same type and stature
performed by the Executive prior to the conversion of
her status to employee-consultant, as may reasonably
be requested by the Corporation. The period during
which the Executive serves as an employee-consultant
pursuant to this Section 6 shall for all purposes of
this Agreement be considered part of the term of
employment. During such period, the Corporation shall
continue to be bound by, and obligated to perform in
all respects, all of the provisions of Section 4
hereof (except Section 4(e)), and, to the extent not
inconsistent with this Section 6, all of the other
provisions of the Agreement shall continue in full
force and effect. During such period, the Executive
shall not engage in any activities in competition with
the Corporation and shall continue to be deemed an
employee under all benefit plans and programs of the
Corporation.
7. Non-Exclusivity of Rights.
(a) Nothing in this Agreement shall prevent or limit the
Executive's continuing or future participation in any
benefit, bonus, incentive or other plan or program
provided by the Corporation or any of its affiliated
companies and for which the Executive may qualify, nor
shall anything herein limit or otherwise affect such
rights as the Executive may have under any stock
option or other agreements with the Corporation or any
of its affiliated companies. Amounts which are vested
benefits or which the Executive is otherwise entitled
to receive under any plan or program of the
Corporation or any of its affiliated companies shall
be payable in accordance with the terms of such plan
or program.
(b) Notwithstanding the foregoing, and in consideration of
the premises contained in this Agreement, the
^L Executive specifically waives any rights she may have
to receive any severance pay or other severance
benefits under the Textron Executive Severance Plan
and any other severance plan, program or agreement of
the Corporation.
8. No Set-Off; Legal Fees.
The Corporation's obligation to make the payments provided
for herein and otherwise to perform its obligations
hereunder shall not be affected by any circumstances,
including without limitation any set-off, counter-claim,
recoupment, defense or other right which the Corporation
may have against the Executive or others. Unless it is
finally determined by a court of competent jurisdiction
after all available appeals that the Corporation has
validly terminated the Executive's employment for Cause,
the Corporation agrees to pay, to the full extent permitted
by law, all legal fees and expenses which the Executive may
reasonably incur as a result of any contest by the
Corporation or others of the validity or enforceability of,
or liability under, any provision of this Agreement or any
guarantee of performance thereof, plus interest on the
total unpaid amount determined to be payable hereunder,
such interest to be calculated on the basis of the prime
commercial lending rate announced by Morgan Guaranty Trust
Company in effect from time to time, for the period
commencing on the date of such contest and ending on the
date on which the Corporation shall pay such total amount
(such interest to be compounded quarterly).
9. Confidential Information.
The Executive shall hold in a fiduciary capacity for the
benefit of the Corporation all secret or confidential
information, knowledge or data relating to the Corporation
or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive
during her employment by the Corporation or any of its
affiliated companies and which shall not be public
knowledge. During and after the end of the term of
employment, the Executive shall not, without the prior
written consent of the Corporation, communicate or divulge
any such information, knowledge or data to anyone other
than the Corporation and those designated by it.
10. No Assignment.
This Agreement is personal to the Executive and without the
prior written consent of the Corporation shall not be
assignable by the Executive other than by will or the laws
of descent and distribution. This Agreement shall inure to
the benefit of and be enforceable by the Executive's legal
representatives.
11. Miscellaneous.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware,
without reference to principles of conflict of laws.
The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect.
This Agreement may not be amended or modified other
than by a written agreement executed by the parties
hereto or their respective successors and legal
representatives.
(b) All notices and other communications hereunder shall
be in writing and shall be given by hand delivery to
the other party or by registered or certified mail,
return receipt requested, postage prepaid, addressed
as follows:
If to the Executive:
Mary L. Howell
4605 Rock Spring Road
Arlington, VA 22207
If to the Corporation:
Textron Inc.
40 Westminster Street
Providence, Rhode Island 02903
or to such other address as either party shall have
furnished to the other in writing in accordance
herewith. Notice and communications shall be
effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or
enforceability of any other provision of this
Agreement.
(d) The Corporation may withhold from any amounts payable
under this Agreement such federal, state or local
taxes as shall be required to be withheld pursuant to
any applicable law or regulation.
(e) This Agreement contains the entire understanding of
the parties hereto with respect to the subject matter
hereof.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be duly executed as of the day and year first above written.
s/Mary L. Howell
Mary L. Howell
TEXTRON INC.
By s/William F. Wayland
William F. Wayland
Executive Vice President
Administration and Chief
Human Resources Officer
ATTEST:
s/Michael D. Cahn
Michael D. Cahn
Assistant Secretary
(SEAL)
EXHIBIT 10.18
Deferred Income Plan for Textron Directors
This Plan is effective May 26, 1993 and replaces the plan previously in effect.
Article I - Participation
1.1 Non-employee members of the Board of Directors of Textron may elect
to defer receipt of all or any portion of earned Director's fees
into either a stock unit account or an interest-bearing account. A
Director must, however, defer a minimum of 25% of the annual Board
retainer fee into the stock unit account. All other amounts de-
ferred are at the election of the Director.
1.2 Each Director must file with Textron by December 1 a Deferral Elec-
tion Form (Exhibit 1) indicating deferrals during the following
calendar year.
1.3 For any complete calendar quarters remaining in the calendar year
in which an individual becomes a non-employee Director, the Direc-
tor may elect to defer Director's fees at any time before the start
of such quarter(s).
Article II - Deferred Income Accounts
2.1 For record-keeping purposes only, Textron shall maintain a stock
unit account and an interest-bearing account.
2.2 Stock Unit Account
The Stock Unit Account shall consist of Stock Units, which are
fictional shares of Textron common stock accumulated and accounted
for the sole purpose of determining the cash payout of any
distribu-
tion under this portion of deferred income.
As of the end of each calendar quarter, Textron shall credit to the
Stock Unit Account 125% (includes a 25% Premium contributed by
Textron) of the amount the Director deferred into this account
during the quarter. Textron shall also credit to this account
Stock Units equal to the number of shares of Textron common stock
that would have been allocated on account of dividends.
The number of Stock Units Textron shall credit to the Stock Unit
Account will equal the number of shares of Textron common stock
that could have been purchased at a price per share equal to the
average price per share of Textron common stock contributed to the
Textron Savings Plan during that quarter.
Half of the 25% Premium contributed by Textron shall vest (become
nonforfeitable) on December 31 of the calendar year in which the
deferred income otherwise would have been paid and the remaining
half on the next December 31. The Premium will continue to vest
after the termination of the Directorship. The Premium will vest
only if the related deferred compensation is unpaid at the time of
vesting. Unvested Premiums shall vest immediately upon the death
or total disability as determined by the Textron Benefits
Committee.
Interest Account
2.3 As of the end of each calendar quarter Textron shall credit to the
Interest Account an amount equal to interest on the average balance
in the Interest Account during such quarter. The average balance
will be computed by adding the opening and closing balances for the
quarter and dividing by two. Interest will be credited at a rate
determined from time to time by the Textron Benefits Committee.
Article III - Payments
3.1 Payments or withdrawals from either the Stock Unit Account of the
Interest Account or transfers between the two accounts shall not be
allowed while the individual remains a Director of Textron. Prior
to or at the time of the Director's resignation, removal, or
retire-
ment from the Board of Directors, the Director must elect a payment
schedule.
3.2 Upon the Director's resignation, removal, or retirement from the
Board of Directors, all amounts in the Stock Unit Account will be
transferred to the Interest Account. The cash amount transferred
will be determined by multiplying the current value of Textron
common stock by the number of whole or fractional Stock Units in
the Stock Unit Account. The current value shall be the average of
the composite closing prices, as reported in the Wall Street Jour-
nal for the ten trading days after the date of the Director's
resignation, removal or retirement.
3.3 The Director may elect on the Payment Election Form (Exhibit 2) to
receive (1) the entire amount in the Interest Account immediately
following the end of the current quarter, (2) the entire amount in
the following January, or (3) payments annually over a period of up
to five years with the initial payment paid in the following Janu-
ary. Annual installments shall be calculated each year by dividing
the unpaid amount as of January 1 of that year by the remaining
number of unpaid installments.
3.4 During the installment period, the unpaid balance in the Interest
Account will continue to earn interest at the same rate as if the
individual had continued as a Director.
3.5 If the Director or former Director dies before all payments have
been made, payment(s) shall be made to the beneficiary designated
on the Designation of Beneficiary form (Exhibit 3). In the event
of death, the Benefits Committee shall choose in its sole discre-
tion the payment schedule after considering the method of payment
that may have been requested by the Director or by the beneficia-
ries.
The designated beneficiary may be changed from time to time by
delivering a new Designation of Beneficiary Form to Textron. If no
designation is made, or if the named beneficiary predeceases the
Director, payment shall be made to the Director's estate.
At the discretion of Textron, the payments to be made after the
Director's resignation, removal, or retirement from the Board of
Directors pursuant to this Article III may be accelerated in such
amounts and at such times as the Benefits Committee determines.
Article IV - Miscellaneous
4.1 Benefits provided under this Plan are unfunded obligations of
Textron. Nothing contained in this Plan shall require Textron to
segregate any monies from its general funds with respect to such
obligations.
4.2 The Textron Benefits Committee shall be the plan administrator of
this Plan and shall be solely responsible for its general adminis-
tration and interpretation and for carrying out the provisions
hereof, and shall have all such powers as may be necessary to do
so.
4.3 Neither the Director nor any beneficiary nor any next-of-kin shall
have the right to assign or otherwise alienate the right to receive
payments hereunder, in whole or in part, which payments are
express-
ly agreed to be non-assignable and non-transferable, whether volun-
tary or involuntary.
Exhibit 1
TEXTRON INC.
Deferred Income Plan
for
Textron Directors
Deferral Election Form
1993
In accordance with the provisions of the Deferred Income Plan for Textron
Direc-
tors, I hereby elect to defer fees payable to me as indicated below. This
deferment shall remain in effect until I shall have filed an election supersed-
ing this election.
Stock Unit Interest
Account Account
Annual Retainer % * %
All Other Fees % %
* Must be at least 25%.
______________________ _______________________
Signature Date
Exhibit 2
TEXTRON INC.
Deferred Income Plan
for
Textron Directors
Payment Election Form
Select One:
_____ Pay full amount immediately following the end of the current calendar
quarter.
_____ Pay full amount in the following January.
_____ Pay annually over __ (2 to 5) years beginning in the following January.
Prior to making your selection you should consider the following:
Half of the 25% Premium contributed by Textron shall vest on Decem-
ber 31 of the calendar year in which the income was deferred and the
remaining half on the next December 31. The Premium will vest only
if the related deferred compensation remains unpaid during the vest-
ing period noted above. If the related deferred compensation is
paid prior to vesting, the unvested portion of the Premium is for-
feited.
______________________ _______________________
Signature Date
Exhibit 3
TEXTRON INC.
Deferred Income Plan
for
Textron Directors
Designation of Beneficiary
I hereby designate the following individual(s) to receive from the Deferred
Income Plan for Textron Directors any amounts payable in the event of my death.
Social Security Percent of
Name Number Address Payment
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
This designation is intended to replace all prior designations made by me for
such amounts.
______________________ _______________________
Signature Date
CREDIT AGREEMENT
Dated as of November 1, 1993
Among
TEXTRON INC.
THE BANKS LISTED HEREIN
AND
BANKERS TRUST COMPANY,
as Administrative Agent
TEXTRON INC.
CREDIT AGREEMENT
dated as of November 1, 1993
TABLE OF CONTENTS
Section Heading Page
INTRODUCTION..................................... 1
RECITALS......................................... 1
Section 1 DEFINITIONS AND ACCOUNTING TERMS................. 1
1.1 Definitions...................................... 1
1.2 Accounting Terms................................. 14
Section 2 AMOUNTS AND TERMS OF COMMITMENTS AND
LOANS; NOTES.................................. 15
2.1 Revolving Loans.................................. 15
2.2 Competitive Bid Loans............................ 17
2.3 Notices of Conversion/Continuation............... 19
2.4 The Revolving Notes and Competitive
Bid Notes..................................... 20
2.5 Pro Rata Borrowings.............................. 21
2.6 Procedure for Extending Maturity Dates........... 22
2.7 Interest......................................... 23
2.8 Commissions and Fees............................. 26
2.9 Reductions in Commitments; Repayments
and Payments.................................. 27
2.10 Use of Proceeds.................................. 31
2.11 Special Provisions Governing
Eurodollar Rate Loans and/or
Competitive Bid Loans......................... 31
2.12 Capital Requirements............................. 39
2.13 Special Continuing Competitive Bid
Loans Provision............................... 40
Section 3 CONDITIONS TO LOANS.............................. 40
3.1 Conditions to Initial Loans...................... 40
3.2 Conditions to All Loans.......................... 42
3.3 Conditions to All Competitive Bid
Loans......................................... 43
-i-
3.4 Conditions to Loans to Subsidiary
Borrowers..................................... 43
Section 4 REPRESENTATIONS AND WARRANTIES................... 45
4.1 Organization, Powers and Good Standing........... 45
4.2 Authorization of Borrowing, etc.................. 45
4.3 Financial Condition.............................. 46
4.4 No Adverse Material Change....................... 47
4.5 Litigation....................................... 47
4.6 Payment of Taxes................................. 47
4.7 Governmental Regulation.......................... 47
4.8 Securities Activities............................ 48
4.9 ERISA Compliance................................. 48
4.10 Certain Fees..................................... 49
Section 5 AFFIRMATIVE COVENANTS............................ 49
5.1 Financial Statements and Other Reports........... 49
5.2 Corporate Existence.............................. 52
5.3 Payment of Taxes................................. 52
5.4 Maintenance of Properties; Insurance............. 52
5.5 Inspection....................................... 53
5.6 Compliance with Laws............................. 53
Section 6 NEGATIVE COVENANTS............................... 53
6.1 Merger........................................... 53
6.2 Liens............................................ 54
6.3 Financial Covenants.............................. 55
6.4 Existing Subordinated Debt....................... 56
6.5 Use of Proceeds.................................. 56
Section 7 EVENTS OF DEFAULT................................ 56
7.1 Failure to Make Payments When Due................ 56
7.2 Default in Other Agreements...................... 56
7.3 Breach of Certain Covenants...................... 57
7.4 Breach of Warranty............................... 57
7.5 Other Defaults Under Agreement................... 57
7.6 Involuntary Bankruptcy; Appointment of
Receiver, etc................................. 57
7.7 Voluntary Bankruptcy; Appointment of
Receiver, etc................................. 58
7.8 Judgments and Attachments........................ 59
7.9 Dissolution...................................... 59
7.10 ERISA Title IV Liabilities....................... 59
-ii-
Section 8 AGENT............................................ 60
8.1 Appointment...................................... 60
8.2 Powers; General Immunity......................... 61
8.3 Representations and Warranties; No
Responsibility for Appraisal of
Creditworthiness.............................. 62
8.4 Right to Indemnity............................... 63
8.5 Payee of Note Treated as Owner................... 63
8.6 Resignation by the Agent......................... 64
8.7 Successor Agent.................................. 64
Section 9 GUARANTEE........................................ 64
9.1 Guarantee........................................ 64
9.2 Obligation Not Affected by Certain
Events........................................ 65
9.3 Guarantee a Guarantee of Payment................. 66
9.4 Obligation Not Subject to Limitation............. 66
9.5 Order of Payment................................. 67
9.6 Waiver by the Company............................ 68
Section 10 MISCELLANEOUS.................................... 68
10.1 Benefit of Agreement............................. 68
10.2 Expenses......................................... 71
10.3 Indemnity........................................ 71
10.4 Setoff........................................... 72
10.5 Ratable Sharing.................................. 72
10.6 Amendments and Waivers........................... 74
10.7 Independence of Covenants........................ 75
10.8 Notices.......................................... 75
10.9 Survival of Warranties and Certain
Agreements.................................... 75
10.10 Failure or Indulgence Not Waiver;
Remedies Cumulative........................... 75
10.11 Severability..................................... 76
10.12 Obligations Several; Independent
Nature of Banks' Rights....................... 76
10.13 Headings......................................... 76
10.14 APPLICABLE LAW,
CONSENT TO JURISDICTION AND
SERVICE OF PROCESS............................ 76
10.15 Successors and Assigns; Subsequent
Holders of Notes.............................. 77
10.16 Counterparts; Effectiveness...................... 78
SIGNATURE PAGES................................................. 79
-iii-
EXHIBITS
Exhibit A-1 - Form of Revolving Note
Exhibit A-2 - Form of Competitive Bid Note
Exhibit B - Form of Opinion of Thomas D. Soutter, Esq.,
General Counsel of the Company
Exhibit C - Form of Opinion of Cahill Gordon & Reindel
Exhibit D-1 - Form of Notice of Syndicated Borrowing
Exhibit D-2 - Form of Notice of Competitive Bid Borrowing
Exhibit D-3 - Form of Notice of Conversion/Continuation
Exhibit E - Form of Compliance Certificate
Exhibit F - Form of Transfer Supplement
EXHIBIT G - Form of Loan Assumption Agreement
-iv-
CREDIT AGREEMENT
CREDIT AGREEMENT, dated as of November 1, 1993, among
TEXTRON INC., a Delaware corporation (the "Company"), the BANKS
signatory hereto (each a "Bank" and collectively the "Banks")
and BANKERS TRUST COMPANY, a New York banking corporation ("BT
Co"), as a Bank and as Administrative Agent for the Banks.
W I T N E S S E T H :
WHEREAS, the Company owns directly or indirectly all
of the outstanding shares of capital stock of each of the
Subsidiary Borrowers;
WHEREAS, the Company desires that the Banks extend
certain credit facilities to the Company and the Subsidiary
Borrowers for the purposes set forth in Section 2.10;
WHEREAS, each Bank is willing to extend its
commitment to make loans to the Company and the Subsidiary
Borrowers for such purposes on the terms and subject to the
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and
the agreements, provisions and covenants herein contained, the
Company, the Banks and the Agent agree as follows:
Section 1 DEFINITIONS AND ACCOUNTING TERMS
1.1 Definitions
As used in this Agreement, and unless the context
requires a different meaning, the following terms have the
meanings indicated:
"Adjusted Eurodollar Rate" means, for any Interest
Period for a Eurodollar Rate Loan, the rate (rounded
upward to the next highest one hundredth of one percent)
obtained by dividing (i) the Eurodollar Rate for the first
day of such Interest Period by (ii) a percentage equal to
100% minus the stated maximum rate of all reserves
required to be maintained against "Eurocurrency
liabilities" as specified in Regulation D (or against any
other category of liabilities which includes deposits by
reference to which the interest rate on Eurodollar Rate
Loans is determined or any category of extensions of
credit or other assets which includes loans by a non-
United States office of any Bank to United States
residents).
"Affected Bank" means any Bank affected by any of the
events described in Section 2.11B or 2.11C hereof.
"Affiliate" means, with respect to any Person, any
Person or group of Persons acting in concert in respect of
the Person in question that, directly or indirectly,
controls or is controlled by or is under common control
with such Person. For the purposes of this definition,
"control" (including, with correlative meanings, the terms
"controlled by" and "under common control with"), as used
with respect to any Person or group of Persons acting in
concert, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction
of management and policies of such Person, whether through
the ownership of voting securities or by contract or
otherwise.
"Agent" has the meaning assigned to that term in
Section 8.1 hereof.
"Agreement" means this Credit Agreement, as the same
may at any time be amended, amended and restated,
supplemented or otherwise modified in accordance with the
terms hereof.
"Applicable Margin" has the meaning set forth in
Section 2.7.
"Bank" and "Banks" have the respective meanings
assigned to those terms in the introduction to this
Agreement and its or their successors and permitted
assigns.
"Bankruptcy Code" means Title 11 of the United States
Code entitled "Bankruptcy," as from time to time amended
and any successor statutes.
"Base Rate" means, 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 Rate in effect on such
day plus 1/2 of 1%.
"Base Rate Loans" are Syndicated Loans whose interest
rate is based on Base Rate.
"Board" means the Board of Governors of the Federal
Reserve System.
"Borrower" means each of the Company and each
Subsidiary Borrower.
"Borrowing" means the incurrence by any Borrower on a
given date of Syndicated Loans.
"BT Co" has the meaning assigned to that term in the
introduction to this Agreement.
"Business Day" means (i) for all purposes other than
as covered by clause (ii) below, any day excluding
Saturday, Sunday and any day on which banking institutions
located in the State of New York are authorized or
required by law or other governmental action to close and
(ii) with respect to all notices, determinations, fundings
and payments in connection with Eurodollar Rate Loans, any
day which is a Business Day described in clause (i) and
which is also a day for trading by and between banks in
dollar deposits in the applicable interbank Eurodollar
market.
"Capital Lease", as applied to any Person, means any
lease of any property (whether real, personal or mixed) by
that Person as lessee which, in conformity with GAAP, is
accounted for as a capital lease on the balance sheet of
that Person.
"Code" means the Internal Revenue Code of 1986, as
from time to time amended. Any reference to the Code
shall include a reference to corresponding provisions of
any subsequent revenue law.
"Commitment" means, at any time any determination
thereof is to be made, the commitment (whether or not then
utilized) of each Bank then in effect to extend credit
hereunder, which initially shall be for each Bank the amount
specified on the signature page hereto for such Bank.
"Company" has the meaning assigned to that term in the
introduction to this Agreement.
"Competitive Bid Loan" means a Loan bearing interest at
such rate and for such interest period, and on such other
terms not inconsistent with the terms of this Agreement, as
the applicable Borrower and the Bank making such Loan may
mutually agree and which Loan is requested pursuant to a
Notice of Competitive Bid Borrowing.
"Competitive Bid Notes" means the promissory notes of
the Borrowers issued pursuant to Section 2.4B hereto in
substantially the form of Exhibit A-2 hereto.
"Compliance Certificate" means a certificate
substantially in the form annexed hereto as Exhibit E
delivered to the Banks by the Company pursuant to Section
5.1B(i)(b).
"Consolidated EBITDA" means, without duplication, for
any consecutive four fiscal quarter period, the sum of the
amounts for such period of (i) the Company's Consolidated
Net Income, excluding therefrom any extraordinary items of
gain or loss, plus (ii) the aggregate amount of cash
dividends actually received by the Company or any of its
Subsidiaries in respect of the capital stock of any
Finance Company or Insurance Company and payable out of
the net income for such period in which paid of any such
Finance Company or Insurance Company, plus (iii) the
aggregate amounts deducted in determining Consolidated Net
Income for such period in respect of (a) the provision for
taxes based on income of the Company and its Subsidiaries,
(b) Consolidated Interest Expense and (c) depreciation and
amortization, all as determined on a consolidated basis
for the Company and its Subsidiaries in conformity with
GAAP.
"Consolidated Interest Expense" means, for any
consecutive four fiscal quarter period, total interest
expense (including that attributable to Capital Leases in
accordance with GAAP) of the Company and its Subsidiaries,
all as determined on a consolidated basis in conformity
with GAAP, with respect to all outstanding Indebtedness of
the Company and its Subsidiaries.
"Consolidated Net Income" means, for any consecutive
four fiscal quarter period, the net income (or loss) of
any Person (for purposes of this definition "Parent") and
its Subsidiaries on a consolidated basis for such period
taken as a single accounting period determined in
conformity with GAAP; provided that there shall be
excluded, the income (or loss) of any Person accrued prior
to the date it becomes a Subsidiary of Parent or is merged
into or consolidated with Parent or any of its
Subsidiaries or that Person's assets are acquired by
Parent or any of its Subsidiaries.
"Consolidated Net Worth" means, as at any date of
determination, the sum of the capital stock and additional
paid-in capital plus/minus marketable equity securities
valuation adjustment plus retained earnings (or minus
accumulated deficit) plus $679,500,000 less the cost of
treasury stock of the Company and its Subsidiaries on a
consolidated basis (but excluding the effects of foreign
currency translation adjustments under Financial
Accounting Standards Board Statement No. 52) calculated in
conformity with GAAP.
"Contractual Obligation", as applied to any Person,
means any provision of any security issued by that Person
or of any material indenture, mortgage, deed of trust or
other similar instrument of that Person under which
Indebtedness is outstanding or secured or by which that
Person or any of its properties is bound or to which that
Person or any of its properties is subject.
"Designation Date" means, with respect to any
Subsidiary of the Company, the date on which the Company
designates such Subsidiary as a Subsidiary Borrower.
"Effective Date" has the meaning assigned to that
term in Section 10.16 hereof.
"Electing Holder" and "Electing Holders" have the
meanings assigned to such terms in Section 2.6.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as from time to time amended, and any
successor statute.
"ERISA Affiliate" means, with respect to any Person,
any trade or business (whether or not incorporated) which,
together with such Person, is under common control as
described in Section 414(c) of the Code or is a member of
a controlled group, as defined in Section 414(b) of the
Code, which includes such Person.
"Eurodollar Rate" means, for any Interest Rate
Determination Date, the arithmetic average (rounded
upwards to the nearest 1/16 of 1%) of the offered
quotation, if any, to first class banks in the Eurodollar
market by each of the Reference Banks for U.S. dollar
deposits of amounts in immediately available funds
comparable to the principal amount of the Eurodollar Rate
Loan of the Reference Bank for which the Eurodollar Rate
is being determined with maturities comparable to the
Interest Period for which such Eurodollar Rate will apply
as of approximately 10:00 A.M. (New York time) two
Business Days prior to the commencement of such Interest
Period. If any Reference Bank fails to provide its
offered quotation to Agent, the Eurodollar Rate shall be
determined on the basis of the offered quotation(s) by the
other Reference Bank(s).
"Eurodollar Rate Loans" means Syndicated Loans or
portions thereof during the period in which such Loans
bear interest at rates determined in accordance with
Section 2.7A hereof.
"Event of Default" has the meaning assigned to that
term in Section 7 hereof.
"Exchange Act" means the Securities Exchange Act of
1934, as from time to time amended, and any successor
statutes.
"Existing Subordinated Debt" means the indebtedness
of the Company outstanding on the date of this Agreement
pursuant to the Indenture dated as of May 1, 1985 with The
Chase Manhattan Bank, N.A., as Trustee, as the same has
been supplemented by the First Supplemental Subordinated
Indenture and as in effect on the date of this Agreement.
"Extension Notice" has the meaning assigned to that
term in Section 2.6.
"Facility Extension Date" means, unless such date is
extended in accordance with Section 2.6, October 30, 1994
and, if so extended, then the date to which extended.
"Federal Funds Rate" means on any one day the
weighted average of the rate on overnight Federal funds
transactions with members of the Federal Reserve System
only arranged by Federal funds brokers as published as of
such day by the Federal Reserve Bank of New York, provided
that if such day is not a Business Day, the Federal Funds
Rate shall be measured as of the immediately preceding
Business Day.
"Final Maturity Date" means October 30, 1996 unless
such date is extended in accordance with Section 2.6 and,
if so extended, then the date to which extended.
"Finance Company" means any subsidiary of the Company
which is primarily engaged in the business of a finance
company.
"Funding Date" means the date of the funding of a
Loan made pursuant to a Notice of Borrowing but does not
mean the date of any conversion or continuation of the
interest rate applicable to any Loan pursuant to a Notice
of Conversion/Continuation.
"GAAP" means generally accepted accounting principles
set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronounce-
ments of the Financial Accounting Standards Board as in
effect on October 2, 1993 and applicable to and used by
the Company in the preparation of the unaudited financial
statements of the Company included in the Company's report
on Form 10-Q for the fiscal quarter ended July 3, 1993.
"Governmental Authority" means any nation or
government, any state or other political subdivision
thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or
pertaining to government.
"Indebtedness", as applied to any Person, means,
without duplication, (i) all indebtedness for borrowed
money of that Person, (ii) that portion of obligations
with respect to Capital Leases which is properly
classified as a liability on a balance sheet of that
Person in conformity with GAAP, (iii) notes payable of
that Person and drafts accepted by that Person
representing extensions of credit whether or not
representing obligations for borrowed money, (iv) any
obligation of that Person owed for all or any part of the
deferred purchase price of property or services which
purchase price is (a) due more than twelve months from the
date of incurrence of the obligation in respect thereof,
or (b) evidenced by a note or similar written instrument,
(v) all indebtedness secured by any Lien on any property
or asset owned or held by that Person regardless of
whether the indebtedness secured thereby shall have been
assumed by that Person or is nonrecourse to the credit of
that Person and (vi) any guarantee of that Person, direct
or indirect, of any indebtedness, note payable, draft
accepted, or obligation described in clauses (i)-(v) above
of any other Person.
"Initial Loans" means the initial Loans made under
this Agreement.
"Insurance Company" means any subsidiary of the
Company which is primarily engaged in the business of an
insurance company, including, without limitation, PRHC
Inc.; provided, however, that PRHC Inc. shall not
thereafter be deemed to be an Insurance Company if, at any
time, PRHC Inc. or any of its Subsidiaries ceases to
remain a company (i) primarily engaged in the business of
an insurance company or (ii) whose principal business is
to augment the operation of a Subsidiary of PRHC Inc.
which is so engaged.
"Interest Payment Date" means, (x) with respect to
any Eurodollar Rate Loan, the last day of each Interest
Period applicable to such Eurodollar Rate Loan; provided
that in the case of each Interest Period of six, nine or
twelve months, "Interest Payment Date" shall also include
each Interest Period Anniversary Date (or if such day is
not a Business Day, then the next succeeding Business Day)
for such Interest Period and (y) in the case of any Base
Rate Loan, the last Business Day of each calendar quarter.
"Interest Period" means any interest period
applicable to a Eurodollar Rate Loan as determined
pursuant to Section 2.7B hereof.
"Interest Period Anniversary Date" means, for each
Interest Period applicable to a Eurodollar Rate Loan which
is six, nine or twelve months, each three-month
anniversary of the commencement of that Interest Period.
"Interest Rate Determination Date" means each date
for calculating the Eurodollar Rate for purposes of
determining the interest rate in respect of an Interest
Period. The Interest Rate Determination Date shall be the
second Business Day prior to the first day of the related
Interest Period.
"Lien" means any lien, mortgage, pledge, security
interest, charge or encumbrance of any kind (including any
conditional sale or other title retention agreement, any
lease in the nature thereof, and any agreement to give any
security interest).
"Line of Credit" means the Line of Credit dated as of
November 1, 1993 among the Company, the banks listed
therein and BT Co, as administrative agent, as such
agreement may from time to time be amended, amended and
restated, supplemented or otherwise modified in accordance
with the terms thereof.
"Loans" means one or more of the Syndicated Loans,
Competitive Bid Loans or any combination thereof.
"Margin Stock" has the meaning assigned to that term
in Regulation U of the Board as in effect from time to
time.
"Material Adverse Effect" means a material adverse
effect on the business, operations, properties, assets or
financial condition of the Company and its Subsidiaries,
taken as a whole.
"Maturity Dates" has the meaning assigned to that
term in Section 2.6.
"Multiemployer Plan" has the meaning assigned to that
term in Section 4001(a)(3) of ERISA.
"1987 Credit Agreement" has the meaning assigned to
that term in Section 3.1E.
"Notes" means the Revolving Notes, the Competitive
Bid Notes, or any combination thereof.
"Notice of Borrowing" means any Notice of Syndicated
Borrowing, Notice of Competitive Bid Borrowing or any
combination thereof.
"Notice of Competitive Bid Borrowing" has the meaning
assigned to that term in Section 2.2A hereof and shall be
substantially in the form of Exhibit D-2 hereof.
"Notice of Conversion/Continuation" means any notice
delivered pursuant to Section 2.3A hereof and shall be
substantially in the form of Exhibit D-3 hereto.
"Notice of Syndicated Borrowing" has the meaning
assigned to that term in Section 2.1B hereof and shall be
substantially in the form of Exhibit D-1 hereto.
"Officer's Certificate" means, as applied to any
corporation, a certificate executed on behalf of such
corporation by its Chairman of the Board (if an officer),
its President, any Vice President of such corporation, its
Chief Financial Officer, its Treasurer or any Assistant
Treasurer of such corporation.
"Payment Office" means the office of the Agent or any
Bank, as the case may be, designated as such on the
signature pages of this Agreement or such other office as
to which the agent or such Bank shall notify the Company,
the Agent and the other Banks in writing.
"PBGC" means the Pension Benefit Guaranty Corporation
created by Section 4002(a) of ERISA or any successor
thereto.
"Pension Plan" means any plan (other than a Multi-
employer Plan) described in Section 4021(a) of ERISA and
not excluded pursuant to Section 4021(b) thereof, which
may be, is or has been established or maintained, or to
which contributions may be, are or have been made by the
Company or any of its ERISA Affiliates or as to which the
Company would be considered as a "contributing sponsor"
for purposes of Title IV of ERISA at any relevant time.
"Permitted Encumbrances" means:
(i) Liens for taxes, assessments or governmental
charges or claims the payment of which is not at
the time required by subsection 5.3;
(ii) Statutory Liens of landlords and Liens of
carriers, warehousemen, mechanics, materialmen
and other liens imposed by law incurred in the
ordinary course of business for sums not yet
delinquent or being contested in good faith, if
such reserve or other appropriate provision, if
any, as shall be required by generally accepted
accounting principles then in effect, shall have
been made therefor;
(iii) Liens (other than any Lien imposed by ERISA)
incurred or deposits made in the ordinary course
of business in connection with workers'
compensation, unemployment insurance and other
types of social security, or to secure the
performance of tenders, statutory obligations,
bids, leases, government contracts, performance
and return-of-money bonds and other similar
obligations (exclusive of obligations for the
payment of borrowed money);
(iv) Any attachment or judgment Lien individually or
in the aggregate not in excess of $50,000,000
unless the judgment it secures shall, within 30
days after the entry thereof, not have been
discharged or execution thereof stayed pending
appeal, or shall not have been discharged within
30 days after the expiration of any such stay;
(v) Leases or subleases granted to others not
interfering in any material respect with the
business of the Company or any of its
Subsidiaries;
(vi) Easements, rights-of-way, restrictions, minor
defects or irregularities in title and other
similar charges or encumbrances not interfering
in any material respect with the ordinary
conduct of the business of the Company or any of
its Subsidiaries;
(vii) Any interest or title of a lessor under any
lease;
(viii) Liens arising from UCC financing statements
regarding leases; and
(ix) Liens in favor of customs and revenue
authorities arising as a matter of law to secure
payment of customs duties in connection with the
importation of goods incurred in the ordinary
course of business.
"Person" means and includes natural persons,
corporations, limited partnerships, general partnerships,
joint stock companies, joint ventures, associations,
companies, trusts, banks, trust companies, land trusts,
business trusts or other organizations, whether or not
legal entities, and any Governmental Authority.
"Potential Event of Default" means a condition or
event which, after notice or lapse of time or both, would
constitute an Event of Default if that condition or event
were not cured or removed within any applicable grace or
cure period.
"Prime Rate" shall mean the rate which BT Co
announces from time to time as its prime lending rate, as
in effect from time to time. The Prime Rate is a
reference rate and does not necessarily represent the
lowest or best rate actually charged to any customer. BT
Co may make commercial loans or other loans at rates of
interest at, above or below the Prime Rate.
"Pro Rata Share" means, when used with reference to
any Bank and any described aggregate or total amount, the
percentage designated as such Bank's Pro Rata Share set
forth under the name of such Bank on the applicable
signature page of this Agreement.
"Reference Banks" means BT Co, Morgan Guaranty Trust
Company of New York and The Chase Manhattan Bank, N.A.
"Regulation D" means Regulation D of the Board as
from time to time in effect and any successor to all or a
portion thereof establishing reserve requirements.
"Reportable Event" means a "reportable event"
described in Section 4043(b) of ERISA or in the
regulations thereunder notice of which to PBGC is required
within 30 days after the occurrence thereof, or receipt of
a notice of withdrawal liability with respect to a Multi-
employer Plan pursuant to Section 4204 of ERISA.
"Required Banks" means, as at any time any
determination thereof is to be made, the Banks holding at
least 66-2/3% of the aggregate Commitments of all the
Banks or, if no Commitments are in effect, 66-2/3% of
Loans outstanding.
"Restricted Subsidiary" means each Subsidiary (or a
group of Subsidiaries that would constitute a Restricted
Subsidiary if consolidated and which are engaged in the
same or related lines of business) of the Company now
existing or hereafter acquired or formed by the Company
which (x) for the most recent fiscal year of the Company,
accounted for more than 5% of the consolidated revenues of
the Company and its Subsidiaries, or (y) as at the end of
such fiscal year, was the owner of more than 5% of the
consolidated assets of the Company and its Subsidiaries.
For purposes of this definition, the proviso to the
definition of Subsidiary shall not be applicable.
"Revolving Notes" means the promissory notes of the
Borrowers issued pursuant to Section 2.4A hereof in
substantially the form of Exhibit A-1 hereto.
"Securities Act" means the Securities Act of 1933, as
from time to time amended, and any successor statutes.
"Subsidiary" means, in respect to any Person, any
corporation, association or other business entity of which
more than 50% of the total voting power of shares of stock
entitled (without regard to the occurrence of any
contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by such Person or one
or more of the other Subsidiaries of such Person or a
combination thereof; provided, however, that no Finance
Company or Insurance Company or any Subsidiary of any
Finance Company or Insurance Company shall be treated as a
Subsidiary of the Company.
"Subsidiary Borrower" means any Subsidiary of the
Company designated as such in writing by the Company;
provided that such Subsidiary shall enter into a Loan
Assumption Agreement in the form annexed hereto as
Exhibit G appropriately completed and that no Loan shall
be made to such Subsidiary until Section 3.4 has been
complied with as to such Subsidiary.
"Syndicated Loan" means a Loan which is made as part
of a Borrowing, is made collectively by the Banks based on
each Bank's Pro Rata Share of such Loan, is made as either
a Base Rate Loan or a Eurodollar Rate Loan and is
requested pursuant to a Notice of Syndicated Borrowing.
"Termination Event" means (i) a Reportable Event with
respect to any Pension Plan, or (ii) the withdrawal of the
Company or any of its ERISA Affiliates from a Pension Plan
during a plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA, or
(iii) the filing of a notice of intent to terminate a
Pension Plan (including any such notice with respect to a
Pension Plan amendment referred to in Section 4041(e) of
ERISA), or (iv) the institution of proceedings to
terminate a Pension Plan by the PBGC, or (v) any other
event or condition which, to the best knowledge of the
Company, would constitute grounds under Section 4042(a) of
ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan.
"Textron Affiliate," as applied to the Company, means
any Person or Persons directly or indirectly controlling
the Company. For purposes of this definition,
controlling, as applied to the Company, means the
possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of
the Company, whether through the ownership of voting
securities or by contract or otherwise. Neither any Bank
nor any parent of any Bank nor any Subsidiary of any such
Bank or parent shall be treated as a Textron Affiliate.
"Textron Affiliate Amount" means, as at any date of
determination, the then aggregate outstanding amount of
all loans and/or advances to any Textron Affiliate from
the Company or any Subsidiary of the Company (without
giving effect to the proviso to the definition of
Subsidiary).
"Total Commitment" means, as at any date of
determination, the aggregate Commitments of all Banks then
in effect (as such Commitments may be reduced from time to
time pursuant to Section 2.9A hereof). The original
amount of the Total Commitment is $1,250,000,000.
"Type" means, in respect of any Syndicated Loan, any
type of Syndicated Loan, i.e., either a Base Rate Loan or
a Eurodollar Rate Loan.
"United States Dollars" or "U.S. Dollars" or "$"
means such coin or currency of the United States of
America as at the time shall be legal tender for the
payment of public and private debts.
1.2 Accounting Terms
For the purposes of this Agreement, all accounting
terms not otherwise defined herein shall have the meanings
assigned to them in conformity with GAAP.
Section 2 AMOUNTS AND TERMS OF COMMITMENTS AND LOANS; NOTES
2.1 Revolving Loans
A. Commitments. (i) Subject to the terms and
conditions of this Agreement and in reliance upon the
representations and warranties of each Borrower herein set
forth, each Bank hereby severally agrees to lend to the
Borrowers from time to time during the period from and
including the Effective Date to and including the Final
Maturity Date its Pro Rata Share of the Total Commitment. Each
Bank's Commitment and the Total Commitment shall expire in full
on the Final Maturity Date.
Amounts borrowed under this Section 2.1A may, subject
to the limitations set forth in this Agreement, be repaid and,
up to but excluding the Final Maturity Date, be reborrowed.
The Syndicated Loans and all other amounts owed hereunder with
respect to the Syndicated Loans shall be paid in full no later
than the Final Maturity Date.
Borrowings on any Funding Date with respect to a
Syndicated Loan under this Section 2.1A(i) shall be in an
aggregate minimum amount of $10,000,000 and integral multiples
of $5,000,000 in excess of that amount or, if less, the
unutilized amount of the Total Commitment. Notwithstanding the
foregoing, (i) Syndicated Loans made by a Bank on any Funding
Date shall not exceed such Bank's Commitment then in effect and
(ii) no Syndicated Loan may be borrowed by the Borrower if the
aggregate principal amount of all Loans outstanding hereunder,
after giving effect to the Loan so requested and all other
Loans then requested which have not yet been funded shall
exceed the Total Commitment then in effect.
(ii) Subject to and upon the terms and conditions
herein set forth, each Bank severally agrees that any Borrower
may incur a Competitive Bid Loan pursuant to a Notice of
Competitive Bid Borrowing from time to time on and after the
Effective Date and prior to the date which is the Business Day
preceding the date which is 30 days prior to the Final Maturity
Date, provided that after giving effect to any Competitive Bid
Loan and the concurrent use of the proceeds thereof the
aggregate principal amount of all Loans outstanding hereunder,
after giving effect to the Loan so requested and all other
Loans then requested which have not yet been funded will not
exceed the Total Commitment then in effect. Within the
foregoing limits and subject to the conditions set forth in
this Agreement, Competitive Bid Loans may be repaid and
reborrowed in accordance with the provisions hereof.
Competitive Bid Loans made on any Funding Date shall be in an
aggregate minimum amount of $10,000,000 and in integral
multiples of $5,000,000 in excess of such amount.
B. Notice of Syndicated Borrowing. Subject to
Section 2.1A, whenever any Borrower desires to borrow under
this Section 2.1, it shall deliver to the Agent a Notice of
Syndicated Borrowing (which may be telephonic, confirmed
promptly in writing) no later than 10:30 A.M. (New York time),
in the case of a Base Rate Loan, on the proposed Funding Date,
and, in the case of a Eurodollar Rate Loan, three Business Days
in advance of the proposed Funding Date. The Notice of
Syndicated Borrowing shall specify (i) the proposed Funding
Date (which shall be a Business Day), (ii) the amount of the
proposed Loans, (iii) whether such Loans are to consist of Base
Rate Loans or Eurodollar Rate Loans or a combination thereof
and the amounts thereof, (iv) the Interest Period(s) therefor
and (v) the aggregate principal amount of Loans outstanding,
after giving effect to the proposed Loan and all other Loans
then requested which have not yet been funded, and that such
aggregate principal amount does not exceed the Total Commitment
then in effect.
Neither the Agent nor any Bank shall incur any
liability to any Borrower in acting upon any telephonic notice
referred to above which the Agent believes in good faith to
have been given by a duly authorized officer or other person
authorized to borrow on behalf of such Borrower or for
otherwise acting in good faith under this Section 2.1B and,
upon funding of Syndicated Loans by the Banks in accordance
with this Agreement pursuant to any telephonic notice, such
Borrower shall have borrowed such Loans hereunder.
Except as provided in Section 2.11D, a Notice of
Syndicated Borrowing for a Eurodollar Rate Loan (or telephonic
notice in lieu thereof) shall be irrevocable on and after the
related Interest Rate Determination Date, and the applicable
Borrower shall be bound to make a borrowing in accordance
therewith.
C. Disbursement of Funds. Promptly after receipt
of a Notice of Syndicated Borrowing pursuant to Section 2.1B
(or telephonic notice in lieu thereof) with respect to a
Syndicated Loan, the Agent shall notify each Bank of the
proposed borrowing. Each Bank shall make its Pro Rata Share of
the amount of such Loans available to the Agent, in same day
funds, at the office of the Agent located at One Bankers Trust
Plaza, New York, New York not later than 12:00 Noon (New York
City time) on the Funding Date. Such Loans of a Bank shall be
equal to such Bank's Pro Rata Share of the aggregate amount of
all such Loans requested by the applicable Borrower pursuant to
the applicable Notice of Syndicated Borrowing. Upon
satisfaction or waiver of the conditions precedent specified in
Section 3.1 (in the case of the Initial Loans) and Sections 3.2
and, if applicable, 3.4 (in the case of all Loans) the Agent
shall make the proceeds of such Loans available to the
applicable Borrower on such Funding Date by causing an amount
of same day funds equal to the proceeds of all such Loans
received by the Agent to be credited to the account of such
Borrower at such office of the Agent.
Unless the Agent shall have been notified by any Bank
(which notice may be telephonic, confirmed promptly in writing)
prior to any Funding Date in respect of any Syndicated Loan
that such Bank does not intend to make available to the Agent
such Pro Rata Share of such Loan on such Funding Date, the
Agent may assume that such Bank has made such amount available
to the Agent on such Funding Date and the Agent in its sole
discretion may, but shall not be obligated to, make available
to the applicable Borrower a corresponding amount on such
Funding Date. If such corresponding amount is not in fact made
available to the Agent by such Bank, the Agent shall be
entitled to recover such corresponding amount on prompt demand
from such Bank together with interest thereon, for each day
from such Funding Date until the date such amount is paid to
the Agent at the customary rate set by the Agent for the
correction of errors among banks for three Business Days and
thereafter at the Base Rate. If such Bank does not pay such
corresponding amount forthwith upon the Agent's demand
therefor, the Agent shall promptly notify the applicable
Borrower and such Borrower shall immediately pay such
corresponding amount to the Agent. Nothing in this
Section 2.1C shall be deemed to relieve any Bank from its
obligation to fulfill its Commitment hereunder or to prejudice
any rights which such Borrower may have against any Bank as a
result of any default by such Bank hereunder.
2.2 Competitive Bid Loans
A. Whenever the Company or a Subsidiary Borrower
desires to incur a Competitive Bid Loan, it shall (i) in the
case of the Company, deliver to the Agent and each Bank, and
(ii) in the case of a Subsidiary Borrower, deliver to the
Company (which shall deliver to the Agent and each Bank), not
later than 11:00 a.m. (New York time) at least one Business Day
prior to the funding date of such proposed Competitive Bid
Loan, a Notice of Competitive Bid Borrowing, such notice to
specify in each case the date of the proposed Competitive Bid
Loan, the aggregate amount of the proposed Competitive Bid
Loan(s), the maturity date for repayment of each Competitive
Bid Loan to be made as part of such Competitive Bid Loans (each
of which maturity dates may not be later than the Business Day
prior to the Final Maturity Date), the interest payment date or
dates relating thereto, and any other terms to be applicable to
such Competitive Bid Loans (including, without limitation, the
basis to be used by the Banks in determining the rate or rates
of interest to be offered by them as provided in Section 2.2B).
No Notice of Competitive Bid Borrowing shall be given earlier
than three Business Days subsequent to the making of the last
Competitive Bid Loan.
B. Each Bank shall, if, in its sole discretion, it
elects to do so, irrevocably offer to make one or more
Competitive Bid Loans to the applicable Borrower as part of
such proposed Competitive Bid Loan at a rate or rates of
interest specified by such Bank in its sole discretion, by
notifying the Company, before 10:00 a.m. (New York City time)
on the date (the "Reply Date") of such proposed Competitive Bid
Loan specified in the Notice of Competitive Bid Borrowing
delivered with respect thereto pursuant to Section 2.2A, of the
minimum amount and maximum amount of each Competitive Bid Loan
which such Bank would be willing to make as part of such
proposed Competitive Bid Loan (which amounts may, subject to
the provisions of Section 2.1A(ii), exceed such Bank's
Commitment); provided that the minimum amount of any Bank's bid
shall be at least $5,000,000. If any Bank shall not notify the
Company, before 10:00 a.m. (New York City time) on the Reply
Date of its offer of a Competitive Bid Loan, such Bank shall be
deemed not to be making an offer with respect to such
Competitive Bid Loan.
C. The Company shall, in turn, before 11:00 a.m.
(New York City time) on the Reply Date, either
(1) cancel such Competitive Bid Loan by giving the
Agent and each Bank notice to that effect (whereupon such
Competitive Bid Loan will not be made), or
(2) accept one or more of the offers made by any
Bank or Banks pursuant to Section 2.2B, in its sole
discretion, by giving notice to the Agent and such Bank of
the amount of each Competitive Bid Loan (which amount
shall be equal to or greater than the minimum amount, and
equal to or less than the maximum amount, notified to the
Company by such Bank or Banks for such Competitive Bid
Loan pursuant to Section 2.2B) to be made by such Bank as
part of such Competitive Bid Loan, and reject any
remaining offers made by Banks pursuant to Section 2.2B
above by giving the Agent and such Bank notice to that
effect.
D. No later than Noon (New York City time) on the
Funding Date of each Competitive Bid Loan, each Bank required
to participate therein will make available its share of such
Competitive Bid Loan (as specified in Section 2.2C) in same day
funds at the office of The Chase Manhattan Bank, N.A. located
at One Chase Manhattan Plaza, New York, New York, ABA No.
021000021, for the account of Textron Inc., ACCOUNT NO.
910-1-013655.
E. Each Competitive Bid Loan shall be payable on
the maturity date specified in the Notice of Competitive Bid
Borrowing relating to such Competitive Bid Loan.
2.3 Notices of Conversion/Continuation
A. Subject to the provisions of Section 2.11
hereof, the applicable Borrower shall have the option (i) to
convert at any time all or any part of its outstanding Base
Rate Loans equal to $10,000,000 and integral multiples of
$5,000,000 in excess of that amount to Eurodollar Rate Loans
and (ii) upon the expiration of any Interest Period applicable
to outstanding Eurodollar Rate Loans, to continue all or any
portion of such Eurodollar Rate Loans equal to $10,000,000 and
integral multiples of $5,000,000 in excess of that amount as
Eurodollar Rate Loans. The succeeding Interest Period(s) of
such converted or continued Eurodollar Rate Loan shall commence
on the date of conversion in the case of clause (i) above and
on the last day of the Interest Period of the Eurodollar Rate
Loans to be continued in the case of clause (ii) above.
The applicable Borrower shall deliver a Notice of
Conversion/Continuation to the Agent no later than 11:00 a.m.
(New York City time) at least three Business Days, in the case
of a conversion into or continuation of Eurodollar Rate Loans,
in advance of the proposed conversion/continuation date. A
Notice of Conversion/Continuation shall specify (i) the
proposed conversion/continuation date (which shall be a
Business Day), (ii) the amount of the Syndicated Loan to be
converted/continued, (iii) the nature of the proposed
conversion/continuation and (iv) the requested Interest Period.
Except as provided in Section 2.11D hereof, a Notice
of Conversion/Continuation for conversion to, or continuation
of, a Eurodollar Rate Loan shall be irrevocable on or after the
related Interest Rate Determination Date, and the applicable
Borrower shall be bound to convert or continue in accordance
therewith.
B. Unless the applicable Borrower shall have given
the Agent (x) a timely Notice of Conversion/Continuation in
accordance with the provisions of Section 2.3A hereof with
respect to Eurodollar Rate Loans outstanding or (y) written
notice of such Borrower's intent to repay Eurodollar Rate
Loans, furnished not later than 11:00 a.m. (New York City time)
on the last day of the Interest Period with respect to such
Eurodollar Rate Loans, the applicable Borrower shall be deemed
to have requested that such Eurodollar Rate Loans be converted
into Base Rate Loans on such day. Such Base Rate Loans shall
be in an aggregate principal amount equal to (i) the aggregate
principal amount of such Eurodollar Rate Loans not intended to
be repaid less (ii) any repayment required to be made on such
date pursuant to Section 2.9 hereof.
2.4 The Revolving Notes and Competitive Bid Notes
A. Each Borrower's obligations to pay the principal
of, and interest on, all the Syndicated Loans made by each Bank
shall be evidenced by a Revolving Note duly executed and
delivered by such Borrower with blanks appropriately completed
in conformity herewith. The Revolving Note issued to each Bank
shall (i) be payable to the order of such Bank, (ii) be dated
the Effective Date, (iii) be in a stated principal amount equal
to the initial Commitment of such Bank and be payable in the
principal amount of the outstanding Syndicated Loans evidenced
thereby, (iv) provide that all Syndicated Loans then
outstanding shall be repaid on the Final Maturity Date as
provided herein, (v) bear interest as provided in the
appropriate clause of Section 2.7 hereof in respect of the Base
Rate Loans, or the Eurodollar Rate Loans, as the case may be,
evidenced thereby, (vi) be entitled to the benefits of this
Agreement, and (vii) have attached thereto a schedule (a
"Syndicated Loans and Principal Payments Schedule")
substantially in the form of the Schedule to Exhibit A-1
hereto. At the time of the making of each Syndicated Loan or
principal payment in respect thereof, each Bank shall, and is
hereby authorized to, make a notation on the Syndicated Loans
and Principal Payments Schedule of the date and the amount of
such Syndicated Loan or payment, as the case may be.
Notwithstanding the foregoing, the failure to make a notation
with respect to the making of any Syndicated Loan, shall not
limit or otherwise affect the obligation of the Borrower
hereunder or under the applicable Note with respect to such
Syndicated Loan and payments of principal by the Borrower shall
not be affected by the failure to make a notation thereof on
the appropriate Syndicated Loans and Principal Payments
Schedule.
B. Each Borrower's obligations to pay the principal
of, and interest on, all the Competitive Bid Loans made by each
Bank shall be evidenced by a Competitive Bid Note duly executed
and delivered by such Borrower with blanks appropriately
completed in conformity herewith. The Competitive Bid Note
issued to each Bank shall (i) be payable to the order of such
Bank, (ii) be dated the Effective Date, (iii) be in a stated
principal amount equal to the Total Commitment and be payable
in the principal amount of the outstanding Competitive Bid
Loans evidenced thereby, (iv) provide that all Competitive Bid
Loans then outstanding shall be repaid on the dates agreed to
between such Borrower and such Bank and, in any event, not
later than the Final Maturity Date, (v) bear interest at the
rates and have interest payable on the dates agreed to between
such Borrower and such Bank, (vi) be entitled to the benefits
of this Agreement, and (vii) have attached thereto a schedule
(a "Competitive Bid Loans and Principal Payments Schedule")
substantially in the form of the Schedule to Exhibit A-2
hereto. At the time of the making of each Competitive Bid Loan
or principal payment in respect thereof, each Bank shall, and
is hereby authorized to, make a notation on the Competitive Bid
Loans and Principal Payments Schedule of the date and the
amount of such Competitive Bid Loan or payment, as the case may
be. Notwithstanding the foregoing, the failure to make a
notation with respect to the making of any Competitive Bid
Loan, shall not limit or otherwise affect the obligation of the
Borrower hereunder or under the applicable Note with respect to
such Competitive Bid Loan and payments of principal by the
Borrower shall not be affected by the failure to make a
notation thereof on the appropriate Competitive Bid Loans and
Principal Payments Schedule.
2.5 Pro Rata Borrowings
The Syndicated Loans comprising each Borrowing under
this Agreement shall be made by the Banks simultaneously and
each Bank's Syndicated Loan shall be equal to such Bank's Pro
Rata Share of such Borrowing. It is understood that no Bank
shall be responsible for any default by any other Bank in its
obligation to make a Loan hereunder and that each Bank shall be
obligated to make the Loans provided to be made by it hereunder
subject to the terms hereof, regardless of the failure of any
other Bank to fulfill its commitment to make Loans hereunder.
If, as a result of an error in the determination of any Bank's
Pro Rata Share of a Borrowing with respect to a Syndicated
Loan, a Bank makes a Syndicated Loan in excess of its Pro Rata
Share (an "Erroneous Loan") the applicable Borrower shall, upon
the request of the Agent, repay a portion of such Syndicated
Loan equal to such excess or, within two days of receiving
written notice of such error, correct such error by effecting a
Borrowing of Syndicated Loans having a comparable maturity to
the then remaining maturity of the Erroneous Loan (a
"Correcting Loan") and allocating the Correcting Loan among the
Banks such that, after such allocation, the sum of the
principal amounts of the Erroneous Loan and the Correcting Loan
held by each Bank shall represent such Bank's Pro Rata Share of
the sum of the aggregate principal amounts of the Erroneous
Loans and the Correcting Loans held by all Banks; provided,
however, that the Borrower may not incur Correcting Loans if,
after giving effect to such Correcting Loans, the outstanding
Syndicated Loans of any Bank shall exceed such Bank's
Commitment or if the aggregate principal amount of all Loans
outstanding would exceed the Total Commitment then in effect.
Borrowings of Correcting Loans shall be subject to all of the
terms and conditions of Borrowings hereunder.
2.6 Procedure for Extending Maturity Dates
Subject to the conditions set forth in this Section
2.6, the Company, with the consent of the holders of 100% of
the Commitments (the "Holders"), shall have the option to
extend the Final Maturity Date and, if any such Date is so
extended, the Facility Extension Date (collectively, the
"Maturity Dates") for a period of 364 days from the then date
thereof. The Company may exercise such option at any time and
from time to time as follows:
(i) Not more than 60 and not less than 45 days prior
to the Facility Extension Date then in effect, the Company
shall notify the Agent and each Holder in writing (an
"Extension Notice") of its desire to extend the Maturity
Dates to a date which is exactly 364 days after the
Maturity Dates then in effect.
(ii) If on or prior to the 15th day prior to the
Facility Extension Date all Persons then Holders consent
to such extension in a writing delivered to the Agent and
the Company, the Maturity Dates then in effect which are
requested in the applicable Extension Notice to be
extended shall be extended automatically to a date which
is 364 days after such Maturity Dates then in effect.
(iii) If any Holder shall have objected to the
extension of any Maturity Date in a writing delivered to
the Agent and the Company on or prior to the 30th day
prior to the applicable Facility Extension Date or any
Holder has not delivered the notice described in Section
2.6(ii) by such 30th day (each such Holder, an "Electing
Holder"; collectively, the "Electing Holders"), then the
Company may, on or prior to the 15th day prior to the
Facility Extension Date, replace such Electing Holder in
accordance with the second to last sentence of Section
10.15.
2.7 Interest
A. Rate of Interest on Loans
(i) Each Borrower agrees to pay interest in respect
of the unpaid principal amount of each Syndicated Loan made to
it from and including the date made to but not including the
date repaid.
(a) Each Eurodollar Rate Loan shall bear interest on
the unpaid principal amount thereof for the applicable
Interest Period at an interest rate per annum equal to the
sum of the Applicable Margin plus the applicable Adjusted
Eurodollar Rate. The "Applicable Margin" for any Interest
Period means the applicable percentage amount set forth in
the table below based upon the rating issued by Standard &
Poor's Corporation and Moody's Investors Service, Inc. for
the Company's long-term unsecured indebtedness at the
Interest Rate Determination Date for such Interest Period:
Rating Category* Applicable Margin
A/A2 or higher .225%
A-/A3 .250%
BBB+/Baa1 .375%
BBB/Baa2 .400%
BBB-/Baa3 or lower
or no rating .500%
______________
* In the case of "split" ratings (i.e., if the ratings of
each such rating agency differ by one or more categories,
including numerical modifiers and (+) and (-) as
categories), the Applicable Margin will be based upon the
higher of the two ratings.
(b) Each Base Rate Loan shall bear interest on the
unpaid principal thereof for the applicable Interest
Period at an interest rate per annum equal to the
applicable Base Rate.
The Agent shall determine each interest rate applicable to the
Loans hereunder. The Agent shall give prompt notice to the
applicable Borrower and the Banks of each rate of interest so
determined, and its determination thereof shall be conclusive
in the absence of manifest error.
(ii) Each Borrower agrees to pay interest in respect
of the unpaid principal amount of each Competitive Bid Loan
made to it from and including the date made up to but not
including the date repaid at the rate or rates per annum as may
be mutually agreed upon by such Borrower and the Bank making
the Competitive Bid Loan.
B. Interest Periods
In connection with each Eurodollar Rate Loan, the
applicable Borrower shall elect an interest period (each an
"Interest Period") to be applicable to such Eurodollar Rate
Loan which Interest Period shall be either a one, two, three or
six month period or, if permitted under clause (v) of this
Section 2.7B, a nine or twelve month period; provided that:
(i) the Interest Period for each Eurodollar Rate
Loan shall commence on the date of such Eurodollar Rate
Loan;
(ii) if an Interest Period would otherwise expire on
a day which is not a Business Day, such Interest Period
shall expire on the next succeeding Business Day; provided
that if any Interest Period would otherwise expire on a
day which is not a Business Day but is a day of the month
after which no further Business Day occurs in such month,
such Interest Period shall expire on the next preceding
Business Day;
(iii) any Interest Period which begins on the last
Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall, subject
to clause (iv) below, end on the last Business Day of such
ending calendar month;
(iv) no Interest Period shall extend beyond the Final
Maturity Date;
(v) no Eurodollar Rate Loan shall have an Interest
Period of nine or twelve months unless the Agent, after
consultation with the Banks, has determined in good faith
based on prevailing conditions in the Eurodollar market on
any date of determination that U.S. Dollar deposits are
generally offered by the Banks to first class banks in the
Eurodollar market for a comparable maturity; and
(vi) there shall be no more than 30 Interest Periods
outstanding at any time.
C. Interest Payments. Interest shall be payable on
each (i) Syndicated Loan in arrears on each Interest Payment
Date applicable to that Loan, and (ii) Competitive Bid Loan, at
such times as agreed to by the applicable Borrower and the Bank
making such Competitive Bid Loan (which shall be the scheduled
maturity date of such Loan if less than 180 days after the
making of such Loan), and in each case upon any prepayment of
that Loan (to the extent accrued on the amount being prepaid)
and when due and payable (whether at maturity, by acceleration
or otherwise).
D. Computation of Interest. Interest on Syndicated
Loans shall be computed on the basis of a 360-day year and the
actual number of days elapsed in the period during which it
accrues. Interest on a Competitive Bid Loan shall be computed
on the basis set forth in the applicable Notice of Competitive
Bid Borrowing. In computing interest on any Loan, the date of
the making of the Loan or, in the case of a Eurodollar Rate
Loan, the first day of an Interest Period, as the case may be,
shall be included and the date of payment or the expiration of
an Interest Period, as the case may be, shall be excluded;
provided that if a Loan is repaid on the same day on which it
is made, one day's interest shall be paid on that Loan.
E. Post-Maturity Interest. Any principal payments
on the Loans not paid when due and, to the extent permitted by
applicable law, any interest payment on the Loans not paid when
due, in each case whether at stated maturity, by notice of
prepayment, by acceleration or otherwise, shall thereafter bear
interest payable upon demand at a rate which is 1% per annum in
excess of the rate of interest otherwise payable under this
Agreement for Prime Rate Loans.
2.8 Commissions and Fees
A. Facility Fees. (i) The Company shall pay to
the Agent for the account of the Banks a facility fee accrued
from and including the Effective Date to and including the
Final Maturity Date on the daily average aggregate amount of
the Commitments (whether used or unused) based upon the rating
issued by Standard & Poor's Corporation and Moody's Investors
Service, Inc. for the Company's long-term unsecured
indebtedness at the beginning of each fiscal quarter of the
Company:
Rating Category* Facility Fee
A/A2 or higher .1500%
A-/A3 .1875%
BBB+/Baa1 .1875%
BBB/Baa2 .2250%
BBB-/Baa3 or lower .2500%
or no rating
______________
* In the case of "split" ratings (i.e., if the ratings of
each such rating agency differ by one or more categories,
including numerical modifiers and (+) and (-) as
categories), the facility fee will be based upon the
higher of the two ratings.
(ii) Such facility fees shall be computed on the
basis of a year of 360 days and paid for the actual number of
days elapsed. Such facility fees shall be paid quarterly in
arrears on each March 31, June 30, September 30 and December 31
and on the Final Maturity Date. From the effective date of any
termination or reduction of Commitments, such facility fees
shall cease to accrue or be correspondingly reduced. If the
Commitments are terminated in their entirety or reduced,
facility fees accrued on the total Commitments, or accrued on
the aggregate amount of the reduction of the Commitments (in
the case of such a reduction), shall be payable on the
effective date of such termination or reduction.
(iii) Upon receipt of any amount representing fees
paid pursuant to this Section 2.8, the Agent shall pay such
amount to the Banks based upon their respective Pro Rata
Shares.
B. Administrative Fees. The Company agrees to pay
to the Agent an annual fee (the "Administrative Fee") in an
amount equal to the amount previously agreed to in writing by
the Company and the Agent. Such Administrative Fee shall be
payable quarterly in advance commencing on the first quarterly
anniversary of the date of this Agreement and on each
successive quarterly anniversary of such date, so long as any
Loan or Commitment is outstanding on such date.
C. Time of Payment. The Company shall make payment
of each Bank's facility fee and of the Agent's Administrative
Fee hereunder, not later than Noon (New York City time) on the
date when due in freely transferable U.S. Dollars and in
immediately available funds, to the Agent at its Payment
Office.
2.9 Reductions in Commitments;
Repayments and Payments___
A. Reductions of Total Commitment. After the
Effective Date, the Company shall have the right, upon at least
three Business Days' prior irrevocable written notice to the
Agent, who will promptly notify the Banks thereof, by telephone
confirmed in writing, without premium or penalty, to reduce or
terminate the Total Commitment, in whole at any time or in part
from time to time, in minimum aggregate amounts of $10,000,000
(unless the Total Commitment at such time is less than
$10,000,000, in which case, in an amount equal to the Total
Commitment at such time) and, if such reduction is greater than
$10,000,000, in integral multiples of $5,000,000 in excess of
such amount, provided that (a) any such reduction of the Total
Commitment shall apply to the Commitment of each Bank in
accordance with its Pro Rata Share of the aggregate of such
reduction and (b) any such reduction in the Total Commitment
shall be permanent.
B. Voluntary Repayments. (i) The applicable
Borrower shall have the right to repay any Base Rate Loan in
whole at any time or in part from time to time, and any
Eurodollar Rate Loan on the last day of the Interest Period
with respect thereto, without premium or penalty in an
aggregate minimum amount of $10,000,000 and integral multiples
of $5,000,000 in excess of that amount or, if less, the
outstanding principal amount of such Loan; provided that no
Loan, either in whole or in part, may be repaid on the
Borrowing Date of such Loan. The applicable Borrower shall
give notice (by telex or telecopier, or by telephone (confirmed
in writing promptly thereafter)) (which shall be irrevocable)
to the Agent and each Bank of each proposed repayment
hereunder, (x) with respect to Base Rate Loans, not later than
10:30 a.m. on the day of the proposed repayment and (y) with
respect to Eurodollar Rate Loans, at least three Business Days
prior to the day of the proposed repayment, and in each case
shall specify the proposed repayment date (which shall be a
Business Day), the aggregate principal amount of the proposed
repayment and what Types of Loans are to be repaid and the
Borrowing(s) pursuant to which made.
(ii) If there exists an Event of Default or a
Potential Event of Default and any Syndicated Loans are
outstanding, no Borrower may prepay all or any portion of the
principal amount of any Competitive Bid Loan prior to the
maturity thereof.
C. Mandatory Repayments. (i) Upon any partial or
total reduction of a Bank's Commitment, each Borrower shall
simultaneously therewith repay such Bank's Syndicated Loans in
a principal amount equal to the amount, if any, by which the
aggregate principal amount of such Bank's Syndicated Loans
outstanding exceeds such Bank's Commitment as so reduced.
(ii) Each Borrower shall repay to the relevant Bank
(which shall promptly furnish notice thereof to the Agent) the
unpaid principal amount of each Competitive Bid Loan made by
such Bank hereunder on the maturity date with respect thereto
and shall repay to the Agent the unpaid principal amount of
each Syndicated Loan on the Final Maturity Date, in each case,
together with all accrued and unpaid interest thereon. Upon
obtaining knowledge of an Event of Default, a Potential Event
of Default, or any other default with respect to a Competitive
Bid Loan, the Bank which made such Competitive Bid Loan shall
notify the Agent thereof.
D. Method and Place of Payment. Except as otherwise
specifically provided herein, all payments to be made by the
applicable Borrower on account of principal and interest on
each Loan shall be made without setoff or counterclaim and
shall be made, in the case of a Syndicated Loan, to the Agent
for the ratable account of each Bank, and, in the case of a
Competitive Bid Loan, to the relevant Bank, in each case not
later than Noon (New York City time) on the date when due and
shall be made in freely transferable U.S. Dollars in
immediately available funds at the Agent's or such Bank's
Payment Office, respectively. Whenever any payment with
respect to any Loan shall be due on a day which is not a
Business Day, the due date thereof shall be extended to the
next succeeding Business Day and, with respect to payments of
principal, interest shall be payable at the applicable rate
during such extension; provided, however, that with respect to
Eurodollar Rate Loans, if the next succeeding Business Day
falls in another calendar month, such payments shall be made on
the next preceding Business Day. The Agent shall remit to each
Bank its Pro Rata Share of all such payments received in
collected funds by the Agent for the account of such Bank in
respect of which such payment is made. Such payments shall be
made at the Payment Office of the Agent. Upon receipt of any
principal payment with respect to a Competitive Bid Loan, the
receiving Bank shall promptly (and in any event within one
Business Day thereof) notify the Agent with respect thereto.
E. Net Payments. (i) All payments by the
applicable Borrower or the Company under this Agreement and/or
the Notes shall be made without setoff or counterclaim and
(unless, in the case of Competitive Bid Loans only, otherwise
agreed to between the Borrower and the Bank making any such
Competitive Bid Loan), in such amounts as may be necessary in
order that all such payments (after deduction or withholding
for or on account of any present or future taxes, levies,
imposts, duties or other charges of whatsoever nature imposed
by any Governmental Authority, other than any tax on or
measured by the net income of a Bank pursuant to the income tax
laws of the United States or of the jurisdictions where such
Bank's principal or lending offices are located (collectively,
"Taxes")) shall not be less than the amounts otherwise
specified to be paid under this Agreement and/or the Notes. If
the applicable Borrower or the Company is required by law to
make any deduction or withholding from any payment due
hereunder, then the amount payable will be increased to such
amount which, after deduction from such increased amount of all
amounts required to be deducted or withheld therefrom, will not
be less than the amount otherwise due and payable. Without
prejudice to the foregoing, if any Bank or the Agent is
required to make any payment on account of Taxes, the Company
will, upon notification by the Bank or the Agent promptly
indemnify such person against such Taxes, together with any
interest, penalties and expenses payable or incurred in
connection therewith. The Company shall also reimburse each
Bank, upon the written request of such Bank, for taxes imposed
on or measured by the net income of such Bank pursuant to the
laws of the United States of America, any State or political
subdivision thereof, or the jurisdiction in which the principal
office or lending office of such Bank is located or under the
laws of any political subdivision or taxing authority of any
such jurisdiction as such Bank shall determine are payable by
such Bank in respect of Taxes paid to or on behalf of such Bank
pursuant to Section 2. For purposes of this Section, the term
"Taxes" includes interest, penalties and expenses payable or
incurred in connection therewith. A certificate as to any
additional amounts payable to a Bank under this Section 2.9E
submitted to the Company by such Bank shall, absent manifest
error, be final, conclusive and binding for all purposes upon
all parties hereto. With respect to each deduction or
withholding for or on account of any Taxes, the Company shall
promptly furnish to each Bank such certificates, receipts and
other documents as may be required (in the judgment of such
Bank) to establish any tax credit to which such Bank may be
entitled.
(ii) Each Bank shall supply to the Company, within a
reasonable period after the date of execution of this
Agreement, executed copies of Internal Revenue Service Form
4224 or Form 1001 (which indicates that the respective Bank is
entitled to receive interest exempt from United States
withholding tax) or any successor Forms, and shall update such
Forms as necessary in order to retain their effectiveness, to
the extent each such Bank is legally entitled to execute and
deliver either of such Forms.
(iii) With respect to any Taxes which are paid by any
Borrower in accordance with the provisions of this Section
2.9E, each Bank receiving the benefits of such payments of
Taxes hereby agrees to pay to such Borrower any amounts
refunded to such Bank which such Bank determines in its sole
discretion to be a refund in respect of such Taxes.
F. Order of Payment. Subject to the last sentence
of this Section 2.9F, all payments made by the applicable
Borrower to the Agent (other than payments to the Agent in its
capacity as a Bank which has made Competitive Bid Loans to such
Borrower and or in connection with any fee or indemnification
payments not specifically designated under the terms of this
Agreement as being for the benefit of the Banks) shall be
applied by the Agent, on behalf of each Bank based on its Pro
Rata Share, (a) first, to the payment of expenses referred to
in Section 10.2 hereof, (b) second, to the payment of the fees
referred to in Section 2.8 hereof, (c) third, to the payment of
accrued and unpaid interest on such Bank's Base Rate Loans
until all such accrued interest has been paid, (d) fourth, to
the payment of accrued and unpaid interest on such Bank's
Eurodollar Rate Loans until all such accrued interest has been
paid, (e) fifth, to the payment of the unpaid principal amount
of such Bank's Base Rate Loans, and (f) sixth, to the payment
of the unpaid principal amount of such Bank's Eurodollar Rate
Loans. Notwithstanding the foregoing, upon the occurrence and
during the continuance of a Potential Event of Default or an
Event of Default, all payments made by the applicable Borrower
with respect to Loans shall be made to the Agent and after
being applied in accordance with clauses (a) and (b) of this
Section 2.9F, shall be paid to the Banks pro rata based upon
the aggregate principal amount of Loans outstanding made by
each Bank, and the payments allocable to Syndicated Loans shall
then be applied in accordance with clauses (c), (d) and (f) of
this Section 2.9F.
2.10 Use of Proceeds
The proceeds of the Loans made by the Banks to the
Borrowers may be used for acquisitions, repurchases of capital
stock of the Company, the funding of dividends payable to
shareholders of the Company and for general corporate purposes
of the Borrowers.
2.11 Special Provisions Governing Eurodollar Rate
Loans and/or Competitive Bid Loans__________
Notwithstanding any other provisions of this
Agreement, the following provisions shall govern with respect
to Eurodollar Rate Loans and Competitive Bid Loans as to the
matters covered, unless, in the case of Competitive Bid Loans,
otherwise agreed to between the Borrower and the Bank making
any such Competitive Bid Loan:
A. Determination of Interest Rate. As soon as
practicable after 10:00 a.m. (New York City time) on an
Interest Rate Determination Date, the Agent shall
determine (which determination shall, absent manifest
error, be final, conclusive and binding upon all parties)
the interest rate which shall apply to the Eurodollar Rate
Loans for which an interest rate is then being determined
for the applicable Interest Period and shall promptly give
notice thereof (in writing or by telephone confirmed in
writing) to the Borrower requesting such Eurodollar Loan
and to each Bank.
B. Substituted Rate of Borrowing. In the event that
on any Interest Rate Determination Date any Bank
(including the Agent) shall have determined (which
determination shall be final and conclusive and binding
upon all parties but, with respect to the following
clauses (i) and (ii)(b), shall be made only after
consultation with the Company and the Agent) that:
(i) by reason of any changes arising after the
date of this Agreement affecting the Eurodollar
market or affecting the position of that Bank in such
market, adequate and fair means do not exist for
ascertaining the applicable interest rate by
reference to the Eurodollar Rate with respect to the
Eurodollar Rate Loans as to which an interest rate
determination is then being made; or
(ii) by reason of (a) any change (including any
changes proposed or published prior to the date
hereof) after the date hereof in any applicable law
or any governmental rule, regulation or order (or any
interpretation or administration thereof and
including the introduction of any new law or
governmental rule, regulation or order (including any
thereof proposed or published, prior to the date
hereof)) or (b) other circumstances affecting that
Bank or the Eurodollar market or the position of that
Bank in such market (such as, for example, but not
limited to, official reserve requirements required by
Regulation D to the extent not given effect in the
Eurodollar Rate), the Adjusted Eurodollar Rate shall
not represent the effective pricing to that Bank for
Dollar deposits of comparable amounts for the
relevant period;
then, and in any such event, that Bank shall be an
Affected Bank and it shall promptly (and in any event as
soon as possible after being notified of a Borrowing) give
notice (by telephone confirmed in writing) to the
applicable Borrower and the Agent (which notice the Agent
shall promptly transmit to each other Bank) of such
determination. Thereafter, such Borrower shall pay to the
Affected Bank with respect to such Eurodollar Rate Loans,
upon written demand therefor, but only if such demand is
made within 60 days of the end of the fiscal quarter in
which such Interest Rate Determination Date falls, such
additional amounts (in the form of an increased rate of,
or a different method of calculating, interest or
otherwise as the Affected Bank in its sole discretion
shall reasonably determine) as shall be required to cause
the Affected Bank to receive interest with respect to such
Affected Bank's Eurodollar Rate Loans for the Interest
Period following that Interest Rate Determination Date
(such Interest Period being an "Affected Interest Period")
at a rate per annum equal to the Applicable Margin in
excess of the effective pricing to the Affected Bank for
Dollar deposits to make or maintain Eurodollar Rate Loans.
A certificate as to additional amounts owed the Affected
Bank, showing in reasonable detail the basis for the
calculation thereof, submitted in good faith to the
applicable Borrower and the Agent by the Affected Bank
shall, absent manifest error, be final, conclusive and
binding for all purposes.
C. Required Termination and Prepayment. In the
event that on any date any Bank shall have reasonably
determined (which determination shall be final and
conclusive and binding upon all parties) that the making
or continuation of its Eurodollar Rate Loans (i) has
become unlawful by, or would be inconsistent with,
compliance by that Bank in good faith with any law,
governmental rule, regulation or order (whether or not
having the force of law and whether or not failure to
comply therewith would be unlawful), or (ii) has become
impracticable as a result of a contingency occurring after
the date of this Agreement which materially and adversely
affects the Eurodollar market, then, and in any such
event, that Bank shall be an Affected Bank and it shall
promptly give notice (by telephone confirmed in writing)
to the applicable Borrower and the Agent (which notice the
Agent shall promptly transmit to each Bank) of that
determination. Subject to the prior withdrawal of a
Notice of Syndicated Borrowing or prepayment of the
Eurodollar Rate Loans of the Affected Bank as contemplated
by the following Section 2.11D hereof, the obligation of
the Affected Bank to make Eurodollar Rate Loans during any
such period shall be terminated at the earlier of the
termination of the Interest Period then in effect or when
required by law and the applicable Borrower shall no later
than the termination of the Interest Period in effect at
the time any such determination pursuant to this Section
2.11C is made or earlier, when required by law, repay
Eurodollar Rate Loans of the Affected Bank together with
all interest accrued thereon.
D. Options of the Borrowers. In lieu of paying an
Affected Bank such additional moneys as are required by
Section 2.11B, 2.11I or 2.12 hereof or the prepayment of
an Affected Bank required by Section 2.11C, hereof but in
no event in derogation of Section 2.11E hereof, any
Borrower may exercise any one of the following options:
(i) If the determination by an Affected Bank
relates only to Eurodollar Rate Loans then being
requested by such Borrower pursuant to a Notice of
Syndicated Borrowing or a Notice of Conver-
sion/Continuation, the Borrower may by giving notice
(by telephone confirmed in writing) to the Agent (who
shall promptly give similar notice to each Bank) no
later than the date immediately prior to the date on
which such Eurodollar Rate Loans are to be made,
withdraw as to the Affected Bank that Notice of
Syndicated Borrowing or Notice of
Conversion/Continuation, as the case may be; or
(ii) Upon written notice to the Agent and each
Bank, such Borrower may terminate the obligations of
the Banks to make Loans as, and to convert Loans
into, Eurodollar Rate Loans and in such event, the
Borrower shall, prior to the time any payment
pursuant to Section 2.11C hereof is required to be
made or, if the provisions of Section 2.11B hereof
are applicable, at the end of the then current
Interest Period, convert all of such Eurodollar Rate
Loans into Base Rate Loans; or
(iii) Such Borrower may give notice (by telephone
confirmed in writing) to the Affected Bank and the
Agent (who shall promptly give similar notice to each
Bank) and require the Affected Bank to make the
Eurodollar Rate Loan then being requested as a Base
Rate Loan or to continue to maintain its outstanding
Base Rate Loan then the subject of a Notice of
Conversion/Continuation as a Base Rate Loan or to
convert its Eurodollar Rate Loan then outstanding
that is so affected into Base Rate Loans at the end
of the then current Interest Period (or at such
earlier time as prepayment is otherwise required to
be made pursuant to Section 2.11C hereof), that
notice to pertain only to the Loans of the Affected
Bank and to have no effect on the obligations of the
other Banks to make or maintain Eurodollar Rate Loans
or to convert Base Rate Loans into Eurodollar Rate
Loans.
E. Compensation. The Company shall compensate each
Bank, upon written request by that Bank (which request
shall set forth in reasonable detail the basis for
requesting such amounts), for all reasonable losses,
expenses and liabilities (including, without limitation,
any interest paid by that Bank to lenders of funds
borrowed by it to make or carry its Eurodollar Rate Loans
and Competitive Bid Loans and any loss (other than loss of
margins) sustained by that Bank in connection with the
re-employment of such funds), which that Bank may sustain
with respect to any Borrower's Eurodollar Rate Loans or
Competitive Bid Loans if for any reason (other than a
default or error by that Bank) (i) a borrowing of any
Eurodollar Rate Loan or Competitive Bid Loan does not
occur on a date specified therefor in a Notice of
Borrowing or a telephonic request for borrowing, (ii) any
repayment or conversion of any of such Bank's Eurodollar
Rate Loans or Competitive Bid Loans occurs on a date which
is not the last day of the Interest Period applicable to
that Eurodollar Rate Loan or Competitive Bid Loan (if
applicable), (iii) any repayment of any such Bank's
Eurodollar Rate Loans or Competitive Bid Loans is not made
on any date specified in a notice of repayment given by
the Borrower, or (iv) as a consequence of any other
failure by the Borrower to repay such Bank's Eurodollar
Rate Loans or Competitive Bid Loans when required by the
terms of this Agreement.
F. Quotation of Eurodollar Rate. Anything herein
to the contrary notwithstanding, if on any Interest Rate
Determination Date no Eurodollar Rate is available by
reason of the failure or inability of all Reference Banks
to provide offered quotations to the Agent in accordance
with the definition of "Eurodollar Rate", the Agent shall
give the applicable Borrowers and each Bank prompt notice
thereof and the Syndicated Loans requested shall be made
as Base Rate Loans.
G. Affected Bank's Obligation to Mitigate. Each
Bank agrees that, as promptly as practicable after it
becomes aware of the occurrence of an event or the
existence of a condition that would cause it to be an
Affected Bank under Section 2.11B or 2.11C hereof, it
will, to the extent not inconsistent with such Bank's
internal policies, use reasonable efforts to make, fund or
maintain the affected Eurodollar Rate Loans of such Bank
through another lending office of such Bank if as a result
thereof the additional moneys which would otherwise be
required to be paid in respect of such Loans pursuant to
Section 2.11B hereof would be materially reduced or the
illegality or other adverse circumstances which would
otherwise require prepayment of such Loans pursuant to
Section 2.11C hereof would cease to exist and if, as
determined by such Bank, in its sole discretion, the
making, funding or maintaining of such Loans through such
other lending office would not otherwise materially
adversely affect such Loans or such Bank. The Company
hereby agrees to pay all reasonable expenses incurred by
any Bank in utilizing another lending office of such Bank
pursuant to this Section 2.11G.
H. Booking of Eurodollar Rate Loans. Any Bank may
make, carry or transfer Eurodollar Rate Loans at, to, or
for the account of, any of its branch offices or the
office of an Affiliate of that Bank.
I. Increased Costs. Except as provided in Section
2.11B, if, by reason of (x) after the date hereof, the
introduction of or any change (including, without
limitation, any change by way of imposition or increase of
reserve requirements) in or in the interpretation of any
law or regulation (whether or not proposed or published
prior to the date hereof), or (y) the compliance with any
guideline or request from any central bank or other
Governmental Authority or quasi-governmental authority
exercising control over banks or financial institutions
generally (whether or not having the force of law):
(i) any Bank (or its applicable lending office)
shall be subject to any tax, duty or other charge
with respect to its Eurodollar Rate Loans or
Competitive Bid Loans or its obligation to make
Eurodollar Rate Loans or Competitive Bid Loans, or
shall change the basis of taxation of payments to any
Bank of the principal of or interest on its
Eurodollar Rate Loans or Competitive Bid Loans or its
obligation to make Eurodollar Rate Loans or
Competitive Bid Loans (except for changes in the rate
of tax on the overall net income of such Bank or its
applicable lending office imposed by the jurisdiction
in which such Bank's principal executive office or
applicable lending office is located); or
(ii) any reserve (including, without limitation,
any imposed by the Board), special deposit or similar
requirement against assets of, deposits with or for
the account of, or credit extended by, any Bank's
applicable lending office shall be imposed or deemed
applicable or any other condition affecting its
Eurodollar Rate Loans or Competitive Bid Loans or its
obligation to make Eurodollar Rate Loans or
Competitive Bid Loans shall be imposed on any Bank or
its applicable lending office or the interbank
Eurodollar market;
and as a result thereof there shall be any increase in the
cost to that Bank of agreeing to make or making, funding
or maintaining Eurodollar Rate Loans or Competitive Bid
Loans (except to the extent already included in the
determination of the applicable Adjusted Eurodollar Rate
or the rate on a Competitive Bid Loan), or there shall be
a reduction in the amount received or receivable by that
Bank or its applicable lending office, then the Borrower
shall from time to time, upon written notice from and
demand by that Bank (which shall be promptly furnished
upon the Banks being made subject thereto) (with a copy of
such notice and demand to the Agent), pay to the Agent for
the account of that Bank, within five Business Days after
the date specified in such notice and demand, additional
amounts sufficient to indemnify that Bank against such
increased cost. A certificate as to the basis for and
calculation of the amount of such increased cost,
submitted to the Borrower and the Agent by that Bank,
shall, absent manifest error, be final, conclusive and
binding for all purposes.
J. Assumption Concerning Funding of Eurodollar Rate
Loans. Calculation of all amounts payable to a Bank under
this Section 2.11 in respect of a Eurodollar Rate Loan
shall be made as though that Bank had actually funded its
Eurodollar Rate Loan through the purchase of a Eurodollar
deposit, bearing interest at the Eurodollar Rate
applicable to such Eurodollar Rate Loan in an amount equal
to the amount of the Eurodollar Rate Loan and having a
maturity comparable to the relevant Interest Period and
through the transfer of such Eurodollar deposit, from an
offshore office of that Bank to a domestic office of that
Bank in the United States of America; provided, however,
that each Bank may fund each of its Eurodollar Rate Loans
in any manner it sees fit and the foregoing assumption
shall be utilized only for the calculations of amounts
payable under this Section 2.11.
K. Eurodollar Rate Loans and Competitive Bid Loans
After Default. Unless the Required Banks shall otherwise
agree, after the occurrence of and during the continuance
of a Potential Event of Default or an Event of Default,
the Borrowers may not elect to have a Eurodollar Rate Loan
or Competitive Bid Loan be made or have any Eurodollar
Rate Loan continued or have any Base Rate Loan converted
into a Eurodollar Rate Loan.
L. Eurodollar Rate Taxes. The Company agrees that:
(i) Promptly upon notice from any Bank to the
Company, the Company will pay, prior to the date on
which penalties attach thereto, all present and
future income, stamp and other taxes, levies, or
costs and charges whatsoever imposed, assessed,
levied or collected on or in respect of any
Borrower's Eurodollar Rate Loans solely as a result
of the interest rate being determined by reference to
the Eurodollar Rate, as the case may be, and/or the
provisions of this Agreement relating to the
Eurodollar Rate and/or the recording, registration,
notarization or other formalization of any thereof
(all such taxes, levies, costs and charges being
herein collectively called "Eurodollar Rate Taxes");
provided that Eurodollar Rate Taxes shall not include
taxes imposed on or measured by the overall net
income of that Bank by the country under the laws of
which such Bank is organized or any political
subdivision or taxing authority thereof or therein,
or taxes imposed on or measured by the overall income
of any branch or subsidiary of that Bank (whether
gross or net income) by any jurisdiction or
subdivision thereof in which that branch or
subsidiary is doing business. The Company shall also
pay such additional amounts equal to increases in
taxes payable by that Bank which increases are
attributable to payments made by the Company
described in the immediately preceding sentence or
this sentence. Promptly after the date on which
payment of any such Eurodollar Rate Tax is due
pursuant to applicable law, the Company will, at the
request of that Bank, furnish to that Bank evidence,
in form and substance satisfactory to that Bank, that
the Company has met its obligation under this Section
2.11L; and
(ii) The Company will indemnify each Bank
against, and reimburse each Bank on demand for, any
Eurodollar Rate Taxes payable under clause (i) above,
as the case may be, as determined by that Bank in its
good faith discretion. That Bank shall provide the
Company with appropriate receipts for any payments or
reimbursements made by the Borrower pursuant to this
clause (ii) of Section 2.11L.
2.12 Capital Requirements
If while any portion of the Total Commitment is in
effect or any Loans are outstanding, any Bank determines that
the adoption of any law, treaty, rule, regulation, guideline or
order regarding capital adequacy or capital maintenance or any
change therein, or any change in the interpretation or
administration thereof by any Governmental Authority, central
bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such Bank, with any
request or directive regarding capital adequacy or capital
maintenance (whether or not having the force of law and whether
or not the failure to comply therewith would be unlawful) of
any such Governmental Authority, central bank or comparable
agency, has or would have the effect of increasing the amount
of capital required to be maintained by such Bank (including,
without limitation, with respect to any Bank's Commitment or
Competitive Bid Loans outstanding), then the Company shall from
time to time, within 15 days of written notice and demand from
such Bank (with a copy to the Agent), pay to the Agent, for the
account of such Bank, additional amounts sufficient to
compensate such Bank for the cost of such additional required
capital. A certificate showing in reasonable detail the
computations made in arriving at such cost, submitted to the
Company and the Agent by such Bank shall, absent manifest
error, be final, conclusive and binding for all purposes.
2.13 Special Continuing Competitive Bid Loans Provision
Upon the Effective Date, all outstanding competitive
bid loans under the 1987 Credit Agreement shall automatically
be deemed to be outstanding hereunder as if incurred hereunder
on the Effective Date. Such competitive bid loans shall be
continued under this Agreement on the same terms as presently
in effect with respect thereto (except that such loans will no
longer be evidenced by the notes issued in respect thereof
under the 1987 Credit Agreement) and, for all purposes of this
Agreement, shall thereafter be deemed to be Competitive Bid
Loans hereunder.
Section 3 CONDITIONS TO LOANS
3.1 Conditions to Initial Loans
The obligation of each Bank to make the Initial Loans
is, in addition to the conditions precedent specified in
Section 3.2, subject to satisfaction of each of the following
conditions:
A. On or before the Effective Date, the Company
shall have delivered to the Banks (or to the Agent with
sufficient copies, originally executed where appropriate,
for each Bank) each, unless otherwise noted, dated the
Effective Date:
1. Certified copies of its Certificate of
Incorporation, together with a good standing
certificate from the Secretary of State of the
jurisdiction of its incorporation, each to be dated a
recent date prior to the Effective Date;
2. Copies of its Bylaws, certified as of the
Effective Date by its corporate secretary or an
assistant secretary;
3. Resolutions of its Board of Directors
approving and authorizing the execution, delivery and
performance of this Agreement and any other
documents, instruments and certificates required to
be executed by the Company in connection herewith and
approving and authorizing the execution, delivery and
payment of the Notes to be issued by the Company and
the incurrence of the Loans, each certified as of the
Effective Date by its corporate secretary or an
assistant secretary as being in full force and effect
without modification or amendment;
4. Signature and incumbency certificates with
respect to the Persons executing this Agreement and
the Notes;
5. Executed copies of this Agreement and the
Line of Credit;
6. Revolving Notes executed by the Company,
substantially in the form of Exhibit A-1 annexed
hereto and in accordance with Section 2.4A hereof,
drawn to the order of each Bank and with appropriate
insertions; and
7. Such other documents as the Agent may
reasonably request.
B. The Agent shall have received an originally
executed copy of the favorable written opinion of
Thomas D. Soutter, Esq., General Counsel of the Company,
dated as of the Effective Date, substantially in the form
of Exhibit B annexed hereto; the Company hereby expressly
instructs such counsel to prepare such opinion and deliver
it to the Banks for their benefit and such opinion shall
contain a statement to that effect.
C. The Agent shall have received an originally
executed copy of the favorable written opinion of Cahill
Gordon & Reindel, counsel to the Banks, dated as of the
Effective Date, substantially in the form of Exhibit C
annexed hereto.
D. The Credit Agreement, dated as of October 30,
1987, as amended (the "1987 Credit Agreement"), among the
Borrower, the Lenders listed therein and BT Co, as
administrative agent, and all commitments to lend
thereunder shall have been terminated and discharged in
full (other than as contemplated by Section 2.13 hereof)
and the notes issued by the Borrower thereunder shall have
been returned by such lenders to the Borrower, marked
"Cancelled".
3.2 Conditions to All Loans
The obligation of each Bank to make any Loans
pursuant to a Notice of Borrowing is subject to prior or
concurrent satisfaction or waiver by the Required Banks in the
case of Syndicated Loans, and the Bank making the relevant Loan
in the case of Competitive Bid Loans, of the following further
conditions precedent:
A. With respect to any such Loan, the Agent shall
have received, (i) before the Funding Date thereof, an
originally executed Notice of Borrowing signed by any of
the chief executive officer, the chief financial officer,
the treasurer or any assistant treasurer of the Company
(the furnishing by the Company of each such Notice of
Borrowing shall be deemed to constitute a representation
and warranty of the Company that each of the conditions
set forth in Section 3.2B hereof (and, in the case of a
Notice of Competitive Bid Borrowing, Section 3.3 hereof)
will be satisfied on the related Funding Date).
B. As of the Funding Date of such Loan:
1. With respect to such Loan the
representations and warranties contained herein shall
be true, correct and complete in all material
respects on and as of that Funding Date to the same
extent as though made on and as of that date, except
that the representations and warranties need not be
true and correct to the extent that changes in the
facts and conditions on which such representations
and warranties are based are required or permitted
under this Agreement, and except that the
representations and warranties set forth in
Sections 4.4 and 4.5 shall not apply to Competitive
Bid Loans which do not increase the aggregate
principal amount of such Competitive Bid Loans then
outstanding with Banks making the same;
2. No event shall have occurred and be
continuing or would result from the consummation of
the Loans on such Funding Date and the use of the
proceeds thereof which would constitute (a) an Event
of Default or (b) a Potential Event of Default;
3. Each Borrower shall have performed in all
material respects all agreements and satisfied in all
material respects all conditions which this Agreement
provides shall be performed by it on or before such
Funding Date;
4. No order, judgment or decree of any court,
arbitrator or governmental authority shall purport to
enjoin or restrain that Bank from making that Loan;
and
5. The making of the Loans requested on such
Funding Date shall not violate Regulation G,
Regulation T, Regulation U or Regulation X of the
Board or any other regulation of the Board or the
Exchange Act.
3.3 Conditions to All Competitive Bid Loans
A. Each Borrower shall, upon the request of the
applicable Bank pursuant to Section 2.4B hereof, on or before
the Funding Date of any Competitive Bid Loan, deliver to the
Bank making such Competitive Bid Loan, the Competitive Bid Note
executed by such Borrower in accordance with Section 2.4B,
substantially in the form of Exhibit A-2 annexed hereto, drawn
to the order of such Bank with appropriate insertions.
B. The obligation of each Bank to make any
Competitive Bid Loan is subject to concurrent satisfaction of
the further condition precedent that on the date any
Competitive Bid Loan is made there shall be outstanding a
publicly held issue of unsecured Indebtedness of the Company
described in clause (i) of the definition of Indebtedness which
ranks pari passu with the Indebtedness represented by the Notes
and which is classified as long-term indebtedness in accordance
with generally accepted accounting principles then applied by
the Company and rated greater than or equal to BBB- by Standard
& Poor's Corporation or any successor equivalent rating and
greater than or equal to Baa3 by Moody's Investors Service,
Inc. or any successor equivalent rating.
3.4 Conditions to Loans to Subsidiary Borrowers
A. Concurrently with or before the designation by
the Company of any of its Subsidiaries as a Subsidiary
Borrower, the Company shall deliver, or cause to be delivered,
to the Banks (or to the Agent for the Banks with sufficient
originally executed copies, where appropriate, for each Bank)
with respect to such Subsidiary Borrower, each, unless
otherwise noted, dated the Designation Date:
1. Certified copies of such Subsidiary Borrower's
Certificate of Incorporation, together with a good
standing certificate from the Secretary of State of the
State of incorporation of such Subsidiary Borrower, each
to be dated a recent date prior to the Designation Date;
2. Copies of such Subsidiary Borrower's Bylaws,
certified as of the Designation Date by its corporate
secretary or an assistant secretary;
3. Resolutions of such Subsidiary Borrower's Board
of Directors approving and authorizing the execution,
delivery and performance of this Agreement and any other
documents, instruments and certificates to be executed by
such Subsidiary Borrower in connection herewith or
therewith and approving and authorizing the execution,
delivery and payment of the Notes to be issued by such
Subsidiary Borrower and the incurrence of Loans by such
Subsidiary Borrower, each certified as of the Designation
Date by its corporate secretary or an assistant secretary
as being in full force and effect without modification or
amendment;
4. Signature and incumbency certificates of such
Subsidiary Borrower's officers executing a Loan Assumption
Agreement substantially in the form of Exhibit G hereto
and the Notes issued by it;
5. Revolving Notes executed by such Subsidiary
Borrower substantially in the form of Exhibit A-1 annexed
hereto and in accordance with Section 2.4, drawn to the
order of each Bank and with appropriate insertions, with
such changes as are acceptable to the Agent to reflect
that such Revolving Notes are obligations of such
Subsidiary Borrower, rather than of the Company; and
6. Such other documents as the Agent may reasonably
request.
B. The Agent shall have received an originally
executed copy of the favorable written opinion of Thomas D.
Soutter, Esq., General Counsel of the Company, dated as of the
Designation Date, relating to such Subsidiary Borrower,
substantially in the form of Exhibit B annexed hereto, with
such changes as are acceptable to the Agent to reflect that
such opinion relates to such Subsidiary Borrower, rather than
to the Company; the Company hereby expressly instructs such
counsel to prepare such opinion and deliver it to the Banks for
their benefit and such opinion shall contain a statement to
that effect.
Section 4 REPRESENTATIONS AND WARRANTIES
In order to induce the Banks to enter into this
Agreement and to make the Loans, the Company and each Borrower
(as to itself only) represents and warrants to each Bank that
the following statements are true, correct and complete:
4.1 Organization, Powers and Good Standing
A. Organization and Powers. Each Borrower is a
corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation.
Each Borrower has all requisite corporate power and authority
(i) to own and operate its properties and to carry on its
business as now conducted and proposed to be conducted, except
where the lack of corporate power and authority would not have
a Material Adverse Effect and (ii) to enter into this Agreement
and to carry out the transactions contemplated hereby, and to
issue the Notes.
B. Good Standing. Each Borrower is in good
standing wherever necessary to carry on its present business
and operations, except in jurisdictions in which the failure to
be in good standing would not have a Material Adverse Effect.
4.2 Authorization of Borrowing, etc.
A. Authorization of Borrowing. The execution,
delivery and performance of this Agreement, and the issuance,
delivery and payment of the Notes and the borrowing of the
Loans have been duly authorized by all necessary corporate
action by each Borrower.
B. No Conflict. The execution, delivery and
performance by each Borrower of this Agreement and the
issuance, delivery and performance of the Notes by each
Borrower, and the borrowing of the Loans do not and will not
(i) violate any provision of law applicable to the Company or
any of its Subsidiaries, (ii) violate the Certificate of
Incorporation or Bylaws of the Company or any of its
Subsidiaries, (iii) violate any order, judgment or decree of
any court or other Governmental Authority binding on the
Company or any of its Subsidiaries, (iv) conflict with, result
in a breach of or constitute (with due notice or lapse of time
or both) a default under any Contractual Obligation of the
Company or any of its Subsidiaries, or (v) result in or require
the creation or imposition of any material Lien upon any of the
material properties or assets of the Company or any of its
Subsidiaries or require any approval of stockholders or any
approval or consent of any Person under any Contractual
Obligation of the Company or any of its Subsidiaries other than
such approvals and consents which have been or will be obtained
on or before the Effective Date.
C. Governmental Consents. The execution, delivery
and performance by each Borrower of this Agreement and the
issuance, delivery and performance by each Borrower of the
Notes will not require on the part of such Borrower any
registration with, consent or approval of, or notice to, or
other action to, with or by, any Governmental Authority other
than any such registration, consent, approval, notice or other
action which has been duly made, given or taken.
D. Binding Obligation. This Agreement is and each
of the Notes when executed and delivered and each Loan when
made will be a legally valid and binding obligation of the
Company and/or the applicable Borrower, as the case may be,
enforceable against the Company and/or the applicable Borrower,
as the case may be, in accordance with its respective terms,
except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or
limiting creditors' rights generally or by equitable principles
relating to enforceability.
4.3 Financial Condition
The Company has delivered to the Banks the following
materials: (i) audited consolidated financial statements of
the Company and its subsidiaries for the year ended January 2,
1993 as set forth in the 1992 Annual Report to Shareholders of
the Company and (ii) unaudited consolidated financial
statements of the Company and its subsidiaries for the fiscal
quarters ended April 3, 1993 and July 3, 1993 as set forth in
the Quarterly Report of the Borrower on Form 10-Q for each such
fiscal quarter (collectively, the "Financial Statements"). All
such Financial Statements were prepared in accordance with
generally accepted accounting principles except for the
preparation of footnote disclosures for the unaudited
statements. All such Financial Statements fairly present the
consolidated financial position of the Company and its
subsidiaries as at the respective dates thereof and the
consolidated statements of income and cash flows of the Company
and its Subsidiaries for each of the periods covered thereby,
subject, in the case of any unaudited interim financial
statements, to changes resulting from normal year-end
adjustments.
4.4 No Adverse Material Change
Since January 2, 1993, there has been no change in
the business, operations, properties, assets or condition
(financial or otherwise) of the Company or any of its
Subsidiaries, which has been, either in any case or in the
aggregate, materially adverse to the Company and its
Subsidiaries, taken as a whole.
4.5 Litigation
Except as disclosed in the Company's Annual Report on
Form 10-K for the fiscal year ended January 2, 1993 and in the
Financial Statements delivered to the Banks pursuant to Section
4.3 hereof, there is no action, suit, proceeding, governmental
investigation (including, without limitation, any of the
foregoing relating to laws, rules and regulations relating to
the protection of the environment, health and safety) of which
the Company has knowledge or arbitration (whether or not
purportedly on behalf of the Company or any of its
Subsidiaries) at law or in equity or before or by any
Governmental Authority, domestic or foreign, pending or, to the
knowledge of the Company, threatened against or affecting the
Company or any of its Subsidiaries or any property of the
Company or any of its Subsidiaries which is probable of being
successful and which would have a Material Adverse Effect.
4.6 Payment of Taxes
Except to the extent permitted by Section 5.3, all
taxes, assessments, fees and other governmental charges upon
the Company and each of its Subsidiaries and upon their
respective properties, assets, income and franchises which are
material to the Company and its Subsidiaries, taken as a whole,
and were due and payable, have been paid.
4.7 Governmental Regulation
Neither the Company nor any of its Subsidiaries is
subject to regulation under the Public Utility Holding Company
Act of 1935 or to any federal or state statute or regulation
limiting its ability to incur Indebtedness for money borrowed
as contemplated by this Agreement.
4.8 Securities Activities
Neither the Company nor any of its Subsidiaries is
engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing
or carrying any Margin Stock.
4.9 ERISA Compliance
A. The Company and its Subsidiaries and each of
their respective ERISA Affiliates are in compliance in all
material respects with all applicable provisions of ERISA and
the regulations and published interpretations thereunder with
respect to all Pension Plans and all Multiemployer Plans.
B. No Termination Event has occurred or is
reasonably expected to occur with respect to any Pension Plan,
as the case may be, which has resulted or would result in any
material liability to the PBGC (or any successor thereto) or to
any other Person under Section 4062, 4063, or 4064 of ERISA.
C. Neither the Company nor any of its ERISA
Affiliates has incurred or reasonably expects to incur any
withdrawal liability under Part E of Title IV of ERISA to any
Multiemployer Plan individually or in the aggregate in excess
of $50,000,000.
D. The sum of the amount of unfunded benefit
liabilities under all Pension Plans (excluding each Pension
Plan with an amount of unfunded benefit liabilities of zero or
less) is not more than $100,000,000.
E. Neither the Company nor any of its ERISA
Affiliates has incurred any accumulated funding deficiency
(whether or not waived) with respect to any Pension Plan
individually or in the aggregate in excess of $2,000,000.
F. Neither the Company nor any of its ERISA
Affiliates has or reasonably expects to become subject to a
lien in favor of any Pension Plan under Section 302(f) of ERISA
individually or in the aggregate in excess of $1,000,000.
G. Neither the Company nor any of its ERISA
Affiliate has or reasonably expects to become subject to a
requirement to provide security to any Pension Plan under
Section 307 of ERISA individually or in the aggregate in excess
of $10,000,000.
As used in this subsection 4.9, the term "amount of
unfunded benefit liabilities" has the meaning specified in
Section 4001(a)(18) of ERISA, and the term "accumulated funding
deficiency" has the meaning specified in Section 302 of ERISA
and Section 412 of the Code.
4.10 Certain Fees
No broker's or finder's fee or commission will be
payable by the Company with respect to the offer, issuance and
sale of any Note or the borrowing of any Loan comprising a
Syndicated Loan or Competitive Bid Loan or the execution,
delivery and performance of this Agreement.
Section 5 AFFIRMATIVE COVENANTS
The Company covenants and agrees that, so long as any
of the Commitments hereunder shall be in effect and until
payment in full of all Loans and Notes unless Required Banks
shall otherwise give prior written consent, it shall perform
all covenants in this Section 5:
5.1 Financial Statements and Other Reports
The Company will maintain, and cause each of its
subsidiaries to maintain, a system of accounting established
and administered in accordance with sound business practices to
permit preparation of consolidated financial statements in
conformity with generally accepted accounting principles in
effect from time to time. The Company will deliver to the
Banks (except to the extent otherwise expressly provided below
in subsection 5.1B(ii)):
A. (i) as soon as practicable and in any event
within 45 days after the end of each fiscal quarter ending
after the Effective Date in the Company's fiscal year the
consolidated balance sheet of the Company and its
consolidated subsidiaries as at the end of such period,
and the related consolidated statements of income and cash
flows of the Company and its consolidated subsidiaries in
each case certified by the chief financial officer or
controller of the Company that they fairly present the
financial condition of the Company and its consolidated
subsidiaries as at the dates indicated and the results of
their operations and changes in their cash flows, subject
to changes resulting from audit and normal year-end
adjustments, based on their respective normal accounting
procedures applied on a consistent basis (except as noted
therein);
(ii) as soon as practicable and in any event within
90 days after the end of each fiscal year the consolidated
balance sheet of the Company and its consolidated
subsidiaries as at the end of such year and the related
consolidated statements of income and cash flows of the
Company and its consolidated subsidiaries for such fiscal
year, accompanied by a report thereon of independent
certified public accountants of recognized national
standing selected by the Company which report shall be
unqualified as to going concern and scope of audit and
shall state that such consolidated financial statements
present fairly the financial position of the Company and
its consolidated subsidiaries as at the dates indicated
and the results of their operations and changes in their
cash flows for the periods indicated in conformity with
generally accepted accounting principles applied on a
basis consistent with prior years (except as noted in such
report) and that the examination by such accountants in
connection with such consolidated financial statements has
been made in accordance with generally accepted auditing
standards;
B. (i) together with each delivery of financial
statements of the Company and its consolidated
subsidiaries pursuant to subdivisions A(i) and A(ii)
above, (a) an Officer's Certificate of the Company stating
that the signer has reviewed the terms of this Agreement
and has made, or caused to be made under such signer's
supervision, a review in reasonable detail of the
transactions and condition of the Company and its
consolidated subsidiaries during the accounting period
covered by such financial statements and that such review
has not disclosed the existence during or at the end of
such accounting period, and that the signer does not have
knowledge of the existence as at the date of the Officers'
Certificate, of any condition or event which constitutes
an Event of Default or Potential Event of Default, or, if
any such condition or event existed or exists, specifying
the nature and period of existence thereof and what action
the Company has taken, is taking and proposes to take with
respect thereto; and (b) a Compliance Certificate
demonstrating in reasonable detail compliance (as
determined in accordance with GAAP during and at the end
of such accounting periods) with the restrictions
contained in Section 6.3 and, in addition, a written
statement of the chief accounting officer, chief financial
officer, any vice president or the treasurer or any
assistant treasurer of the Company describing in
reasonable detail the differences between the financial
information contained in such financial statements and the
information contained in the Compliance Certificate
relating to the Company's compliance with Section 6.3
hereof;
(ii) promptly upon their becoming available but only
to the extent requested by a Bank, copies of all publicly
available financial statements, reports, notices and proxy
statements sent or made available generally by the Company
to its security holders or by any Subsidiary of the
Company to its security holders other than the Company or
another Subsidiary, of all regular and periodic reports
and all registration statements and prospectuses, if any,
filed by the Company or any of its Subsidiaries with any
securities exchange or with the Securities and Exchange
Commission and of all press releases and other statements
made available generally by the Company or any Subsidiary
to the public concerning material developments in the
business of the Company and its Subsidiaries;
(iii) promptly upon the chairman of the board, the
chief executive officer, the president, the chief
accounting officer, the chief financial officer, the
treasurer or the general counsel of the Company obtaining
knowledge (a) of any condition or event which constitutes
an Event of Default or Potential Event of Default,
(b) that any Person has given any notice to the Company or
any Subsidiary of the Company or taken any other action
with respect to a claimed default or event or condition of
the type referred to in Section 7.2, or (c) of a material
adverse change in the business, operations, properties,
assets or condition (financial or otherwise) of the
Company and its Subsidiaries, taken as a whole, an
Officer's Certificate specifying the nature and period of
existence of any such condition or event, or specifying
the notice given or action taken by such holder or Person
and the nature of such claimed default, Event of Default,
Potential Event of Default, event or condition, and what
action the Company has taken, is taking and proposes to
take with respect thereto; and
(iv) with reasonable promptness, such other
information and data with respect to the Company or any of
its subsidiaries as from time to time may be reasonably
requested by any Bank.
5.2 Corporate Existence
Except as permitted by Section 6.1, the Company will
at all times preserve and keep in full force and effect its
corporate existence and rights and franchises material to the
business of the Company and its Subsidiaries, taken as a whole.
5.3 Payment of Taxes
The Company will, and will cause each of its
Subsidiaries to, pay all taxes, assessments and other
governmental charges imposed upon it or any of its properties
or assets or in respect of any of its franchises, business,
income or property when due which are material to the Company
and its Subsidiaries, taken as a whole, provided that no such
amount need be paid if being contested in good faith by
appropriate proceedings promptly instituted and diligently
conducted and if such reserve or other appropriate provision,
if any, as shall be required in conformity with generally
accepted accounting principles shall have been made therefor.
5.4 Maintenance of Properties; Insurance
The Company will maintain or cause to be maintained
in good repair, working order and condition all material
properties used or useful in its business of the Company and
its Subsidiaries and from time to time will make or cause to be
made all appropriate material repairs and renewals thereto and
replacements thereof. The Company will maintain or cause to be
maintained, with financially sound and reputable insurers,
insurance with respect to its material properties and business
and the material properties and business of its Subsidiaries
against loss or damage of the kinds customarily insured against
by corporations of established reputation engaged in the same
or similar businesses and similarly situated, of such types and
in such amounts as are customarily carried under similar
circumstances by such other corporations and to the extent
reasonably prudent may self-insure.
5.5 Inspection
The Company shall permit any authorized
representatives designated by any Bank to visit and inspect any
of the properties of the Company or any of its Subsidiaries,
including its and their financial and accounting records, and,
to make copies and take extracts therefrom, and to discuss its
and their affairs, finances and accounts with its and their
officers, all upon reasonable notice and at such reasonable
times during normal business hours and as often as may be
reasonably requested; provided that any confidential
information so obtained by any Bank shall remain confidential
except where disclosure is mandated by applicable laws or such
information otherwise becomes public other than by a breach by
such Bank of this Section 5.5; provided further that this
Section shall not prohibit any Bank from disclosing to the
Agent (or the Agent to any Bank) any Event of Default or
Potential Event of Default.
5.6 Compliance with Laws
The Company and its Subsidiaries shall exercise all
due diligence in order to comply in all material respects with
the requirements of all applicable laws, rules, regulations and
orders of any Governmental Authority (including, without
limitation, laws, rules and regulations relating to the
disposal of hazardous wastes and asbestos in the environment),
noncompliance with which would have a Material Adverse Effect.
Section 6 NEGATIVE COVENANTS
The Company covenants and agrees that, so long as any
of the Commitments shall be in effect and until payment in full
of all of the Loans and the Notes, unless the Required Banks
shall otherwise give prior written consent, it will perform all
covenants in this Section 6:
6.1 Merger
The Company may not consolidate with, merge with or
into or sell, lease or otherwise transfer all or substantially
all of its assets (as an entirety or substantially as an
entirety in one transaction or a series of related
transactions) to any Person unless:
(i) the Company shall be the continuing Person, or
the Person (if other than the Company) formed by such
consolidation or into which the Company is merged or to
which the properties and assets of the Company are sold,
leased or transferred shall be a solvent corporation
organized and existing under the laws of the United States
or any State thereof or the District of Columbia and shall
expressly assume, by an agreement, executed and delivered
to the Banks, in form and substance reasonably
satisfactory to the Required Banks, all of the obligations
of the Company under this Agreement, the Notes and the
Competitive Bid Loans;
(ii) immediately before and immediately after giving
effect to such transaction, no Event of Default and no
Potential Event of Default shall have occurred and be
continuing (with the interest coverage ratio required by
Section 6.3B being calculated on a pro forma basis for the
four fiscal quarters of the Company and such Person ending
immediately prior to the date of such consolidation,
merger, sale, lease or transfer); and
(iii) the Company shall deliver to the Banks an
Officer's Certificate (attaching the arithmetic
computations to demonstrate compliance with Section 6.3)
and an opinion of counsel, each stating that such
consolidation, merger, sale, lease or transfer and such
agreement comply with this Section 6.1 and that all
conditions precedent herein provided for relating to such
transaction have been complied with.
6.2 Liens
The Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume
or permit to exist any Lien on or with respect to any property
or asset (including any document or instrument in respect of
goods or accounts receivable) (other than Margin Stock) of the
Company or any of its Subsidiaries, whether now owned or
hereafter acquired, or any income or profits therefrom, except:
(i) Liens in existence on the date hereof;
(ii) Permitted Encumbrances;
(iii) Liens on accounts receivable sold with recourse;
(iv) Liens incurred in connection with the
acquisition of equipment by the Company or any of its
Subsidiaries for a cost less than $2,000,000 in any case,
provided that the principal amount of the indebtedness so
secured shall not exceed in any case 100% of the cost to
the Company or such Subsidiary of the equipment acquired
and provided, further, that each such Lien shall cover
only the equipment acquired and the proceeds thereof,
substitutions therefor and replacements thereof; and
(v) Liens (other than Liens permitted by clauses
(i)-(iv) above) securing obligations of the Company and
its Subsidiaries (including Indebtedness) not in excess of
an amount equal to 5% of the consolidated total assets of
the Company and its Subsidiaries, all as determined in
accordance with GAAP on a consolidated basis for the
Company and its Subsidiaries.
Nothing in this Section 6.2 shall prohibit the sale,
assignment, transfer, conveyance or other disposition of any
Margin Stock owned by the Company or any of its Subsidiaries at
its fair value, or the creation, incurrence, assumption or
existence of any Lien on or with respect to any Margin Stock.
6.3 Financial Covenants
A. Minimum Consolidated Net Worth.
The Company will not permit its Consolidated Net
Worth (less the Textron Affiliate Amount) at any time during
any fiscal quarter (each a "Measurement Quarter") ending on and
after July 3, 1993 to be less than the sum of
(x) $2,000,000,000 plus (y) an amount equal to 40% of the
Consolidated Net Income of the Company for each fiscal quarter
of the Company in which the Company had a Consolidated Net
Income for such fiscal quarter in excess of $0 and which such
fiscal quarter commenced on or after July 3, 1993 and ended on
or prior to the first day of such Measurement Quarter plus
(z) 100% of the proceeds of any equity issuances by the Company
(excluding issuances as a result of the exercise of employee
stock options) on and after the date of this Agreement.
B. Interest Coverage Ratio.
The Company shall not permit the ratio of (i) Con-
solidated EBITDA to (ii) Consolidated Interest Expense at any
date to be less than 1.5 to 1.0 calculated at the end of each
fiscal quarter of the Company by reference to the four fiscal
quarter periods ending on such date of calculation.
6.4 Existing Subordinated Debt
The Company will not amend or otherwise change the
terms of any Existing Subordinated Debt except as specifically
permitted hereby, or make, directly or indirectly, any payment
consistent with an amendment or change thereto, if the effect
of such amendment or change is to increase the interest rate on
such Debt, change the dates upon which payments of principal or
interest are due thereon, change any event of default or
condition to an event of default with respect to such Debt,
grant any security interest in favor of such Existing
Subordinated Debt, change the redemption provisions thereof,
change the subordination provisions thereof, cause the Existing
Subordinated Debt to be guaranteed by any Person or which,
together with all other amendments or changes made, increase
materially the obligations of the obligor or confer additional
rights on the holder of such Debt which would be adverse to the
Company or the Banks.
6.5 Use of Proceeds
Notwithstanding any provisions of this Agreement to
the contrary, no portion of the proceeds of any borrowing under
this Agreement shall be used by the Company in any manner which
would cause the borrowing or the application of such proceeds
to violate Regulation G, Regulation U, Regulation T, or
Regulation X of the Board or any other regulation of the Board
or to violate the Exchange Act, in each case as in effect on
the date or dates of such borrowing and such use of proceeds.
Section 7 EVENTS OF DEFAULT
If any of the following conditions or events ("Events
of Default") shall occur and be continuing:
7.1 Failure To Make Payments When Due
Failure to pay any installment of principal of any
Loan when due, whether at stated maturity, by acceleration, by
notice of prepayment or otherwise; or failure to pay any
interest on any Loan or any other amount due under this
Agreement when due and such default shall continue for 5 days;
or
7.2 Default in Other Agreements
(i) Failure of the Company or any of its Subsidiaries
to pay when due any principal or interest on any Indebtedness
(other than Indebtedness referred to in Section 7.1) in an
individual principal amount of $20,000,000 or more or items of
Indebtedness with an aggregate principal amount of $20,000,000
or more beyond the end of any period prior to which the obligee
thereunder is prohibited from accelerating payment thereunder
or any grace period after the maturity thereof, or (ii) breach
or default of the Company or any of its Subsidiaries (other
than a default arising under any restrictive provision relating
to any sale, pledge or other disposition of Margin Stock
contained in a lending agreement to which any Bank or Affiliate
thereof is a party) with respect to any other term of (y) any
evidence of any Indebtedness in an individual principal amount
of $20,000,000 or more or items of Indebtedness with an
aggregate principal amount of $20,000,000 or more; or (z) any
loan agreement, mortgage, indenture or other agreement relating
thereto, if such failure, default or breach shall continue for
more than the period of grace, if any, specified therein and
shall not at the time of acceleration hereunder be cured or
waived; or
7.3 Breach of Certain Covenants
Failure of any Borrower to perform or comply with any
term or condition contained in Section 5.2, 6.1, 6.3, 6.4 or
6.5 of this Agreement; or
7.4 Breach of Warranty
Any representation or warranty made by any Borrower
in this Agreement or in any statement or certificate at any
time given by such Person in writing pursuant hereto or thereto
or in connection herewith or therewith shall be false in any
material respect on the date as of which made; or
7.5 Other Defaults Under Agreement
Any Borrower shall default in the performance of or
compliance with any term contained in this Agreement other than
those referred to above in Section 7.1, 7.3 or 7.4 and such
default shall not have been remedied or waived within 30 days
after receipt of notice from the Agent or any Bank of such
default; or
7.6 Involuntary Bankruptcy; Appointment of Receiver, etc.
(A) A court having jurisdiction in the premises shall
enter a decree or order for relief in respect of the Company or
any of its Restricted Subsidiaries or any Subsidiary Borrower
in an involuntary case under the Bankruptcy Code or any
applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, which decree or order is not stayed; or
any other similar relief shall be granted under any applicable
federal or state law; or (B) an involuntary case is commenced
against the Company or any of its Restricted Subsidiaries or
any Subsidiary Borrower under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect; or
a decree or order of a court having jurisdiction in the
premises for the appointment of a receiver, liquidator,
sequestrator, trustee, custodian or other officer having
similar powers over the Company or any of its Restricted
Subsidiaries or any Subsidiary Borrower, or over all or a
substantial part of its property, shall have been entered; or
an interim receiver, trustee or other custodian of the Company
or any of its Restricted Subsidiaries or any Subsidiary
Borrower for all or a substantial part of the property of the
Company or any of its Restricted Subsidiaries or any Subsidiary
Borrower is involuntarily appointed; or a warrant of
attachment, execution or similar process is issued against any
substantial part of the property of the Company or any of its
Restricted Subsidiaries or any Subsidiary Borrower, and the
continuance of any such events in subpart (B) for 60 days
unless dismissed, bonded or discharged; or
7.7 Voluntary Bankruptcy; Appointment of Receiver, etc.
The Company or any of its Restricted Subsidiaries or
any Subsidiary Borrower shall have an order for relief entered
with respect to it or commence a voluntary case under the
Bankruptcy Code or any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or shall consent
to the entry of an order for relief in an involuntary case, or
to the conversion of an involuntary case to a voluntary case,
under any such law, or shall consent to the appointment of or
taking possession by a receiver, trustee or other custodian for
all or a substantial part of its property; the making by the
Company or any of its Restricted Subsidiaries or any Subsidiary
Borrower of any assignment for the benefit of creditors; or the
inability or failure of the Company or any of its Restricted
Subsidiaries or any Subsidiary Borrower, or the admission by
the Company or any of its Restricted Subsidiaries or any
Subsidiary Borrower in writing of its inability to pay its
debts as such debts become due; or the Board of Directors of
the Company or any Restricted Subsidiary or any Subsidiary
Borrower (or any committee thereof) adopts any resolution or
otherwise authorizes action to approve any of the foregoing; or
7.8 Judgments and Attachments
Any money judgment, writ or warrant of attachment, or
similar process involving individually or in the aggregate an
amount in excess of $50,000,000 shall be entered or filed
against the Company or any Restricted Subsidiary or any of its
assets and shall remain undischarged, unvacated, unbonded or
unstayed, as the case may be, for a period of 30 days or in any
event later than five days prior to the date of any proposed
sale thereunder; or
7.9 Dissolution
Any order, judgment or decree shall be entered
against the Company or any of its Restricted Subsidiaries or
any Subsidiary Borrower decreeing the dissolution or split up
of the Company or that Restricted Subsidiary and such order
shall remain undischarged or unstayed for a period in excess of
30 days; or
7.10 ERISA Title IV Liabilities
(i) The Company or any of its ERISA Affiliates shall
terminate or suffer the termination of (by action of the PBGC
or any successor thereto) any Pension Plan, or shall suffer the
appointment of or the institution of proceedings to appoint a
trustee to administer any Pension Plan, or shall withdraw
(under Section 4063 of ERISA) from a Pension Plan, if as of the
date thereof or any subsequent date the sum of the Company's
and each ERISA Affiliate's liabilities to the PBGC or any other
Person under Sections 4062, 4063 and 4064 of ERISA (calculated
after giving effect to the tax consequences thereof) resulting
from or otherwise associated with the above-described events
exceeds $50,000,000; or
(ii) The Company or any of its ERISA Affiliates shall
withdraw from any Multiemployer Plan and the aggregate amount
of withdrawal liability (determined pursuant to Sections 4201
et seq. of ERISA) to which the Company and its ERISA Affiliates
become obligated to all Multiemployer Plans requires annual
payments in excess of $5,000,000;
THEN (i) upon the occurrence of any Event of Default
described in the foregoing Sections 7.6 or 7.7, the unpaid
principal amount of and accrued interest on all the Loans shall
automatically become immediately due and payable, without
presentment, demand, protest or other requirements of any kind,
all of which are hereby expressly waived by the Company and
each Borrower and the obligation of each Bank to make any Loans
hereunder shall thereupon terminate, and (ii) upon the
occurrence of any other Event of Default, the Required Banks
may, by written notice to the Company and each Borrower,
declare the unpaid principal amount of and accrued interest on
all the Loans to be, and the same shall forthwith become,
immediately due and payable, and the obligation of each Bank to
make any Loan hereunder shall thereupon terminate.
Nevertheless, if at any time within 60 days after acceleration
of the maturity of the Loans, each Borrower shall pay all
arrears of interest and all payments on account of the
principal which shall have become due otherwise than by
acceleration (with interest on principal and, to the extent
permitted by law, on overdue interest, at the rates specified
in this Agreement or the Notes) and all other fees and expenses
then owed hereunder and all Events of Default and Potential
Events of Default (other than non-payment of principal of and
accrued interest on the Loans and the Notes), in each case due
and payable solely by virtue of acceleration) shall be remedied
or waived pursuant to Section 10.6, then the Required Banks by
written notice to the Company may (in their sole discretion)
rescind and annul the acceleration and its consequences; but
such action shall not affect any subsequent Event of Default or
Potential Event of Default or impair any right consequent
thereon.
Section 8 AGENT
8.1 Appointment
Each of the Banks hereby appoints BT Co as its Agent
(the "Agent") hereunder and each Bank hereby authorizes the
Agent to act hereunder and under the other instruments and
agreements referred to herein as its agent hereunder and
thereunder. BT Co agrees to act as such upon the express
conditions contained in this Section 8. The provisions of this
Section 8 are solely for the benefit of the Agent, and neither
the Company nor any other Borrower shall have any rights as a
third party beneficiary of or any obligations under any of the
provisions hereof. In performing its functions and duties
under this Agreement, the Agent shall act solely as agent of
the Banks and does not assume and shall not be deemed to have
assumed any obligation towards or relationship of agency or
trust with or for the Company or any other Borrower.
8.2 Powers; General Immunity
A. Duties Specified. Each Bank irrevocably
authorizes the Agent to take such action on such Bank's behalf
and to exercise such powers hereunder and under the other
instruments and agreements referred to herein as are
specifically delegated to the Agent by the terms hereof and
thereof, together with such powers as are reasonably incidental
thereto. The Agent shall have only those duties and
responsibilities which are expressly specified in this
Agreement and it may perform such duties by or through its
agents or employees. The duties of the Agent shall be
mechanical and administrative in nature; and the Agent shall
not have by reason of this Agreement a fiduciary or trust
relationship in respect of any Bank; and nothing in this
Agreement, expressed or implied, is intended to or shall be so
construed as to impose upon the Agent any obligations in
respect of this Agreement or the other instruments and
agreements referred to herein except as expressly set forth
herein or therein.
B. No Responsibility for Certain Matters. The
Agent shall not be responsible to any Bank for the execution,
effectiveness, genuineness, validity, enforceability,
collectibility or sufficiency of this Agreement or the Notes
issued hereunder or any Loan, or for any representations,
warranties, recitals or statements made herein or therein or
made in any written or oral statement or in any financial or
other statements, instruments, reports, certificates or any
other documents in connection herewith or therewith furnished
or made by the Agent to any Bank or by or on behalf of the
Borrower to the Agent or any Bank, or for the accuracy of any
information relating to Competitive Bid Loans (including as to
amounts outstanding at any time), or be required to ascertain
or inquire as to the performance or observance of any of the
terms, conditions, provisions, covenants or agreements
contained herein or therein or as to the use of the proceeds of
the Loans, or of the existence or possible existence of any
Event of Default or Potential Event of Default.
C. Exculpatory Provisions. Neither the Agent nor
any of its officers, directors, employees or agents shall be
responsible or liable to any Bank for any action taken or
omitted hereunder or under any of the other Loan Documents or
in connection herewith or therewith unless caused by its or
their gross negligence or willful misconduct. If the Agent
shall request instructions from any Bank with respect to any
act or action (including the failure to take an action) in
connection with this Agreement or the Notes, the Agent shall be
entitled to refrain from such act or taking such action unless
and until the Agent shall have received instructions from the
Required Banks. Without prejudice to the generality of the
foregoing, (i) the Agent shall be entitled to rely, and shall
be fully protected in relying, upon any communication,
instrument or document believed by it to be genuine and correct
and to have been signed or sent by the proper person or
persons, and shall be entitled to rely and shall be protected
in relying on opinions and judgments of attorneys (who may be
attorneys for the Borrower), accountants, experts and other
professional advisors selected by it; and (ii) no Bank shall
have any right of action whatsoever against the Agent as a
result of the Agent acting or (where so instructed) refraining
from acting under this Agreement, any Note or the other
instruments and agreements referred to herein or therein in
accordance with the instructions of the Required Banks. The
Agent shall be entitled to refrain from exercising any power,
discretion or authority vested in it under this Agreement, any
Note or the other instruments and agreements referred to herein
or therein unless and until it has obtained the instructions of
the Required Banks.
D. Agent Entitled to Act as Bank. The agency
hereby created shall in no way impair or affect any of the
rights and powers of, or impose any duties or obligations upon,
the Agent in its individual capacity as a Bank hereunder. With
respect to its participation in the Loans, the Agent shall have
the same rights and powers hereunder as any other Bank and may
exercise the same as though it were not performing the duties
and functions delegated to it hereunder, and the term "Bank" or
"Banks" or any similar term shall, unless the context clearly
otherwise indicates, include the Agent in its individual
capacity. The Agent and its Affiliates may accept deposits
from, lend money to and generally engage in any kind of
banking, trust, financial advisory or other business with the
Company or any Affiliate or Subsidiary of the Company as if it
were not performing the duties specified herein, and may accept
fees and other consideration from the Company or any such
Affiliate or Subsidiary for services in connection with this
Agreement or the Notes and otherwise without having to account
for the same to the Banks.
8.3 Representations and Warranties; No Responsibility
for Appraisal of Creditworthiness________________
Each Bank represents and warrants that it has made
its own independent investigation of the financial condition
and affairs of the Company and each other Borrower in
connection with the making of the Loans hereunder and has made
and shall continue to make its own appraisal of the
creditworthiness of the Company. The Agent shall not have any
duty or responsibility either initially or on a continuing
basis to make any such investigation or any such appraisal on
behalf of any Bank or to provide any Bank with any credit or
other information with respect thereto whether coming into its
possession before the making of the Loan or any time or times
thereafter, and the Agent shall further not have any
responsibility with respect to the accuracy of or the
completeness of the information provided to the Banks.
8.4 Right to Indemnity
Each Bank severally agrees to indemnify the Agent in
accordance with its Pro Rata Share to the extent the Agent
shall not have been reimbursed by the Company, for and against
any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses
(including, without limitation, counsel fees and disbursements)
or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by or asserted against the Agent in
performing its duties hereunder or under the other Loan
Documents or in any way relating to or arising out of this
Agreement or the Notes; provided that no Bank shall be liable
for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses
or disbursements resulting from the Agent's negligence or
willful misconduct. If any indemnity furnished to the Agent
for any purpose shall, in the opinion of the Agent, be
insufficient or become impaired, the Agent may call for
additional indemnity and cease, or not commence, to do the acts
indemnified against until such additional indemnity is
furnished.
8.5 Payee of Note Treated as Owner
The Agent may deem and treat the payee of any Note as
the owner thereof for all purposes hereof unless and until a
written notice of the assignment or transfer thereof shall have
been filed with the Agent. Any request, authority or consent
of any person or entity who, at the time of making such request
or giving such authority or consent, is the holder of any Note
shall be conclusive and binding on any subsequent holder,
transferee or assignee of that Note or of any Note or Notes
issued in exchange for such Note.
8.6 Resignation by the Agent
(a) The Agent may resign from the performance of all
its functions and duties hereunder at any time by giving
30 days' prior written notice to the Company and the Banks.
Such resignation shall take effect upon the acceptance by a
successor Agent of appointment pursuant to clauses (b) and (c)
below or as otherwise provided below.
(b) Upon any such notice of resignation, the
Required Banks shall appoint a successor Agent who shall be
satisfactory to the Company and shall be an incorporated bank
or trust company with a combined surplus and undivided capital
of at least $500 million.
(c) If a successor Agent shall not have been so
appointed within said 30 day period, the resigning Agent, with
the consent of the Company, shall then appoint a successor
Agent who shall serve as the Agent until such time, if any, as
the Required Banks, with the consent of the Company, appoint a
successor Agent as provided above.
8.7 Successor Agent
The Agent may resign at any time as provided in
Section 8.6 hereof. Upon any such notice of resignation, the
Required Banks shall have the right, upon five days' notice to
the Company and subject to Section 8.6 hereof, to appoint a
successor Agent. Upon the acceptance of any appointment as the
Agent hereunder by a successor Agent, that successor Agent
shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and
obligations as the Agent under this Agreement. After any
retiring Agent's resignation hereunder as the Agent the
provisions of this Section 8 shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was the
Agent under this Agreement.
Section 9 GUARANTEE
9.1 Guarantee
The Company hereby unconditionally guarantees the due
and punctual payment of all principal of and interest on, and
all other amounts now or hereafter payable by any Subsidiary
Borrower to any Bank or Banks or the Agent under this
Agreement, any Note or any Loans (collectively, "Guaranteed
Obligations") when any of the same shall become due, whether at
stated maturity, by required payment, declaration,
acceleration, demand or otherwise (including amounts which
would become due but for the operation of the automatic stay
under Section 362(a) of the Bankruptcy Code, 11 U.S.C.
{ 362(a)), and agrees to pay any and all costs and expenses
(including reasonable fees and disbursements of counsel)
incurred by the Agent or the Banks in enforcing any rights
under this Section 9.
The Company agrees that the Guaranteed Obligations
may be extended or renewed, in whole or in part, without notice
or further assent from it, and that the Company will remain
bound under this Section 9 notwithstanding any extension,
renewal or other alteration of any Guaranteed Obligation.
9.2 Obligation Not Affected by
Certain Events____________
The Company waives presentation of, demand of, and
protest of any Guaranteed Obligation and also waives notice of
protest for nonpayment. The obligations of the Company under
this Section 9 shall not be affected by:
(a) the failure of any Bank, the Agent or any other
Person to assert any claim or demand or to enforce any
right or remedy against any Subsidiary Borrower or any
successor thereto under the provisions of this Agreement
or any other agreement or otherwise;
(b) any extension or renewal of any provision of any
thereof;
(c) any change in the time, manner or place of
payment of any of the Guaranteed Obligations or any
rescission, waiver, amendment or modification of any of
the terms or provisions of this Agreement or any
instrument or agreement executed pursuant thereto; or
(d) the failure to perfect any security interest in,
or the release of, any of the security held by any Bank,
the Agent or other Person for any of the Guaranteed
Obligations.
9.3 Guarantee a Guarantee of Payment
The Company further agrees that this Section 9
constitutes a guarantee of payment when due and not of
collection and waives any right to require that any resort be
had by any Bank or the Agent or any other Person to any
security held for payment of any of the Guaranteed Obligations
or to any balance of any deposit account or credit on the books
of any Bank, the Agent or any other Person in favor of any
Subsidiary Borrower or any other Person.
9.4 Obligation Not Subject to Limitation
The obligation of the Company under this Section 9
shall not be subject to any reduction, limitation, impairment,
or termination for any reason, including, without limitation,
any claim of waiver, release, surrender, alteration or
compromise of any of the Guaranteed Obligations, and shall not
be subject to any defense or setoff, counterclaim, recoupment
or termination whatsoever by reason of the invalidity,
illegality or unenforceability of any of the Guaranteed
Obligations or discharge of any Subsidiary Borrower from any of
the Guaranteed Obligations in a bankruptcy or similar
proceeding or otherwise. Without limiting the generality of
the foregoing, the obligation of the Company under this Section
9 shall not be discharged or impaired or otherwise affected by
the failure of any Bank or the Agent or any other Person to
assert any claim or demand or to enforce any remedy under this
Agreement or any other agreement or instrument or any other
guarantee, by any waiver or modification of any thereof, by any
default, or by any other act or thing or omission or delay to
do any other act or thing which may or might in any manner or
to any extent vary the risk of the Company or which would
otherwise operate as a discharge of the Company as a matter of
law or equity.
The Company further agrees that this Section 9 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,
interest on or any other amount with respect to, any Guaranteed
Obligation is rescinded or must otherwise be restored by any
Bank, the Agent or any other Person upon the bankruptcy or
reorganization of any Subsidiary Borrower, any other Person or
otherwise.
9.5 Order of Payment
The Company further agrees, in furtherance of the
foregoing and not in limitation of any other right which any
Bank, the Agent or any other Person may have at law or in
equity against the Company by virtue of this Section 9, upon
the failure of any Subsidiary Borrower to pay any of the
Guaranteed Obligations when and as the same shall become due,
whether by required prepayment, acceleration or otherwise
(including amounts which would become due but for the operation
of the automatic stay under Section 362(a) of the Bankruptcy
Code, 11 U.S.C. { 362(a)), the Company will forthwith pay, or
cause to be paid, in cash, to the Agent for the ratable benefit
of the Banks or the Agent, as the case may be, an amount equal
to the sum of the unpaid principal amount of such Guaranteed
Obligations then due as aforesaid, accrued and unpaid interest
on such Guaranteed Obligations (including, without limitation,
interest which, but for the filing of a petition in bankruptcy
with respect to any Subsidiary Borrower, would have accrued on
such Guaranteed Obligations) and all other Guaranteed
Obligations then owed to the Banks and the Agent as aforesaid.
All such payments shall be applied promptly, from time to time,
by the Agent:
First, to the payment of the costs and
expenses of any collection, or other realization
under this Section 9, including reasonable
compensation to the Agent and its agents and
counsel, and all expenses, liabilities and
advances made or incurred by the Agent in
connection therewith;
Second, to the payment of accrued but unpaid
interest on the Notes and the Loans comprising the
Guaranteed Obligations;
Third, to the payment of the Guaranteed
Obligations not paid pursuant to clause Second
above;
Fourth, after payment in full of all
Guaranteed Obligations, to the Company or its
successors or assigns, or to whomsoever may be
lawfully entitled to receive the same or as a
court of competent jurisdiction may direct, of any
surplus then remaining from such payments.
9.6 Waiver by the Company
The Company hereby waives absolutely and irrevocably
any claim which it may have against any of the Subsidiary
Borrowers by reason of any payment to the Banks or the Agent or
to any other Person pursuant to or in respect of the guarantee
set forth in this Section 9, including any claim by way of
subrogation, contribution, reimbursement, indemnity or
otherwise.
Section 10 MISCELLANEOUS
10.1 Benefit of Agreement
A. This Agreement shall be binding upon and inure
to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto, provided that the
Company may not assign or transfer any of its interest
hereunder without the prior written consent of the Banks.
B. Any Bank may make, carry or transfer Loans at,
to or for the account of, any of its branch offices or the
offices of an Affiliate of such Bank, provided that doing so
shall not cause any Borrower to incur any additional costs
hereunder at the time of such transfer.
C. Any Bank may assign its rights and delegate its
obligations under this Agreement and further may sell
participations in all or any part of any Loan or Loans made by
it or its Commitment or any other interest herein or in its
Notes to another bank or other entity; provided that (i) in the
case of an assignment, such Bank shall (a) give to the Company
and the Agent prior notice thereof, and, in the case of any
assignment, the Company shall, except as set forth in the last
sentence of this Section 10.1C and in Section 10.1D, have
consented thereto and (b) comply with Section 10.1F hereof and
thereupon, the assignee "Purchasing Bank" shall have, to the
extent of such assignment (unless otherwise provided thereby),
the rights and benefits described in Section 10.1F hereof, and
(ii) in the case of a participation, except as set forth below,
the participant shall not have any rights under this Agreement
or any Note or any other document delivered in connection
herewith (the participant's rights against such Bank in respect
of such participation to be those set forth in the agreement
executed by such Bank in favor of the participant relating
thereto) and all amounts payable by the Borrower under Sections
2.11E and 2.11I hereof shall be determined as if the Bank had
not sold such participation. Except with respect to interest
rate, principal amount of any Loan, fees, scheduled dates for
payment of principal or interest or fees, scheduled termination
of commitments and commitment amounts, a Bank will not in any
such participation agreement restrict its ability to make any
modification, amendment or waiver to this Agreement without the
consent of the participant. Any Bank may furnish any
information concerning the Company in possession of such Bank
from time to time to Affiliates of such Bank and to assignees
and participants (including prospective assignees and
participants), provided, however, that (i) the furnishing Bank
shall give the Company prior notice of any furnishing of non-
public information (ii) the recipient shall agree to the terms
of Section 10.12 hereof and (iii) the furnishing of such
information (and the nature, manner and extent thereof) by any
Bank to its Affiliates and such assignees and participants
shall be further governed by the relevant agreement, assignment
or participation agreement relating to such arrangement,
assignment or participation, as the case may be. Notwithstand-
ing anything to the contrary in the foregoing, any Bank may,
without the consent of the Company, assign any of its rights
and interests in Loans hereunder to (x) a federal reserve bank
without the consent of the Company or (y) any Affiliate of such
Bank; provided that an Affiliate to whom such disposition has
been made shall not be considered a "Bank" for purposes of
Section 10.6 but shall be considered a "Bank" for purposes of
Sections 10.4 and 10.5.
D. Notwithstanding the foregoing provisions of this
Section 10.1, each Bank may at any time, upon 30 days' prior
written notice to the Agent and the Company, sell, assign,
transfer or negotiate all or any part of its Loans, Notes or
Commitment if, but only if, concurrently therewith or prior
thereto (a) any Person or two or more Persons acting in concert
shall have acquired beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission under the
Securities Exchange Act of 1934) of a majority of the
outstanding shares of voting stock of the Company pursuant to
one or more transactions not approved, in their capacities as
directors, by at least a majority of the individuals who served
as directors of the Company on the date one year prior to the
date of the first acquisition of voting stock leading to such
acquisition or (b) during any period of 12 consecutive months,
commencing before or after the date of this Agreement,
individuals who at the beginning of such 12 month period were
directors of the Company cease for any reason to constitute a
majority of the board of directors of the Company.
E. Except pursuant to an assignment permitted by
this Agreement but only to the extent set forth in such
assignment, no Bank shall, as between each Borrower and that
Bank, be relieved of any of its obligations hereunder as a
result of any sale, transfer or negotiation of, or granting of
participations in, all or any part of the Loans, the Notes or
Commitment of that Bank or other obligations owed to such Bank.
F. Any assignment made pursuant to Section 10.1C
hereof shall be made pursuant to a Transfer Supplement,
substantially in the form of Exhibit F annexed hereto, executed
by the Purchasing Bank, the transferor Bank, the Company and
the Agent. Upon (i) such execution of such Transfer
Supplement, (ii) delivery of an executed copy thereof to the
Borrower, (iii) payment by such Purchasing Bank to such
transferor Bank of an amount equal to the purchase price agreed
between such transferor Bank and such Purchasing Bank, and
(iv) payment by such Purchasing Bank or transferor Bank (as
they shall mutually agree) to the Agent of a non-refundable fee
of $3,000 to cover administrative and other expenses which may
be incurred in connection with such assignment, such Purchasing
Bank shall for all purposes be a Bank party to this Agreement
and shall have the rights (including without limitation the
benefits of Sections 2.11 and 2.12) and obligations of a Bank
under this Agreement to the same extent as if it were an
original party hereto and thereto with the Pro Rata Share of
the applicable Commitment set forth in such Transfer
Supplement, and no further consent or action by the Company,
the Banks or the Agent shall be required. Such Transfer
Supplement shall be deemed to amend this Agreement to the
extent, and only to the extent, necessary to reflect the
addition of such Purchasing Bank and the resulting adjustment
of Pro Rata Shares arising from the purchase by such Purchasing
Bank of all or a portion of the rights and obligations of such
transferor Bank under this Agreement, the Loans and the Notes.
Upon the consummation of any transfer to a Purchasing Bank
pursuant to this paragraph F, the transferor Bank, the Agent
and the Company shall make appropriate arrangements so that, if
required, a replacement Note is issued to such transferor Bank
and a new Note or, as appropriate, a replacement Note, issued
to such Purchasing Bank, in each case in principal amounts
reflecting their Pro Rata Shares or, as appropriate, their
outstanding Loans, as adjusted pursuant to such Transfer
Supplement.
10.2 Expenses
Whether or not the transactions contemplated hereby
shall be consummated, the Company agrees to promptly pay
(i) all the actual and reasonable out-of-pocket costs and
expenses of the Agent in connection with the negotiation,
preparation and execution of this Agreement, and the Notes;
(ii) the reasonable fees, expenses and disbursements of Cahill
Gordon & Reindel, counsel to the Agent and the Banks, in
connection with the negotiation, preparation, execution and
administration of this Agreement, the Notes, the Loans, and any
amendments and waivers hereto or thereto; and (iii) all
reasonable costs and expenses (including reasonable attorneys'
fees, expenses and disbursements, and costs of settlement)
incurred by the Banks in enforcing any obligations of or in
collecting any payments due from any Borrower hereunder or
under the Notes by reason of the occurrence of any Event of
Default or in connection with any refinancing or restructuring
of the credit arrangements provided under this Agreement in the
nature of a "work-out" or of any insolvency or bankruptcy
proceedings or otherwise.
10.3 Indemnity
In addition to the payment of expenses pursuant to
Section 10.2 hereof, whether or not the transactions
contemplated hereby shall be consummated, the Company agrees to
indemnify, pay and hold the Agent and each Bank and any holder
of any of the Notes and the officers, directors, employees,
agents, advisors and affiliates of each of them (collectively
called the "Indemnitees") harmless from and against any and all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, expenses and disbursements of
any kind or nature whatsoever (including, without limitation,
the reasonable fees, expenses and disbursements of counsel for
such Indemnitees in connection with any investigative,
administrative or judicial proceeding commenced or threatened,
whether or not such Indemnitee shall be designated a party
thereto), which may be imposed on, incurred by, or asserted
against that Indemnitee, in any manner relating to or arising
out of this Agreement, the Banks' agreement to make the Loans
or the use or intended use of the proceeds of any of the Loans
hereunder (the "indemnified liabilities"); provided that, the
Company shall have no obligation to any Indemnitee hereunder to
the extent that such indemnified liabilities arose from the
negligence or willful misconduct of that Indemnitee. To the
extent that the undertaking to indemnify, pay and hold harmless
set forth in the preceding sentence may be unenforceable
because it is violative of any law or public policy or
otherwise, the Company shall contribute the maximum portion
which it is permitted to pay and satisfy under applicable law,
to the payment and satisfaction of all indemnified liabilities
incurred by the Indemnitees or any of them.
10.4 Setoff
In addition to any rights now or hereafter granted
under applicable law and not by way of limitation of any such
rights, upon the occurrence of any Event of Default, each Bank
and each subsequent holder of any Note is hereby authorized by
each Borrower at any time and from time to time, without notice
to such Borrower, or to any other Person, and without
presentment, demand or protest, any such being hereby expressly
waived, to set off and to appropriate and to apply any and all
deposits (general or special, including, but not limited to,
Indebtedness evidenced by certificates of deposit, whether
matured or unmatured but not including trust accounts) and any
other Indebtedness at any time held or owing by that Bank or
that subsequent holder (including, without limitation, any
branches or agencies thereof, wherever located) to or for the
credit or the account of such Borrower against and on account
of the obligations and liabilities of such Borrower to that
Bank or that subsequent holder under this Agreement, or the
Notes including, but not limited to, all claims of any nature
or description arising out of or connected with this Agreement
or the Notes or the Loans, irrespective of whether or not
(a) that Bank or that subsequent holder shall have made any
demand hereunder or (b) that Bank or that subsequent holder
shall have declared the principal or the interest on the Loans
and Notes, and other amounts due hereunder, to be due and
payable as permitted by Section 7 and although said obligations
and liabilities, or any of them, may be contingent or
unmatured.
10.5 Ratable Sharing
Subject to the last sentence of this Section 10.5,
each Bank and each subsequent holder by acceptance of a
Revolving Note or a Syndicated Loan agree among themselves that
(i) with respect to all amounts received by them which are
applicable to the payment of principal of or interest on the
Syndicated Loans and Revolving Notes and amounts payable in
respect of the facility fees, equitable adjustment will be made
so that, in effect, all such amounts will be shared among the
Banks proportionately to their respective Pro Rata Shares
whether received by voluntary payment, by the exercise of the
right of setoff or banker's lien, by counterclaim or cross
action or by the enforcement of any or all of the Revolving
Notes and Syndicated Loans, (ii) if any of them shall exercise
any right of counterclaim, setoff, banker's lien or similar
right with respect to amounts owed by any Borrower hereunder or
under the Revolving Notes or the Syndicated Loans, then the
Bank or holder, as the case may be, shall apportion the amount
recovered as a result of the exercise of such right in
accordance with each Bank's Pro Rata Share, and (iii) if any of
them shall thereby through the exercise of any right of
counterclaim, set off, banker's lien or otherwise or as
adequate protection of a deposit treated as cash collateral
under the Bankruptcy Code, receive payment or reduction of a
proportion of the aggregate amount of principal and interest
due with respect to the Revolving Notes or Syndicated Loans
held by the Bank or holder, or any amount payable hereunder
which is greater than the proportion received by any other
holder of the Revolving Notes or Syndicated Loans in respect of
the aggregate amount of principal and interest due with respect
to the Revolving Notes or Syndicated Loans held by it, or any
amount payable hereunder, then the Bank or that holder of the
Revolving Notes or Syndicated Loans receiving such
proportionately greater payments shall (y) notify each other
Bank and the Agent of such receipt and (z) purchase
participations (which it shall be deemed to have done
simultaneously upon the receipt of such payment) in the
Revolving Notes or Syndicated Loans held by the other holders
so that all such recoveries of principal and interest with
respect to the Revolving Notes or Syndicated Loans shall be
proportionate to their Pro Rata Shares provided that, if all or
part of such proportionately greater payment received by such
purchasing holder is thereafter recovered from such holder,
those purchases shall be rescinded and the purchase prices paid
for such participations shall be returned to that holder to the
extent of such recovery, but without interest. Each Borrower
expressly consents to the foregoing arrangement and agrees that
any holder of a participation in any such Revolving Note or
Syndicated Loan so purchased and any other subsequent holder of
a participation in any Revolving Note or Syndicated Loan
otherwise acquired may exercise any and all rights of banker's
lien, set off or counterclaim with respect to any and all
moneys owing by such Borrower to that holder as fully as if
that holder were a holder of such Revolving Note or Syndicated
Loan in the amount of the participation held by that holder.
Notwithstanding the foregoing, upon the occurrence and during
the continuance of a Potential Event of Default or an Event of
Default, the ratable sharing arrangements set forth in this
Section 10.5 shall be based on each Bank's pro rata share of
all Loans outstanding at such time, rather than on each Bank's
Pro Rata Share.
10.6 Amendments and Waivers
No amendment, modification, termination or waiver of
any provision of this Agreement or of the Notes or consent to
any departure by any Borrower therefrom shall in any event be
effective without the written concurrence of the Required
Banks; except that (A) any amendment, modification, termination
or waiver (i) of any provision that increases the principal
amount of the Commitments or the Loans, changes a Bank's Pro
Rata Share or affects the definitions of "Required Banks" and
"Final Maturity Date," (ii) of any provision that expressly
requires the approval or concurrence of all Banks, (iii) that
decreases the interest rates borne by the Syndicated Loans, or
postpones the payment of interest due on the Syndicated Loans,
(iv) that decreases the amount or changes the due date of any
amount payable in respect of the fees payable hereunder,
(v) that eliminates the Company's guarantee set forth in
Section 9 hereof or (vi) of any of the provisions contained in
Sections 2.11B, 2.11C and 7.1 hereof and this Section 10.6
shall be effective only if evidenced by a writing signed by or
on behalf of all Banks and (B) any waiver with respect to a
Competitive Bid Loan can be given only by the Bank affected
with respect thereto. No amendment, modification, termination
or waiver of any provision of Section 8 hereof or any of the
rights, duties, indemnities or obligations of the Agent, as
agent shall be effective without the written concurrence of the
Agent. The Agent may, but shall have no obligation to, with
the concurrence of any Bank, execute amendments, modifications,
waivers or consents on behalf of that Bank. Any waiver or
consent shall be effective only in the specific instance and
for the specific purpose for which it was given. No notice to
or demand on any Borrower in any case shall entitle such
Borrower to any further notice or demand in similar or other
circumstances. Any amendment, modification, termination,
waiver or consent effected in accordance with this Section 10.6
shall be binding upon each holder of the Notes or Loans, at the
time outstanding, each future holder of the Notes or Loans and,
if signed by such Borrower, on the Borrower.
10.7 Independence of Covenants
All covenants hereunder shall be given independent
effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be
permitted by an exception to, or be otherwise within the
limitation of, another covenant shall not avoid the occurrence
of an Event of Default or Potential Event of Default if such
action is taken or condition exists.
10.8 Notices
Unless otherwise provided herein, any notice or other
communication herein required or permitted to be given shall be
in writing and may be personally served, telecopied, telexed or
sent by United States mail and shall be deemed to have been
given when delivered in person, upon receipt of telecopy or
telex or four Business Days after depositing it in the United
States mail, registered or certified, with postage prepaid and
properly addressed; provided that notices to the Agent shall
not be effective until received by Agent. For the purposes
hereof, the addresses of the parties hereto (until notice of a
change thereof is delivered as provided in this Section 10.8)
shall be set forth under each party's name on the signature
pages hereto.
10.9 Survival of Warranties and Certain Agreements
A. All agreements, representations and warranties
made herein shall survive the execution and delivery of this
Agreement, the making of the Loans hereunder and the execution
and delivery of the Notes.
B. Notwithstanding anything in this Agreement or
implied by law to the contrary, the agreements of the Company
or any other Borrower set forth in Sections 2.11E, 2.11I and
2.11L, the agreements of the Company set forth in Sections 10.2
and 10.3 and the agreements of Banks set forth in Sections
8.2C, 8.4, 10.4 and 10.5 shall survive the payment of the
Loans, the Notes and the termination of this Agreement.
10.10 Failure or Indulgence Not Waiver;
Remedies Cumulative______________
No failure or delay on the part of any Bank or of any
holder of any Note or lender of any Loan in the exercise of any
power, right or privilege hereunder or under the Notes or the
Loans shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such
power, right or privilege preclude other or further exercise
thereof or of any other right, power or privilege. All rights
and remedies existing under this Agreement or the Notes or the
Loans are cumulative to and not exclusive of any rights or
remedies otherwise available.
10.11 Severability
In case any provision in or obligation under this
Agreement or any Note or Loan shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations
thereof, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired
thereby.
10.12 Obligations Several; Independent
Nature of Bank's Rights_________
The obligation of each Bank hereunder is several, and
no Bank shall be responsible for the obligation or commitment
of any other Bank hereunder. Nothing contained in this
Agreement and no action taken by the Banks pursuant hereto
shall be deemed to constitute the Banks to be a partnership, an
association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Bank shall be a
separate and independent debt, and each Bank shall be entitled
to protect and enforce its rights arising out of this Agreement
and it shall not be necessary for any other Bank to be joined
as an additional party in any proceeding for such purpose.
10.13 Headings
Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be
given any substantive effect.
10.14 APPLICABLE LAW, CONSENT TO JURISDICTION
AND SERVICE OF PROCESS_________________
A. THIS AGREEMENT, THE NOTES AND THE LOANS SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICT OF LAWS.
B. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY
BORROWER WITH RESPECT TO THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN THE STATE OF NEW YORK AND BY
EXECUTION AND DELIVERY OF THIS AGREEMENT EACH BORROWER ACCEPTS
FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID
COURTS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. THE
PARTIES HERETO HEREBY IRREVOCABLY WAIVE TRIAL BY JURY, AND EACH
BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING,
WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR
BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR
PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.
10.15 Successors and Assigns; Subsequent
Holders of Notes__________________
This Agreement shall be binding upon the parties
hereto and their respective successors and assigns and shall
inure to the benefit of the parties hereto and the successors
and assigns of the Banks. The terms and provisions of this
Agreement shall inure to the benefit of any assignee or
transferee of the Notes and Loans and in the event of such
transfer or assignment, the rights and privileges herein
conferred upon the Banks shall automatically extend to and be
vested in such transferee or assignee, all subject to the terms
and conditions hereof. The Company's or any Borrower's rights
or any interest therein hereunder may not be assigned without
the written consent of all the Banks except pursuant to a
merger, consolidation or sale, lease or transfer of assets
permitted by Section 6.1 hereof. The Banks' rights of
assignment are limited by and subject to Section 10.1 hereof.
The Company may, in its sole discretion, upon ten (10) days'
prior written notice, replace any of the Banks with one or more
banks provided that (i) the Bank being replaced has
concurrently therewith been paid in full all amounts due to
such Bank hereunder and under any of its Notes, (ii) the full
amount of the Commitments remains unchanged and (iii) the
percentages of the total Commitments allocated to each other
Bank (or any successors thereto) remains unchanged unless the
prior written consent from such Bank has been obtained. Any
such Bank so replaced shall, upon written request of the
Company, execute and deliver such instruments and agreements as
are reasonably necessary to accomplish the same.
10.16 Counterparts; Effectiveness
This Agreement and any amendments, waivers, consents
or supplements may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute
but one and the same instrument. This Agreement shall become
effective on such date (the "Effective Date") as a counterpart
hereof shall be executed by each of the parties hereto and
copies hereof shall be delivered to the Company and the Agent.
WITNESS the due execution hereof by the respective
duly authorized officers of the undersigned as of the date
first written above.
COMPANY:
TEXTRON INC.
By: s/Richard A. McWhirter
Executive Vice President and
Chief Financial Officer
By: s/Brian T. Downing
Vice President and Treasurer
Notice Address:
Textron Inc.
40 Westminster Street
Providence, RI 02903
Attention: Treasurer
with a copy to:
Textron Inc.
40 Westminster Street
Providence, RI 02903
Attention: General Counsel
S-2
BANKS AND AGENT:
BANKERS TRUST COMPANY,
as a Bank and as Agent
By: s/Edward G. Benedict
Name: Edward G. Benedict
Title: Vice President
Notice Address and Payment Office:
Bankers Trust Company
280 Park Avenue
14-E
New York, NY 10017
Attention: Edward G. Benedict
Telephone No. (212) 454-3591
Telecopy No. (212) 454-2942
Commitment: $8,991,223
Pro Rata Share: 3.5965%
S-3
ABN-AMRO BANK, N.V.
By: s/Elliott O. May
Name: Elliott O. May
Title: Group Vice President and
Marketing Manager
Notice Address and Payment Office:
ABN-Amro Bank, N.V.
53 State Street
Boston, MA 02109
Attention: Elliott May
Telephone No.
Telecopy No.
Commitment: $9,210,528
Pro Rata Share: 3.6842%
S-4
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By: s/Arlene S. Pedovitch
Name: Arlene S. Pedovitch
Title: Vice President
Notice Address and Payment Office:
Bank of America
1850 Gateway Boulevard, 4th fl.
Concord, California 94520
Attention: Lorine Stafford
Telephone No.
Telecopy No. (510) 675-7531
Commitment: $13,157,900
Pro Rata Share: 5.2632%
S-5
BANK OF BOSTON
By: s/Carol A. Lovell
Name: Carol A. Lovell
Title: Director
Notice Address and Payment Office:
First National Bank of Boston
100 Federal Street
Boston, MA 02110
Attention: Carol Lovell
Telephone No.
Telecpy No.
Commitment: $14,473,685
Pro Rata Share: 5.7895%
S-6
BANK OF MONTREAL/
HARRIS TRUST AND SAVINGS BANK
By: s/Cecily Mistarz
Name: Cecily Mistarz
Title: Director
Notice Address and Payment Office:
Bank of Montreal/
Harris Trust and Savings Bank
115 South LaSalle Street
12th Floor
Chicago, IL 60603
Attention: Calvin R. Myers
Telephone No.
Telecopy No.
Commitment: $3,289,475
Pro Rata Share: 1.3158%
S-7
THE BANK OF NEW YORK
By: s/David C. Judge
Name: David C. Judge
Title: Vice President
Notice Address and Payment Office:
The Bank of New York
One Wall Street
New York, NY 10286
Attention: David C. Judge
Telephone No.
Telecopy No.
Commitment: $9,868,425
Pro Rata Share: 3.9474%
S-8
THE BANK OF NOVA SCOTIA
By: s/M. R. Bradley
Name: M. R. Bradley
Title: Representative
Notice Address and Payment Office:
The Bank of Nova Scotia
101 Federal Street
16th Floor
Boston, MA 02110
Attention: Michael R. Bradley
Telephone No.
Telecopy No.
Commitment: $3,333,333
Pro Rata Share: 1.3333%
S-9
THE BANK OF TOKYO TRUST COMPANY
By: s/G. Stewart
Name: G. Stewart
Title: Vice President
Notice Address and Payment Office:
Bank of Tokyo Trust Company
Corporate Banking Department
100 Broadway, 12th Floor
New York, NY 10005
Attention: George C. Stewart
Telephone No.
Telecopy No.
Commitment: $3,728,067
Pro Rate Share: 1.4912%
S-10
BANQUE NATIONALE de PARIS
By: s/Phil Truesdale
Name: Phil Truesdale
Title: Vice President
Notice Address and Payment Office:
Banque Nationale de Paris
499 Park Avenue
New York, NY 10022
Attention: Philemon Truesdale
Telephone No.
Telecopy No.
Commitment: $2,631,575
Pro Rata Share: 1.0526%
S-11
BANQUE PARIBAS
By: s/Stanley B. Berkman
Name: Stanley B. Berkman
Title: Group Vice President
By: s/Stephen J. Kelly
Name: Stephen J. Kelly
Title: Vice President
Notice Address and Payment Office:
Banque Paribas
The Equitable Tower
787 Seventh Avenue
New York, NY 10019
Attention: Stephen Kelly
Telephone No. (212) 841-2382
Telecopy No. (212) 841-2333
Commitment: $6,535,092
Pro Rata Share: 2.6140%
S-12
BARCLAYS BANK PLC.
By: s/Gregory D. Amoruso
Name:
Title: Vice President
Notice Address and Payment Office:
Barclays Bank Plc.
222 Broadway
New York, NY 10038
Attention: Peter Nikitaidis
Telephone No.
Telecopy No.
Commitment: $2,631,575
Pro Rata Share: 1.0526%
S-13
CIBC INC.
By: s/W. B. Anderson
Name: W. B. Anderson
Title: Authorized Signatory
Notice Address and Payment Office:
Canadian Imperial Bank of Commerce
Two Paces West
2727 Paces Ferry Road
Atlanta, GA 30339
Attention: Michael J. Dorr
Telephone No. (404) 319-4815
Telecopy No. (404) 319-4950
Commitment: $9,868,425
Pro Rata Share: 3.9474%
S-14
THE CHASE MANHATTAN BANK, N.A.
By: s/Sherwood E. Exum, Jr.
Name: Sherwood E. Exum, Jr.
Title: Managing Director
Notice Address and Payment Office:
The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza
6th Floor
Manufacturing Component
New York, NY 10081
Attention: Sherwood Exum, Jr.
Telephone No.
Telecopy No.
Commitment: $9,868,425
Pro Rata Share: 3.9474%
S-15
CHEMICAL BANK
By: s/Anne Kuchinsky
Name: Anne Kuchinsky
Title: Vice President
Notice Address and Payment Office:
Chemical Bank
270 Park Avenue
New York, NY 10017
Attention: Stewart U. Wallace
Telephone No.
Telecopy No.
Commitment: $14,035,092
Pro Rata Share: 5.6140%
S-16
CITIBANK, N.A.
By: s/W. Martens
Name: W. Martens
Title: Vice President
Notice Address and Payment Office:
Citibank, N.A.
399 Park Avenue
New York, NY 10043
Attention: William G. Martens, III
Telephone No.
Telecopy No.
Commitment: $9,868,425
Pro Rata Share: 3.9474%
S-17
COMERICA BANK
By: s/Jon A. Bird
Name: Jon A. Bird
Title: Vice President
Notice Address and Payment Office:
Comerica Bank
500 Woodward Avenue
MC 3280
Detroit, MI 48226
Attention: Jon A. Bird
Telephone No.
Telecopy No.
Commitment: $1,315,785
Pro Rata Share: 0.5263%
S-18
CONTINENTAL BANK, N.A.
By: s/David Noda
Name: David Noda
Title: Vice President
Notice Address and Payment Office:
Continental Bank, N.A.
231 South LaSalle Street
Chicago, IL 60697
Attention: Elliot J. Jaffee
Telephone No.
Telecopy No.
Commitment: $2,631,575
Pro Rata Share: 1.0526%
S-19
CREDIT LYONNAIS
By: s/Robert Ivosevich
Name: Robert Ivosevich
Title: Senior Vice President
Notice Address and Payment Office:
Credit Lyonnais
Exchange Place
53 State Street - 26th Floor
Boston, MA 02109
Attention: Thierry Hauret
Telephone No.
Telecopy No.
Commitment: $2,631,575
Pro Rata Share: 1.0526%
S-20
CREDIT SUISSE
By: s/Juerg Johner
Name: Juerg Johner
Title:
Notice Address and Payment Office:
Credit Suisse
Tower 49
12 East 40th Street
New York, NY 10017
Attention: Juerg Johner
Telephone No.
Telecopy No.
Commitment: $4,166,667
Pro Rata Share: 1.6667%
S-21
DEUTSCHE BANK AG
NEW YORK BRANCH
By: s/Philip J. Palm
Name: Philip J. Palm
Title: Director
Notice Address and Payment Office:
Deutsche Bank AG
New York Branch
31 West 52nd Street
New York, NY 10019
Attention: Philip J. Palm
Telephone No.
Telecopy No.
Commitment: $9,868,425
Pro Rata Share: 3.9474%
S-22
FIRST AMERICAN NATIONAL
By: s/Scott M. Bane
Name: Scott M. Bane
Title: Vice President
Notice Address and Payment Office:
First American National
First American Center
Nashville, TN 37237
Attention: Scott M. Bane
Telephone No.
Telecopy No.
Commitment: $1,315,785
Pro Rata Share: 0.5263%
S-23
FIRST INTERSTATE BANK OF CALIFORNIA
By: s/Bruce L. Gregory
Name: Bruce L. Gregory
Title: Vice President
Notice Address and Payment Office:
First Interstate Bank of California
885 Third Avenue
New York, NY 10022
Attention: Bruce L. Gregory
Telephone No.
Telecopy No.
Commitment: $5,921,052
Pro Rata Share: 2.3684%
S-24
THE FIRST NATIONAL BANK OF CHICAGO
By: s/Courtenay R. Wood
Name: Courtenay R. Wood
Title: Vice President
Notice Address and Payment Office:
The First National Bank of Chicago
North American Banking Group
One First National Plaza
Mail Suite 0374
Chicago, IL 60670-0374
Attention: Thomas M. Harkless
Telephone No.
Telecopy No.
Commitment: $13,157,900
Pro Rata Share: 5.2632%
S-25
FLEET NATIONAL BANK
By: s/Kathleen A. Fitzgerald
Name: Kathleen A. Fitzgerald
Title: Vice President
Notice Address and Payment Office:
Fleet National Bank
111 Westminster Street
Providence, RI 02903
Attention: Kathleen A. Fitzgerald
Telephone No.:
Telecopy No.:
Commitment: $8,114,027
Pro Rata Share: 3.2456%
S-26
FUJI BANK, LTD.
By: s/Yoshihiko Shiotsugu
Name: Yoshihiko Shiotsugu
Title: Vice President and Manager
Notice Address and Payment Office:
Fuji Bank, Ltd.
Two World Trade Center
New York, NY 10048
Attention: Michael A. Imperiale
Telephone No.
Telecopy No.
Commitment: $3,728,067
Pro Rata Share: 1.4912%
S-27
INDUSTRIAL BANK OF JAPAN
By: s/Takeshi Kawano
Name: Takeshi Kawano
Title: Senior Vice President and
Senior Manager
Notice Address and Payment Office:
Industrial Bank of Japan
245 Park Avenue
New York, NY 10167-0037
Attention: John Veltri
Telephone No.
Telecopy No.
Commitment: $3,728,067
Pro Rata Share: 1.4912%
S-28
MELLON BANK, N.A.
By: s/Diane P. Durnin
Name: Diane P. Durnin
Title: Vice President
Notice Address and Payment Office:
Mellon Bank, N.A.
551 Madison Avenue
New York, NY 10022
Attention: Diane Durnin
Telephone No.
Telecopy No.
Commitment: $5,701,758
Pro Rata Share: 2.2807%
S-29
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK
By: s/Steven Kenneally
Name: Steven Kenneally
Title: Vice President
Notice Address and Payment Office:
Morgan Guaranty Trust Company
of New York
60 Wall Street
New York, NY 10260
Attention: Martin R. Atkin
Telephone No.
Telecopy No.
Commitment: $13,157,900
Pro Rata Share: 5.2632%
S-30
NATIONSBANK
By: s/Thomas McCaskill
Name: Thomas McCaskill
Title: Senior Vice President
Notice Address and Payment Office:
NationsBank
767 Fifth Avenue - 23rd Floor
New York, NY 10153
Attention: Michael J. Cerminaro
Telephone No.
Telecopy No.
Commitment: $13,815,785
Pro Rata Share: 5.5263%
S-31
NATIONAL WESTMINSTER BANK Plc.
By: s/David Apps
Name: David Apps
Title: Vice President
Notice Address and Payment Office:
National Westminster Bank Plc.
175 Water Street - 29th Floor
New York, NY 10038
Attention: David Apps
Telephone No.
Telecopy No.
Commitment: $2,631,575
Pro Rata Share: 1.0526%
S-32
NBD BANK, N.A.
By: s/Carolyn J. Parks
Name: Carolyn J. Parks
Title: Vice President
Notice Address and Payment Office:
NBD Bank, N.A.
611 Woodward Avenue
Detroit, MI 48226
Attention: Carolyn J. Parks
Telephone No.
Telecopy No.
Commitment: $3,289,475
Pro Rata Share: 1.3158%
S-33
CORESTATES BANK, N.A.
By: s/Donna J. Emhart
Name: Donna J. Emhart
Title: Commercial Officer
Notice Address and Payment Office:
Corestates Bank, N.A.
1345 Chestnut Street
P.O. Box 7618
Philadelphia, PA 19101
Attention: Donna J. Emhart
Telephone No.
Telecopy No.
Commitment: $1,315,785
Pro Rata Share: 0.5263%
S-34
THE ROYAL BANK OF CANADA
By: s/Gary R. Overton
Name: Gary R. Overton
Title: Senior Manager
Notice Address and Payment Office:
Royal Bank of Canada
USA Headquarters Financial Square
New York, NY 10005-3531
Attention: Gary R. Overton
Telephone No.
Telecopy No.
Commitment: $9,868,425
Pro Rata Share: 3.9474%
S-35
SANWA BANK, Ltd.
By: s/Renko Hara
Name: Renko Hara
Title: Vice President
Notice Address and Payment Office:
Sanwa Bank, Ltd.
Boston Branch
One Financial Center
Suite 2812
Boston, MA 02111
Attention: Dale C. Edmunds
Telephone No.
Telecopy No.
Commitment: $3,289,475
Pro Rata Share: 1.3158%
S-36
SHAWMUT BANK
By: s/John B. Desmond
Name: John B. Desmond
Title: Vice President
Notice Address and Payment Office:
Shawmut Bank
777 Main Street
Hartford, CT 06115
Attention: John B. Desmond
Telephone No.
Telecopy No.
Commitment: $4,166,667
Pro Rata Share: 1.6667%
S-37
SUNTRUST
By: s/Peter Gentry
Name: Peter Gentry
Title: Assistant Vice President
Notice Address and Payment Office:
Suntrust
Suntrust Corporate Services
25 Park Place, Center 123
Atlanta, GA 30303
Attention: Christina Ernshaw
Telephone No.
Telecopy No.
Commitment: $1,315,785
Pro Rata Share: 0.5263%
S-38
SWISS BANK CORPORATION
By: s/Stephanie W. Kim
Name: Stephanie W. Kim
Title: Associate Director
Notice Address and Payment Office:
Swiss Bank Corporation
Swiss Bank Tower
10 East 50th Street
SBT-17-A
New York, NY 10022
Attention: Michael Fabiano
Telephone No.
Telecopy No.
Commitment: $9,868,425
Pro Rata Share: 3.9474%
S-39
TORONTO DOMINION BANK
By: s/Lisa Allison
Name: Lisa Allison
Title: Mgr. Cr. Admin.
Notice Address and Payment Office:
Toronto Dominion Bank
31 West 52nd Street
New York, NY 10019
Attention: Katherine Lucey
Telephone No.
Telecopy No.
Commitment: $3,508,766
Pro Rata Share: 1.4035%
LINE OF CREDIT
Dated as of November 1, 1993
Among
TEXTRON INC.
THE BANKS LISTED HEREIN
AND
BANKERS TRUST COMPANY,
as Administrative Agent
TEXTRON INC.
LINE OF CREDIT
dated as of November 1, 1993
TABLE OF CONTENTS
Section Heading Page
INTRODUCTION ......................................... 1
RECITALS ............................................. 1
Section 1 DEFINITIONS AND ACCOUNTING TERMS ..................... 1
1.1 Definitions .......................................... 1
1.2 Accounting Terms ..................................... 14
Section 2 AMOUNTS AND TERMS OF COMMITMENTS AND
LOANS; NOTES ....................................... 14
2.1 Revolving Loans ...................................... 14
2.2 Competitive Bid Loans ................................ 17
2.3 Notices of Conversion/Continuation ................... 19
2.4 The Revolving Notes and Competitive
Bid Notes .......................................... 20
2.5 Pro Rata Borrowings .................................. 21
2.6 Procedure for Extending Final Maturity
Date ............................................... 22
2.7 Interest ............................................. 22
2.8 Commissions and Fees ................................. 25
2.9 Reductions in Commitments; Repayments
and Payments ....................................... 26
2.10 Use of Proceeds ...................................... 30
2.11 Special Provisions Governing Eurodollar
Rate Loans and/or Competitive
Bid Loans .......................................... 30
2.12 Capital Requirements ................................. 38
Section 3 CONDITIONS TO LOANS .................................. 38
3.1 Conditions to Initial Loans .......................... 38
3.2 Conditions to All Loans .............................. 40
3.3 Conditions to All Competitive Bid Loans .............. 41
3.4 Conditions to Loans to Subsidiary
Borrowers .......................................... 42
-i-
Section 4 REPRESENTATIONS AND WARRANTIES ....................... 43
4.1 Organization, Powers and Good Standing ............... 43
4.2 Authorization of Borrowing, etc. ..................... 44
4.3 Financial Condition .................................. 45
4.4 No Adverse Material Change ........................... 45
4.5 Litigation ........................................... 45
4.6 Payment of Taxes ..................................... 46
4.7 Governmental Regulation .............................. 46
4.8 Securities Activities ................................ 46
4.9 ERISA Compliance ..................................... 46
4.10 Certain Fees ......................................... 47
Section 5 AFFIRMATIVE COVENANTS ................................ 47
5.1 Financial Statements and Other Reports ............... 47
5.2 Corporate Existence .................................. 50
5.3 Payment of Taxes ..................................... 50
5.4 Maintenance of Properties; Insurance ................. 50
5.5 Inspection ........................................... 51
5.6 Compliance with Laws ................................. 51
Section 6 NEGATIVE COVENANTS ................................... 51
6.1 Merger ............................................... 51
6.2 Liens ................................................ 52
6.3 Financial Covenants .................................. 53
6.4 Existing Subordinated Debt ........................... 54
6.5 Use of Proceeds ...................................... 54
Section 7 EVENTS OF DEFAULT .................................... 54
7.1 Failure To Make Payments When Due .................... 54
7.2 Default in Other Agreements .......................... 55
7.3 Breach of Certain Covenants .......................... 55
7.4 Breach of Warranty ................................... 55
7.5 Other Defaults Under Agreement ....................... 55
7.6 Involuntary Bankruptcy; Appointment
of Receiver, etc. .................................. 56
7.7 Voluntary Bankruptcy; Appointment
of Receiver, etc. .................................. 56
7.8 Judgments and Attachments ............................ 57
7.9 Dissolution .......................................... 57
7.10 ERISA Title IV Liabilities ........................... 57
Section 8 AGENT ................................................ 58
8.1 Appointment .......................................... 58
8.2 Powers; General Immunity ............................. 59
-ii-
8.3 Representations and Warranties; No
Responsibility for Appraisal of
Creditworthiness ................................... 61
8.4 Right to Indemnity ................................... 61
8.5 Payee of Note Treated as Owner ....................... 61
8.6 Resignation by the Agent ............................. 62
8.7 Successor Agent ...................................... 62
Section 9 GUARANTEE............................................. 63
9.1 Guarantee............................................. 63
9.2 Obligation Not Affected by
Certain Events...................................... 63
9.3 Guarantee a Guarantee of Payment...................... 64
9.4 Obligation Not Subject to
Limitation.......................................... 64
9.5 Order of Payment...................................... 65
9.6 Waiver by the Company ................................ 65
Section 10 MISCELLANEOUS ........................................ 66
10.1 Benefit of Agreement ................................. 66
10.2 Expenses ............................................. 68
10.3 Indemnity ............................................ 69
10.4 Setoff ............................................... 70
10.5 Ratable Sharing ...................................... 70
10.6 Amendments and Waivers ............................... 71
10.7 Independence of Covenants ............................ 72
10.8 Notices .............................................. 72
10.9 Survival of Warranties and Certain
Agreements ......................................... 73
10.10 Failure or Indulgence Not Waiver;
Remedies Cumulative ................................ 73
10.11 Severability ......................................... 73
10.12 Obligations Several; Independent Nature
of Banks' Rights ................................... 74
10.13 Headings ............................................. 74
10.14 APPLICABLE LAW; CONSENT TO JURISDICTION
AND SERVICE OF PROCESS ............................. 74
10.15 Successors and Assigns; Subsequent
Holders of Notes ................................... 75
10.16 Counterparts; Effectiveness .......................... 75
SIGNATURE PAGES ..................................................... 76
-iii-
EXHIBITS
Exhibit A-1 - Form of Revolving Note
Exhibit A-2 - Form of Competitive Bid Note
Exhibit B - Form of Opinion of Thomas D. Soutter, Esq.,
General Counsel of the Company
Exhibit C - Form of Opinion of Cahill Gordon & Reindel
Exhibit D-1 - Form of Notice of Syndicated Borrowing
Exhibit D-2 - Form of Notice of Competitive Bid Borrowing
Exhibit D-3 - Form of Notice of Conversion/Continuation
Exhibit E - Form of Compliance Certificate
Exhibit F - Form of Transfer Supplement
Exhibit G - Form of Loan Assumption Agreement
-iv-
LINE OF CREDIT
LINE OF CREDIT, dated as of November 1, 1993, among
TEXTRON INC., a Delaware corporation (the "Company"), the BANKS
signatory hereto (each a "Bank" and collectively the "Banks")
and BANKERS TRUST COMPANY, a New York banking corporation ("BT
Co"), as a Bank and as Administrative Agent for the Banks.
W I T N E S S E T H :
WHEREAS, the Company owns directly or indirectly all
of the outstanding shares of capital stock of each of the
Subsidiary Borrowers;
WHEREAS, the Company desires that the Banks extend
certain credit facilities to the Company and the Subsidiary
Borrowers for the purposes set forth in Section 2.10;
WHEREAS, each Bank is willing to extend its
commitment to make loans to the Company and the Subsidiary
Borrowers for such purposes on the terms and subject to the
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and
the agreements, provisions and covenants herein contained, the
Company, the Banks and the Agent agree as follows:
Section 1 DEFINITIONS AND ACCOUNTING TERMS
1.1 Definitions
As used in this Agreement, and unless the context
requires a different meaning, the following terms have the
meanings indicated:
"Adjusted Eurodollar Rate" means, for any Interest
Period for a Eurodollar Rate Loan, the rate (rounded
upward to the next highest one hundredth of one percent)
obtained by dividing (i) the Eurodollar Rate for the first
day of such Interest Period by (ii) a percentage equal to
100% minus the stated maximum rate of all reserves
required to be maintained against "Eurocurrency liabili-
ties" as specified in Regulation D (or against any other
category of liabilities which includes deposits by
reference to which the interest rate on Eurodollar Rate
Loans is determined or any category of extensions of
credit or other assets which includes loans by a non-
United States office of any Bank to United States
residents).
"Affected Bank" means any Bank affected by any of the
events described in Section 2.11B or 2.11C hereof.
"Affiliate" means, with respect to any Person, any
Person or group of Persons acting in concert in respect of
the Person in question that, directly or indirectly,
controls or is controlled by or is under common control
with such Person. For the purposes of this definition,
"control" (including, with correlative meanings, the terms
"controlled by" and "under common control with"), as used
with respect to any Person or group of Persons acting in
concert, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction
of management and policies of such Person, whether through
the ownership of voting securities or by contract or
otherwise.
"Agent" has the meaning assigned to that term in
Section 8.1 hereof.
"Agreement" means this Line of Credit, as the same
may at any time be amended, amended and restated,
supplemented or otherwise modified in accordance with the
terms hereof.
"Applicable Margin" has the meaning set forth in
Section 2.7.
"Bank" and "Banks" have the respective meanings
assigned to those terms in the introduction to this
Agreement and its or their successors and permitted
assigns.
"Bankruptcy Code" means Title 11 of the United States
Code entitled "Bankruptcy," as from time to time amended
and any successor statutes.
"Base Rate" means, 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 Rate in effect on such
day plus 1/2 of 1%.
"Base Rate Loans" are Syndicated Loans whose interest
rate is based on Base Rate.
"Board" means the Board of Governors of the Federal
Reserve System.
"Borrower" means each of the Company and each
Subsidiary Borrower.
"Borrowing" means the incurrence by any Borrower on a
given date of Syndicated Loans.
"BT Co" has the meaning assigned to that term in the
introduction to this Agreement.
"Business Day" means (i) for all purposes other than
as covered by clause (ii) below, any day excluding
Saturday, Sunday and any day on which banking institutions
located in the State of New York are authorized or
required by law or other governmental action to close and
(ii) with respect to all notices, determinations, fundings
and payments in connection with Eurodollar Rate Loans, any
day which is a Business Day described in clause (i) and
which is also a day for trading by and between banks in
dollar deposits in the applicable interbank Eurodollar
market.
"Capital Lease", as applied to any Person, means any
lease of any property (whether real, personal or mixed) by
that Person as lessee which, in conformity with GAAP, is
accounted for as a capital lease on the balance sheet of
that Person.
"Code" means the Internal Revenue Code of 1986, as
from time to time amended. Any reference to the Code
shall include a reference to corresponding provisions of
any subsequent revenue law.
"Commitment" means, at any time any determination
thereof is to be made, the commitment (whether or not then
utilized) of each Bank then in effect to extend credit
hereunder, which initially shall be for each Bank the amount
specified on the signature page hereto for such Bank.
"Company" has the meaning assigned to that term in the
introduction to this Agreement.
"Competitive Bid Loan" means a Loan bearing interest at
such rate and for such interest period, and on such other
terms not inconsistent with the terms of this Agreement, as
the applicable Borrower and the Bank making such Loan may
mutually agree and which Loan is requested pursuant to a
Notice of Competitive Bid Borrowing.
"Competitive Bid Notes" means the promissory notes of
the Borrowers issued pursuant to Section 2.4B hereto in
substantially the form of Exhibit A-2 hereto.
"Compliance Certificate" means a certificate
substantially in the form annexed hereto as Exhibit E
delivered to the Banks by the Company pursuant to Section
5.1B(i)(b).
"Consolidated EBITDA" means, without duplication, for
any consecutive four fiscal quarter period, the sum of the
amounts for such period of (i) the Company's Consolidated
Net Income, excluding therefrom any extraordinary items of
gain or loss, plus (ii) the aggregate amount of cash
dividends actually received by the Company or any of its
Subsidiaries in respect of the capital stock of any
Finance Company or Insurance Company and payable out of
the net income for such period in which paid of any such
Finance Company or Insurance Company, plus (iii) the
aggregate amounts deducted in determining Consolidated Net
Income for such period in respect of (a) the provision for
taxes based on income of the Company and its Subsidiaries,
(b) Consolidated Interest Expense and (c) depreciation and
amortization, all as determined on a consolidated basis
for the Company and its Subsidiaries in conformity with
GAAP.
"Consolidated Interest Expense" means, for any
consecutive four fiscal quarter period, total interest
expense (including that attributable to Capital Leases in
accordance with GAAP) of the Company and its Subsidiaries,
all as determined on a consolidated basis in conformity
with GAAP, with respect to all outstanding Indebtedness of
the Company and its Subsidiaries.
"Consolidated Net Income" means, for any consecutive
four fiscal quarter period, the net income (or loss) of
any Person (for purposes of this definition "Parent") and
its Subsidiaries on a consolidated basis for such period
taken as a single accounting period determined in
conformity with GAAP; provided that there shall be
excluded, the income (or loss) of any Person accrued prior
to the date it becomes a Subsidiary of Parent or is merged
into or consolidated with Parent or any of its
Subsidiaries or that Person's assets are acquired by
Parent or any of its Subsidiaries.
"Consolidated Net Worth" means, as at any date of
determination, the sum of the capital stock and additional
paid-in capital plus/minus marketable equity securities
valuation adjustment plus retained earnings (or minus
accumulated deficit) plus $679,500,000 less the cost of
treasury stock of the Company and its Subsidiaries on a
consolidated basis (but excluding the effects of foreign
currency translation adjustments under Financial
Accounting Standards Board Statement No. 52) calculated in
conformity with GAAP.
"Contractual Obligation", as applied to any Person,
means any provision of any security issued by that Person
or of any material indenture, mortgage, deed of trust or
other similar instrument of that Person under which
Indebtedness is outstanding or secured or by which that
Person or any of its properties is bound or to which that
Person or any of its properties is subject.
"Credit Agreement" means the Credit Agreement dated
as of November 1, 1993 among the Company, the banks listed
therein and BT Co, as administrative Agent, as such
agreement may from time to time be amended, amended and
restated, supplemented or otherwise modified.
"Designation Date" means, with respect to any
Subsidiary of the Company, the date on which the Company
designates such Subsidiary as a Subsidiary Borrower.
"Effective Date" has the meaning assigned to that
term in Section 10.16 hereof.
"Electing Holder" and "Electing Holders" have the
meanings assigned to such terms in Section 2.6.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as from time to time amended, and any
successor statute.
"ERISA Affiliate" means, with respect to any Person,
any trade or business (whether or not incorporated) which,
together with such Person, is under common control as
described in Section 414(c) of the Code or is a member of
a controlled group, as defined in Section 414(b) of the
Code, which includes such Person.
"Eurodollar Rate" means, for any Interest Rate
Determination Date, the arithmetic average (rounded
upwards to the nearest 1/16 of 1%) of the offered
quotation, if any, to first class banks in the Eurodollar
market by each of the Reference Banks for U.S. dollar
deposits of amounts in immediately available funds
comparable to the principal amount of the Eurodollar Rate
Loan of the Reference Bank for which the Eurodollar Rate
is being determined with maturities comparable to the
Interest Period for which such Eurodollar Rate will apply
as of approximately 10:00 A.M. (New York time) two
Business Days prior to the commencement of such Interest
Period. If any Reference Bank fails to provide its
offered quotation to Agent, the Eurodollar Rate shall be
determined on the basis of the offered quotation(s) by the
other Reference Bank(s).
"Eurodollar Rate Loans" means Syndicated Loans or
portions thereof during the period in which such Loans
bear interest at rates determined in accordance with Sec-
tion 2.7A hereof.
"Event of Default" has the meaning assigned to that
term in Section 7 hereof.
"Exchange Act" means the Securities Exchange Act of
1934, as from time to time amended, and any successor
statutes.
"Existing Subordinated Debt" means the indebtedness
of the Company outstanding on the date of this Agreement
pursuant to the Indenture dated as of May 1, 1985 with The
Chase Manhattan Bank, N.A., as Trustee, as the same has
been supplemented by the First Supplemental Subordinated
Indenture and as in effect on the date of this Agreement.
"Extension Notice" has the meaning assigned to that
term in Section 2.6.
"Federal Funds Rate" means on any one day the
weighted average of the rate on overnight Federal funds
transactions with members of the Federal Reserve System
only arranged by Federal funds brokers as published as of
such day by the Federal Reserve Bank of New York, provided
that if such day is not a Business Day, the Federal Funds
Rate shall be measured as of the immediately preceding
Business Day.
"Final Maturity Date" means October 30, 1994 unless
such date is extended in accordance with Section 2.6 and,
if so extended, then the date to which extended.
"Finance Company" means any subsidiary of the Company
which is primarily engaged in the business of a finance
company.
"Funding Date" means the date of the funding of a
Loan made pursuant to a Notice of Borrowing but does not
mean the date of any conversion or continuation of the
interest rate applicable to any Loan pursuant to a Notice
of Conversion/Continuation.
"GAAP" means generally accepted accounting principles
set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board
as in effect on October 2, 1993 and applicable to and used
by the Company in the preparation of the unaudited
financial statements of the Company included in the
Company's report on Form 10-Q for the fiscal quarter ended
July 3, 1993.
"Governmental Authority" means any nation or
government, any state or other political subdivision
thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or
pertaining to government.
"Indebtedness", as applied to any Person, means,
without duplication, (i) all indebtedness for borrowed
money of that Person, (ii) that portion of obligations
with respect to Capital Leases which is properly
classified as a liability on a balance sheet of that
Person in conformity with GAAP, (iii) notes payable of
that Person and drafts accepted by that Person
representing extensions of credit whether or not
representing obligations for borrowed money, (iv) any
obligation of that Person owed for all or any part of the
deferred purchase price of property or services which
purchase price is (a) due more than twelve months from the
date of incurrence of the obligation in respect thereof,
or (b) evidenced by a note or similar written instrument,
(v) all indebtedness secured by any Lien on any property
or asset owned or held by that Person regardless of
whether the indebtedness secured thereby shall have been
assumed by that Person or is nonrecourse to the credit of
that Person and (vi) any guarantee of that Person, direct
or indirect, of any indebtedness, note payable, draft
accepted, or obligation described in clauses (i)-(v) above
of any other Person.
"Initial Loans" means the initial Loans made under
this Agreement.
"Insurance Company" means any subsidiary of the
Company which is primarily engaged in the business of an
insurance company, including, without limitation, PRHC
Inc.; provided, however, that PRHC Inc. shall not
thereafter be deemed to be an Insurance Company if, at any
time, PRHC Inc. or any of its Subsidiaries ceases to
remain a company (i) primarily engaged in the business of
an insurance company or (ii) whose principal business is
to augment the operation of a Subsidiary of PRHC Inc.
which is so engaged.
"Interest Payment Date" means, (x) with respect to
any Eurodollar Rate Loan, the last day of each Interest
Period applicable to such Eurodollar Rate Loan; provided
that in the case of each Interest Period of six months,
"Interest Payment Date" shall also include the Interest
Period Anniversary Date (or if such day is not a Business
Day, then the next succeeding Business Day) for such
Interest Period and (y) in the case of any Base Rate Loan,
the last Business Day of each calendar quarter.
"Interest Period" means any interest period
applicable to a Eurodollar Rate Loan as determined
pursuant to Section 2.7B hereof.
"Interest Period Anniversary Date" means, for each
Interest Period applicable to a Eurodollar Rate Loan which
is six months, the three month anniversary of the
commencement of that Interest Period.
"Interest Rate Determination Date" means each date
for calculating the Eurodollar Rate for purposes of
determining the interest rate in respect of an Interest
Period. The Interest Rate Determination Date shall be the
second Business Day prior to the first day of the related
Interest Period.
"Lien" means any lien, mortgage, pledge, security
interest, charge or encumbrance of any kind (including any
conditional sale or other title retention agreement, any
lease in the nature thereof, and any agreement to give any
security interest).
"Loans" means one or more of the Syndicated Loans,
Competitive Bid Loans or any combination thereof.
"Margin Stock" has the meaning assigned to that term
in Regulation U of the Board as in effect from time to
time.
"Material Adverse Effect" means a material adverse
effect on the business, operations, properties, assets or
financial condition of the Company and its Subsidiaries,
taken as a whole.
"Multiemployer Plan" has the meaning assigned to that
term in Section 4001(a)(3) of ERISA.
"1987 Credit Agreement" has the meaning assigned to
that term in Section 3.1E.
"Notes" means the Revolving Notes, the Competitive
Bid Notes, or any combination thereof.
"Notice of Borrowing" means any Notice of Syndicated
Borrowing, Notice of Competitive Bid Borrowing or any
combination thereof.
"Notice of Competitive Bid Borrowing" has the meaning
assigned to that term in Section 2.2A hereof and shall be
substantially in the form of Exhibit D-2 hereof.
"Notice of Conversion/Continuation" means any notice
delivered pursuant to Section 2.3A hereof and shall be
substantially in the form of Exhibit D-3 hereto.
"Notice of Syndicated Borrowing" has the meaning
assigned to that term in Section 2.1B hereof and shall be
substantially in the form of Exhibit D-1 hereto.
"Officer's Certificate" means, as applied to any
corporation, a certificate executed on behalf of such
corporation by its Chairman of the Board (if an officer),
its President, any Vice President of such corporation, its
Chief Financial Officer, its Treasurer or any Assistant
Treasurer of such corporation.
"Payment Office" means the office of the Agent or any
Bank, as the case may be, designated as such on the
signature pages of this Agreement or such other office as
to which the agent or such Bank shall notify the Company,
the Agent and the other Banks in writing.
"PBGC" means the Pension Benefit Guaranty Corporation
created by Section 4002(a) of ERISA or any successor
thereto.
"Pension Plan" means any plan (other than a
Multiemployer Plan) described in Section 4021(a) of ERISA
and not excluded pursuant to Section 4021(b) thereof,
which may be, is or has been established or maintained, or
to which contributions may be, are or have been made by
the Company or any of its ERISA Affiliates or as to which
the Company would be considered as a "contributing
sponsor" for purposes of Title IV of ERISA at any relevant
time.
"Permitted Encumbrances" means:
(i) Liens for taxes, assessments or governmental
charges or claims the payment of which is not at
the time required by subsection 5.3;
(ii) Statutory Liens of landlords and Liens of
carriers, warehousemen, mechanics, materialmen
and other liens imposed by law incurred in the
ordinary course of business for sums not yet
delinquent or being contested in good faith, if
such reserve or other appropriate provision, if
any, as shall be required by generally accepted
accounting principles then in effect, shall have
been made therefor;
(iii) Liens (other than any Lien imposed by ERISA)
incurred or deposits made in the ordinary course
of business in connection with workers'
compensation, unemployment insurance and other
types of social security, or to secure the
performance of tenders, statutory obligations,
bids, leases, government contracts, performance
and return-of-money bonds and other similar
obligations (exclusive of obligations for the
payment of borrowed money);
(iv) Any attachment or judgment Lien individually or
in the aggregate not in excess of $50,000,000
unless the judgment it secures shall, within 30
days after the entry thereof, not have been
discharged or execution thereof stayed pending
appeal, or shall not have been discharged within
30 days after the expiration of any such stay;
(v) Leases or subleases granted to others not
interfering in any material respect with the
business of the Company or any of its
Subsidiaries;
(vi) Easements, rights-of-way, restrictions, minor
defects or irregularities in title and other
similar charges or encumbrances not interfering
in any material respect with the ordinary
conduct of the business of the Company or any of
its Subsidiaries;
(vii) Any interest or title of a lessor under any
lease;
(viii) Liens arising from UCC financing statements
regarding leases; and
(ix) Liens in favor of custom and revenue authorities
arising as a matter of law to secure payment of
customs duties in connection with the
importation of goods incurred in the ordinary
course of business.
"Person" means and includes natural persons,
corporations, limited partnerships, general partnerships,
joint stock companies, joint ventures, associations,
companies, trusts, banks, trust companies, land trusts,
business trusts or other organizations, whether or not
legal entities, and any Governmental Authority.
"Potential Event of Default" means a condition or
event which, after notice or lapse of time or both, would
constitute an Event of Default if that condition or event
were not cured or removed within any applicable grace or
cure period.
"Prime Rate" shall mean the rate which BT Co
announces from time to time as its prime lending rate, as
in effect from time to time. The Prime Rate is a
reference rate and does not necessarily represent the
lowest or best rate actually charged to any customer.
BT Co may make commercial loans or other loans at rates of
interest at, above or below the Prime Rate.
"Pro Rata Share" means, when used with reference to
any Bank and any described aggregate or total amount, the
percentage designated as such Bank's Pro Rata Share set
forth under the name of such Bank on the applicable
signature page of this Agreement.
"Reference Banks" means BT Co, Morgan Guaranty Trust
Company of New York and The Chase Manhattan Bank, N.A.
"Regulation D" means Regulation D of the Board as
from time to time in effect and any successor to all or a
portion thereof establishing reserve requirements.
"Reportable Event" means a "reportable event"
described in Section 4043(b) of ERISA or in the
regulations thereunder notice of which to PBGC is required
within 30 days after the occurrence thereof, or receipt of
a notice of withdrawal liability with respect to a
Multiemployer Plan pursuant to Section 4202 of ERISA.
"Required Banks" means, as at any time any
determination thereof is to be made, the Banks holding at
least 66-2/3% of the aggregate Commitments of all the
Banks or, if no Commitments are in effect, 66-2/3% of
Loans outstanding.
"Restricted Subsidiary" means each Subsidiary (or a
group of Subsidiaries that would constitute a Restricted
Subsidiary if consolidated and which are engaged in the
same or related lines of business) of the Company now
existing or hereafter acquired or formed by the Company
which (x) for the most recent fiscal year of the Company,
accounted for more than 5% of the consolidated revenues of
the Company and its Subsidiaries, or (y) as at the end of
such fiscal year, was the owner of more than 5% of the
consolidated assets of the Company and its Subsidiaries.
For purposes of this definition, the proviso to the
definition of Subsidiary shall not be applicable.
"Revolving Notes" means the promissory notes of the
Borrowers issued pursuant to Section 2.4A hereof in
substantially the form of Exhibit A-1 hereto.
"Securities Act" means the Securities Act of 1933, as
from time to time amended, and any successor statutes.
"Subsidiary" means, in respect to any Person, any
corporation, association or other business entity of which
more than 50% of the total voting power of shares of stock
entitled (without regard to the occurrence of any
contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by such Person or one
or more of the other Subsidiaries of such Person or a
combination thereof; provided, however, that no Finance
Company or Insurance Company or any Subsidiary of any
Finance Company or Insurance Company shall be treated as a
Subsidiary of the Company.
"Subsidiary Borrower" means any Subsidiary of the
Company designated as such in writing by the Company;
provided, that such Subsidiary shall enter into a Loan
Assumption Agreement in the form annexed hereto as Exhibit
G appropriately completed and that no Loan shall be made
to such Subsidiary until Section 3.4 has been complied
with as to such Subsidiary.
"Syndicated Loan" means a Loan which is made as part
of a Borrowing, is made collectively by the Banks based on
each Bank's Pro Rata Share of such Loan, is made as either
a Base Rate Loan or a Eurodollar Rate Loan and is
requested pursuant to a Notice of Syndicated Borrowing.
"Termination Event" means (i) a Reportable Event with
respect to any Pension Plan, or (ii) the withdrawal of the
Company or any of its ERISA Affiliates from a Pension Plan
during a plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA, or
(iii) the filing of a notice of intent to terminate a
Pension Plan (including any such notice with respect to a
Pension Plan amendment referred to in Section 4041(e) of
ERISA, or (iv) the institution of proceedings to terminate
a Pension Plan by the PBGC, or (v) any other event or
condition which, to the best knowledge of the Company,
would constitute grounds under Section 4042(a) of ERISA
for the termination of, or the appointment of a trustee to
administer, any Pension Plan.
"Textron Affiliate", as applied to the Company, means
any Person or Persons directly or indirectly controlling
the Company. For purposes of this definition,
controlling, as applied to the Company, means the
possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of
the Company, whether through the ownership of voting
securities or by contract or otherwise. Neither any Bank
nor any parent of any Bank nor any Subsidiary of any such
Bank or parent shall be treated as a Textron Affiliate.
"Textron Affiliate Amount" means, as at any date of
determination, the then aggregate outstanding amount of
all loans and/or advances to any Textron Affiliate from
the Company or any Subsidiary of the Company (without
giving effect to the proviso to the definition of
Subsidiary).
"Total Commitment" means, as at any date of
determination, the aggregate Commitments of all Banks then
in effect (as such Commitments may be reduced from time to
time pursuant to Section 2.9A hereof). The original
amount of the Total Commitment is $250,000,000.
"Type" means, in respect of any Syndicated Loan, any
type of Syndicated Loan, i.e., either a Base Rate Loan or
a Eurodollar Rate Loan.
"United States Dollars" or "U.S. Dollars" or "$"
means such coin or currency of the United States of
America as at the time shall be legal tender for the
payment of public and private debts.
1.2 Accounting Terms
For the purposes of this Agreement, all accounting
terms not otherwise defined herein shall have the meanings
assigned to them in conformity with GAAP.
Section 2 AMOUNTS AND TERMS OF COMMITMENTS AND LOANS; NOTES
2.1 Revolving Loans
A. Commitments. (i) Subject to the terms and
conditions of this Agreement and in reliance upon the
representations and warranties of each Borrower herein set
forth, each Bank hereby severally agrees to lend to the
Borrowers from time to time during the period from and
including the Effective Date to and including the Final
Maturity Date its Pro Rata Share of the Total Commitment. Each
Bank's Commitment and the Total Commitment shall expire in full
on the Final Maturity Date.
Amounts borrowed under this Section 2.1A may, subject
to the limitations set forth in this Agreement, be repaid and,
up to but excluding the Final Maturity Date, be reborrowed.
The Syndicated Loans and all other amounts owed hereunder with
respect to the Syndicated Loans shall be paid in full no later
than the Final Maturity Date.
Borrowings on any Funding Date with respect to a
Syndicated Loan under this Section 2.1A(i) shall be in an
aggregate minimum amount of $10,000,000 and integral multiples
of $5,000,000 in excess of that amount or, if less, the
unutilized amount of the Total Commitment. Notwithstanding the
foregoing, (i) Syndicated Loans made by a Bank on any Funding
Date shall not exceed such Bank's Commitment then in effect and
(ii) no Syndicated Loan may be borrowed by the Borrower if the
aggregate principal amount of all Loans outstanding hereunder,
after giving effect to the Loan so requested and all other
Loans then requested which have not yet been funded shall
exceed the Total Commitment then in effect.
(ii) Subject to and upon the terms and conditions
herein set forth, each Bank severally agrees that any Borrower
may incur a Competitive Bid Loan pursuant to a Notice of
Competitive Bid Borrowing from time to time on and after the
Effective Date and prior to the date which is the Business Day
preceding the date which is 30 days prior to the Final Maturity
Date, provided that after giving effect to any Competitive Bid
Loan and the concurrent use of the proceeds thereof the
aggregate principal amount of all Loans outstanding hereunder,
after giving effect to the Loan so requested and all other
Loans then requested which have not yet been funded will not
exceed the Total Commitment then in effect. Within the
foregoing limits and subject to the conditions set forth in
this Agreement, Competitive Bid Loans may be repaid and
reborrowed in accordance with the provisions hereof.
Competitive Bid Loans made on any Funding Date shall be in an
aggregate minimum amount of $10,000,000 and in integral
multiples of $5,000,000 in excess of such amount.
B. Notice of Syndicated Borrowing. Subject to
Section 2.1A, whenever any Borrower desires to borrow under
this Section 2.1, it shall deliver to the Agent a Notice of
Syndicated Borrowing (which may be telephonic, confirmed
promptly in writing) no later than 10:30 A.M. (New York time),
in the case of a Base Rate Loan, on the proposed Funding Date,
and, in the case of a Eurodollar Rate Loan, three Business Days
in advance of the proposed Funding Date. The Notice of
Syndicated Borrowing shall specify (i) the proposed Funding
Date (which shall be a Business Day), (ii) the amount of the
proposed Loans, (iii) whether such Loans are to consist of Base
Rate Loans or Eurodollar Rate Loans or a combination thereof
and the amounts thereof, (iv) the Interest Period(s) therefor
and (v) the aggregate principal amount of Loans outstanding,
after giving effect to the proposed Loan and all other Loans
then requested which have not yet been funded, and that such
aggregate principal amount does not exceed the Total Commitment
then in effect.
Neither the Agent nor any Bank shall incur any
liability to any Borrower in acting upon any telephonic notice
referred to above which the Agent believes in good faith to
have been given by a duly authorized officer or other person
authorized to borrow on behalf of such Borrower or for
otherwise acting in good faith under this Section 2.1B and,
upon funding of Syndicated Loans by the Banks in accordance
with this Agreement pursuant to any telephonic notice, such
Borrower shall have borrowed such Loans hereunder.
Except as provided in Section 2.11D, a Notice of
Syndicated Borrowing for a Eurodollar Rate Loan (or telephonic
notice in lieu thereof) shall be irrevocable on and after the
related Interest Rate Determination Date, and the applicable
Borrower shall be bound to make a borrowing in accordance
therewith.
C. Disbursement of Funds. Promptly after receipt of
a Notice of Syndicated Borrowing pursuant to Section 2.1B (or
telephonic notice in lieu thereof) with respect to a Syndicated
Loan, the Agent shall notify each Bank of the proposed
borrowing. Each Bank shall make its Pro Rata Share of the
amount of such Loans available to the Agent, in same day funds,
at the office of the Agent located at One Bankers Trust Plaza,
New York, New York not later than 12:00 Noon (New York City
time) on the Funding Date. Such Loans of a Bank shall be equal
to such Bank's Pro Rata Share of the aggregate amount of all
such Loans requested by the applicable Borrower pursuant to the
applicable Notice of Syndicated Borrowing. Upon satisfaction
or waiver of the conditions precedent specified in Section 3.1
(in the case of the Initial Loans) and Sections 3.2 and, if
applicable, 3.4 (in the case of all Loans) the Agent shall make
the proceeds of such Loans available to the applicable Borrower
on such Funding Date by causing an amount of same day funds
equal to the proceeds of all such Loans received by the Agent
to be credited to the account of such Borrower at such office
of the Agent.
Unless the Agent shall have been notified by any Bank
(which notice may be telephonic, confirmed promptly in writing)
prior to any Funding Date in respect of any Syndicated Loan
that such Bank does not intend to make available to the Agent
such Pro Rata Share of such Loan on such Funding Date, the
Agent may assume that such Bank has made such amount available
to the Agent on such Funding Date and the Agent in its sole
discretion may, but shall not be obligated to, make available
to the applicable Borrower a corresponding amount on such
Funding Date. If such corresponding amount is not in fact made
available to the Agent by such Bank, the Agent shall be
entitled to recover such corresponding amount on prompt demand
from such Bank together with interest thereon, for each day
from such Funding Date until the date such amount is paid to
the Agent at the customary rate set by the Agent for the
correction of errors among banks for three Business Days and
thereafter at the Base Rate. If such Bank does not pay such
corresponding amount forthwith upon the Agent's demand
therefor, the Agent shall promptly notify the applicable
Borrower and such Borrower shall immediately pay such
corresponding amount to the Agent. Nothing in this
Section 2.1C shall be deemed to relieve any Bank from its
obligation to fulfill its Commitment hereunder or to prejudice
any rights which such Borrower may have against any Bank as a
result of any default by such Bank hereunder.
2.2 Competitive Bid Loans
A. Whenever the Company or a Subsidiary Borrower
desires to incur a Competitive Bid Loan, it shall (i) in the
case of the Company, deliver to the Agent and each Bank, and
(ii) in the case of a Subsidiary Borrower, deliver to the
Company (which shall deliver to the Agent and each Bank), not
later than 11:00 a.m. (New York time) at least one Business Day
prior to the funding date of such proposed Competitive Bid
Loan, a Notice of Competitive Bid Borrowing, such notice to
specify in each case the date of the proposed Competitive Bid
Loan, the aggregate amount of the proposed Competitive Bid
Loan(s), the maturity date for repayment of each Competitive
Bid Loan to be made as part of such Competitive Bid Loans (each
of which maturity dates may not be later than the Business Day
prior to the Final Maturity Date), the interest payment date or
dates relating thereto, and any other terms to be applicable to
such Competitive Bid Loans (including, without limitation, the
basis to be used by the Banks in determining the rate or rates
of interest to be offered by them as provided in Section 2.2B).
No Notice of Competitive Bid Borrowing shall be given earlier
than three Business Days subsequent to the making of the last
Competitive Bid Loan.
B. Each Bank shall, if, in its sole discretion, it
elects to do so, irrevocably offer to make one or more
Competitive Bid Loans to the applicable Borrower as part of
such proposed Competitive Bid Loan at a rate or rates of
interest specified by such Bank in its sole discretion, by
notifying the Company, before 10:00 a.m. (New York City time)
on the date (the "Reply Date") of such proposed Competitive Bid
Loan specified in the Notice of Competitive Bid Borrowing
delivered with respect thereto pursuant to Section 2.2A, of the
minimum amount and maximum amount of each Competitive Bid Loan
which such Bank would be willing to make as part of such
proposed Competitive Bid Loan (which amounts may, subject to
the provisions of Section 2.1A(ii), exceed such Bank's
Commitment); provided that the minimum amount of any Bank's bid
shall be at least $5,000,000. If any Bank shall not notify the
Company, before 10:00 a.m. (New York City time) on the Reply
Date of its offer of a Competitive Bid Loan, such Bank shall be
deemed not to be making an offer with respect to such
Competitive Bid Loan.
C. The Company shall, in turn, before 11:00 a.m.
(New York City time) on the Reply Date, either
(1) cancel such Competitive Bid Loan by giving
the Agent and each Bank notice to that effect
(whereupon such Competitive Bid Loan will not be
made), or
(2) accept one or more of the offers made by
any Bank or Banks pursuant to Section 2.2B, in its
sole discretion, by giving notice to the Agent and
such Bank of the amount of each Competitive Bid Loan
(which amount shall be equal to or greater than the
minimum amount, and equal to or less than the maximum
amount, notified to the Company by such Bank or Banks
for such Competitive Bid Loan pursuant to
Section 2.2B) to be made by such Bank as part of such
Competitive Bid Loan, and reject any remaining offers
made by Banks pursuant to Section 2.2B above by
giving the Agent and such Bank notice to that effect.
D. No later than Noon (New York City time) on the
Funding Date of each Competitive Bid Loan, each Bank required
to participate therein will make available its share of such
Competitive Bid Loan (as specified in Section 2.2C) in same day
funds at the office of The Chase Manhattan Bank, N.A. located
at One Chase Manhattan Plaza, New York, New York, ABA
No. 021000021, for the account of Textron Inc., ACCOUNT
NO. 910-1-013655.
E. Each Competitive Bid Loan shall be payable on the
maturity date specified in the Notice of Competitive Bid
Borrowing relating to such Competitive Bid Loan.
2.3 Notices of Conversion/Continuation
A. Subject to the provisions of Section 2.11 hereof,
the applicable Borrower shall have the option (i) to convert at
any time all or any part of its outstanding Base Rate Loans
equal to $10,000,000 and integral multiples of $5,000,000 in
excess of that amount to Eurodollar Rate Loans and (ii) upon
the expiration of any Interest Period applicable to outstanding
Eurodollar Rate Loans, to continue all or any portion of such
Eurodollar Rate Loans equal to $10,000,000 and integral
multiples of $5,000,000 in excess of that amount as Eurodollar
Rate Loans. The succeeding Interest Period(s) of such
converted or continued Eurodollar Rate Loan shall commence on
the date of conversion in the case of clause (i) above and on
the last day of the Interest Period of the Eurodollar Rate
Loans to be continued in the case of clause (ii) above.
The applicable Borrower shall deliver a Notice of
Conversion/Continuation to the Agent no later than 11:00 a.m.
(New York City time) at least three Business Days, in the case
of a conversion into or continuation of Eurodollar Rate Loans
in advance of the proposed conversion/continuation date. A
Notice of Conversion/Continuation shall specify (i) the
proposed conversion/continuation date (which shall be a
Business Day), (ii) the amount of the Syndicated Loan to be
converted/continued, (iii) the nature of the proposed
conversion/continuation and (iv) the requested Interest Period.
Except as provided in Section 2.11D hereof, a Notice
of Conversion/Continuation for conversion to, or continuation
of, a Eurodollar Rate Loan shall be irrevocable on or after the
related Interest Rate Determination Date, and the applicable
Borrower shall be bound to convert or continue in accordance
therewith.
B. Unless the applicable Borrower shall have given
the Agent (x) a timely Notice of Conversion/Continuation in
accordance with the provisions of Section 2.3A hereof with
respect to Eurodollar Rate Loans outstanding or (y) written
notice of such Borrower's intent to repay Eurodollar Rate
Loans, furnished not later than 11:00 a.m. (New York City time)
on the last day of the Interest Period with respect to such
Eurodollar Rate Loans, the applicable Borrower shall be deemed
to have requested that such Eurodollar Rate Loans be converted
into Base Rate Loans on such day. Such Base Rate Loans shall
be in an aggregate principal amount equal to (i) the aggregate
principal amount of such Eurodollar Rate Loans not intended to
be repaid less (ii) any repayment required to be made on such
date pursuant to Section 2.9 hereof.
2.4 The Revolving Notes and Competitive Bid Notes
A. Each Borrower's obligations to pay the principal
of, and interest on, all the Syndicated Loans made by each Bank
shall be evidenced by a Revolving Note duly executed and
delivered by such Borrower with blanks appropriately completed
in conformity herewith. The Revolving Note issued to each Bank
shall (i) be payable to the order of such Bank, (ii) be dated
the Effective Date, (iii) be in a stated principal amount equal
to the initial Commitment of such Bank and be payable in the
principal amount of the outstanding Syndicated Loans evidenced
thereby, (iv) provide that all Syndicated Loans then
outstanding shall be repaid on the Final Maturity Date as
provided herein, (v) bear interest as provided in the
appropriate clause of Section 2.7 hereof in respect of the Base
Rate Loans, or the Eurodollar Rate Loans, as the case may be,
evidenced thereby, (vi) be entitled to the benefits of this
Agreement, and (vii) have attached thereto a schedule (a
"Syndicated Loans and Principal Payments Schedule")
substantially in the form of the Schedule to Exhibit A-1
hereto. At the time of the making of each Syndicated Loan or
principal payment in respect thereof, each Bank shall, and is
hereby authorized to, make a notation on the Syndicated Loans
and Principal Payments Schedule of the date and the amount of
such Syndicated Loan or payment, as the case may be.
Notwithstanding the foregoing, the failure to make a notation
with respect to the making of any Syndicated Loan, shall not
limit or otherwise affect the obligation of the Borrower
hereunder or under the applicable Note with respect to such
Syndicated Loan and payments of principal by the Borrower shall
not be affected by the failure to make a notation thereof on
the appropriate Syndicated Loans and Principal Payments
Schedule.
B. Each Borrower's obligations to pay the principal
of, and interest on, all the Competitive Bid Loans made by each
Bank shall be evidenced by a Competitive Bid Note duly executed
and delivered by such Borrower with blanks appropriately
completed in conformity herewith. The Competitive Bid Note
issued to each Bank shall (i) be payable to the order of such
Bank, (ii) be dated the Effective Date, (iii) be in a stated
principal amount equal to the Total Commitment and be payable
in the principal amount of the outstanding Competitive Bid
Loans evidenced thereby, (iv) provide that all Competitive Bid
Loans then outstanding shall be repaid on the dates agreed to
between such Borrower and such Bank and, in any event, not
later than the Final Maturity Date, (v) bear interest at the
rates and have interest payable on the dates agreed to between
such Borrower and such Bank, (vi) be entitled to the benefits
of this Agreement, and (vii) have attached thereto a schedule
(a "Competitive Bid Loans and Principal Payments Schedule")
substantially in the form of the Schedule to Exhibit A-2
hereto. At the time of the making of each Competitive Bid Loan
or principal payment in respect thereof, each Bank shall, and
is hereby authorized to, make a notation on the Competitive Bid
Loans and Principal Payments Schedule of the date and the
amount of such Competitive Bid Loan or payment, as the case may
be. Notwithstanding the foregoing, the failure to make a
notation with respect to the making of any Competitive Bid
Loan, shall not limit or otherwise affect the obligation of the
Borrower hereunder or under the applicable Note with respect to
such Competitive Bid Loan and payments of principal by the
Borrower shall not be affected by the failure to make a
notation thereof on the appropriate Competitive Bid Loans and
Principal Payments Schedule.
2.5 Pro Rata Borrowings
The Syndicated Loans comprising each Borrowing under
this Agreement shall be made by the Banks simultaneously and
each Bank's Syndicated Loan shall be equal to such Bank's Pro
Rata Share of such Borrowing. It is understood that no Bank
shall be responsible for any default by any other Bank in its
obligation to make a Loan hereunder and that each Bank shall be
obligated to make the Loans provided to be made by it hereunder
subject to the terms hereof, regardless of the failure of any
other Bank to fulfill its commitment to make Loans hereunder.
If, as a result of an error in the determination of any Bank's
Pro Rata Share of a Borrowing with respect to a Syndicated
Loan, a Bank makes a Syndicated Loan in excess of its Pro Rata
Share (an "Erroneous Loan") the applicable Borrower shall, upon
the request of the Agent, repay a portion of such Syndicated
Loan equal to such excess or, within two days of receiving
written notice of such error, correct such error by effecting a
Borrowing of Syndicated Loans having a comparable maturity to
the then remaining maturity of the Erroneous Loan (a
"Correcting Loan") and allocating the Correcting Loan among the
Banks such that, after such allocation, the sum of the
principal amounts of the Erroneous Loan and the Correcting Loan
held by each Bank shall represent such Bank's Pro Rata Share of
the sum of the aggregate principal amounts of the Erroneous
Loans and the Correcting Loans held by all Banks; provided,
however, that the Borrower may not incur Correcting Loans if,
after giving effect to such Correcting Loans, the outstanding
Syndicated Loans of any Bank shall exceed such Bank's
Commitment or if the aggregate principal amount of all Loans
outstanding would exceed the Total Commitment then in effect.
Borrowings of Correcting Loans shall be subject to all of the
terms and conditions of Borrowings hereunder.
2.6 Procedure for Extending Final Maturity Date
Subject to the conditions set forth in this Section
2.6, the Company, with the consent of the holders of 100% of
the Commitments (the "Holders"), shall have the option to
extend the Final Maturity Date for a period of 364 days from
the then date thereof. The Company may exercise such option at
any time and from time to time as follows:
(i) No more than 60 and not less than 45 days prior
to the Final Maturity Date then in effect, the Company
shall notify the Agent and each Holder in writing (an
"Extension Notice") of its desire to extend the Final
Maturity Date to a date which is exactly 364 days after
the Final Maturity Date then in effect.
(ii) If on or prior to the 15th day prior to the
Final Maturity Date all Persons then Holders consent to
such extension in a writing delivered to the Agent and the
Company, the Final Maturity Date then in effect which is
requested in the applicable Extension Notice to be
extended shall be extended automatically to a date which
is 364 days after such Final Maturity Date then in effect.
(iii) If any Holder shall have objected to the
extension of any Final Maturity Date in a writing
delivered to the Agent and the Company on or prior to the
30th day prior to the applicable Final Maturity Date or
any Holder has not delivered the notice described in
Section 2.6(ii) by such 30th day (each such Holder, an
"Electing Holder"; collectively, the "Electing Holders"),
then the Company may, on or prior to the 15th day prior to
the Final Maturity Date, replace such Electing Holder in
accordance with the second to last sentence of Section
10.15.
2.7 Interest
A. Rate of Interest on Loans
(i) Each Borrower agrees to pay interest in respect
of the unpaid principal amount of each Syndicated Loan made to
it from and including the date made to but not including the
date repaid.
(a) Each Eurodollar Rate Loan shall bear interest on
the unpaid principal amount thereof for the applicable
Interest Period at an interest rate per annum equal to the
sum of the Applicable Margin plus the applicable Adjusted
Eurodollar Rate. The "Applicable Margin" for any Interest
Period means the applicable percentage amount set forth in
the table below based upon the rating issued by Standard &
Poor's Corporation and Moody's Investors Service, Inc. for
the Company's long-term unsecured indebtedness at the
Interest Rate Determination Date for such Interest Period:
Rating Category* Applicable Margin
A/A2 or higher .225%
A-/A3 .250%
BBB+/Baa1 .375%
BBB/Baa2 .400%
BBB-/Baa3 or lower or no rating .500%
__________________
* In the case of "split" ratings (i.e., if the ratings
of each such rating agency differ by one or more
categories, including numerical modifiers and (+) and (-)
as categories), the Applicable Margin will be based upon
the higher of the two ratings.
(b) Each Base Rate Loan shall bear interest on the
unpaid principal thereof for the applicable Interest
Period at an interest rate per annum equal to the
applicable Base Rate.
The Agent shall determine each interest rate applicable to the
Loans hereunder. The Agent shall give prompt notice to the
applicable Borrower and the Banks of each rate of interest so
determined, and its determination thereof shall be conclusive
in the absence of manifest error.
(ii) Each Borrower agrees to pay interest in respect
of the unpaid principal amount of each Competitive Bid Loan
made to it from and including the date made up to but not
including the date repaid at the rate or rates per annum as may
be mutually agreed upon by such Borrower and the Bank making
the Competitive Bid Loan.
B. Interest Periods
In connection with each Eurodollar Rate Loan, the
applicable Borrower shall elect an interest period (each an
"Interest Period") to be applicable to such Eurodollar Rate
Loan which Interest Period shall be either a one, two, three or
six month period; provided that:
(i) the Interest Period for each Eurodollar Rate
Loan shall commence on the date of such Eurodollar Rate
Loan;
(ii) if an Interest Period would otherwise expire on
a day which is not a Business Day, such Interest Period
shall expire on the next succeeding Business day; provided
that if any Interest Period would otherwise expire on a
day which is not a Business Day but is a day of the month
after which no further Business Day occurs in such month,
such Interest Period shall expire on the next preceding
Business Day;
(iii) any Interest Period which begins on the last
Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall, subject
to clause (iv) below, end on the last Business Day of such
ending calendar month;
(iv) no Interest Period shall extend beyond the Final
Maturity Date; and
(v) there shall be no more than 30 Interest Periods
outstanding at any time.
C. Interest Payments. Interest shall be payable on
each (i) Syndicated Loan in arrears on each Interest Payment
Date applicable to that Loan, and (ii) Competitive Bid Loan, at
such times as agreed to by the applicable Borrower and the Bank
making such Competitive Bid Loan (which shall be the scheduled
maturity date of such Loan if less than 180 days after the
making of such Loan), and in each case upon any prepayment of
that Loan (to the extent accrued on the amount being prepaid)
and when due and payable (whether at maturity, by acceleration
or otherwise).
D. Computation of Interest. Interest on Syndicated
Loans shall be computed on the basis of a 360-day year and the
actual number of days elapsed in the period during which it
accrues. Interest on a Competitive Bid Loan shall be computed
on the basis set forth in the applicable Notice of Competitive
Bid Borrowing. In computing interest on any Loan, the date of
the making of the Loan or, in the case of a Eurodollar Rate
Loan, the first day of an Interest Period, as the case may be,
shall be included and the date of payment or the expiration of
an Interest Period, as the case may be, shall be excluded;
provided that if a Loan is repaid on the same day on which it
is made, one day's interest shall be paid on that Loan.
E. Post-Maturity Interest. Any principal payments
on the Loans not paid when due and, to the extent permitted by
applicable law, any interest payment on the Loans not paid when
due, in each case whether at stated maturity, by notice of
prepayment, by acceleration or otherwise, shall thereafter bear
interest payable upon demand at a rate which is 1% per annum in
excess of the rate of interest otherwise payable under this
Agreement for Prime Rate Loans.
2.8 Commissions and Fees
A. Facility Fees. (i) The Company shall pay to the
Agent for the account of the Banks a facility fee accrued from
and including the Effective Date to and including the Final
Maturity Date on the daily average aggregate amount of the
Commitments (whether used or unused) based upon the rating
issued by Standard & Poor's Corporation and Moody's Investors
Service, Inc. for the Company's long-term unsecured
indebtedness at the beginning of each fiscal quarter of the
Company:
Rating Category* Facility Fee
A/A2 or higher .1000%
A-/A3 .1250%
BBB+/Baal .1500%
BBB/Baa2 .2000%
BBB-/Baa3 or lower or no .2250%
rating
__________________
* In the case of "split" ratings (i.e., if the ratings of
each such rating agency differ by one or more categories,
including numerical modifiers and (+) and (-) as
categories), the facility fee will be based upon the
higher of the two ratings.
(ii) Such facility fees shall be computed on the
basis of a year of 360 days and paid for the actual number of
days elapsed. Such facility fees shall be paid quarterly in
arrears on each March 31, June 30, September 30 and December 31
and on the Final Maturity Date. From the effective date of any
termination or reduction of Commitments, such facility fees
shall cease to accrue or be correspondingly reduced. If the
Commitments are terminated in their entirety or reduced,
facility fees accrued on the total Commitments, or accrued on
the aggregate amount of the reduction of the Commitments (in
the case of such a reduction), shall be payable on the
effective date of such termination or reduction.
(iii) Upon receipt of any amount representing fees
paid pursuant to this Section 2.8, the Agent shall pay such
amount to the Banks based on their respective Pro Rata Shares.
B. Administrative Fees. The Company agrees to pay
to the Agent an annual fee (the "Administrative Fee") in an
amount equal to the amount previously agreed to in writing by
the Company and the Agent. Such Administrative Fee shall be
payable quarterly in advance commencing on the first quarterly
anniversary of the date of this Agreement and on each
successive quarterly anniversary of such date, so long as any
Loan or Commitment is outstanding on such date.
C. Time of Payment. The Company shall make payment
of each Bank's facility fee and of the Agent's Administrative
Fee hereunder, not later than Noon (New York City time) on the
date when due in freely transferable U.S. Dollars and in
immediately available funds, to the Agent at its Payment
Office.
2.9 Reductions in Commitments;
Repayments and Payments___
A. Reductions of Total Commitment. After the
Effective Date, the Company shall have the right, upon at least
three Business Days' prior irrevocable written notice to the
Agent, who will promptly notify the Banks thereof, by telephone
confirmed in writing, without premium or penalty, to reduce or
terminate the Total Commitment, in whole at any time or in part
from time to time, in minimum aggregate amounts of $10,000,000
(unless the Total Commitment at such time is less than
$10,000,000, in which case, in an amount equal to the Total
Commitment at such time) and, if such reduction is greater than
$10,000,000, in integral multiples of $5,000,000 in excess of
such amount, provided that (a) any such reduction of the Total
Commitment shall apply to the Commitment of each Bank in
accordance with its Pro Rata Share of the aggregate of such
reduction and (b) any such reduction in the Total Commitment
shall be permanent.
B. Voluntary Repayments. (i) The applicable
Borrower shall have the right to repay any Base Rate Loan in
whole at any time or in part from time to time, and any
Eurodollar Rate Loan on the last day of the Interest Period
with respect thereto, without premium or penalty in an
aggregate minimum amount of $10,000,000 and integral multiples
of $5,000,000 in excess of that amount or, if less, the
outstanding principal amount of such Loan; provided that no
Loan, either in whole or in part, may be repaid on the
Borrowing Date of such Loan. The applicable Borrower shall
give notice (by telex or telecopier, or by telephone (confirmed
in writing promptly thereafter)) (which shall be irrevocable)
to the Agent and each Bank of each proposed repayment
hereunder, (x) with respect to Base Rate Loans, not later than
10:30 A.M. on the day of the proposed repayment and (y) with
respect to Eurodollar Rate Loans, at least three Business Days
prior to the day of the proposed repayment, and in each case
shall specify the proposed repayment date (which shall be a
Business Day), the aggregate principal amount of the proposed
repayment and what Types of Loans are to be repaid and the
Borrowing(s) pursuant to which made.
(ii) If there exists an Event of Default or a
Potential Event of Default and any Syndicated Loans are
outstanding, no Borrower may prepay all or any portion of the
principal amount of any Competitive Bid Loan prior to the
maturity thereof.
C. Mandatory Repayments. (i) Upon any partial or
total reduction of a Bank's Commitment, each Borrower shall
simultaneously therewith repay such Bank's Syndicated Loans in
a principal amount equal to the amount, if any, by which the
aggregate principal amount of such Bank's Syndicated Loans
outstanding exceeds such Bank's Commitment as so reduced.
(ii) Each Borrower shall repay to the relevant Bank
(which shall promptly furnish notice thereof to the Agent) the
unpaid principal amount of each Competitive Bid Loan made by
such Bank hereunder on the maturity date with respect thereto
and shall repay to the Agent the unpaid principal amount of
each Syndicated Loan on the Final Maturity Date, in each case,
together with all accrued and unpaid interest thereon. Upon
obtaining knowledge of an Event of Default, a Potential Event
of Default, or any other default with respect to a Competitive
Bid Loan, the Bank which made such Competitive Bid Loan shall
notify the Agent thereof.
D. Method and Place of Payment. Except as otherwise
specifically provided herein, all payments to be made by the
applicable Borrower on account of principal and interest on
each Loan shall be made without setoff or counterclaim and
shall be made, in the case of a Syndicated Loan, to the Agent
for the ratable account of each Bank, and, in the case of a
Competitive Bid Loan, to the relevant Bank, in each case not
later than Noon (New York City time) on the date when due and
shall be made in freely transferable U.S. Dollars in
immediately available funds at the Agent's or such Bank's
Payment Office, respectively. Whenever any payment with
respect to any Loan shall be due on a day which is not a
Business Day, the due date thereof shall be extended to the
next succeeding Business Day and, with respect to payments of
principal, interest shall be payable at the applicable rate
during such extension; provided, however, that with respect to
Eurodollar Rate Loans, if the next succeeding Business Day
falls in another calendar month, such payments shall be made on
the next preceding Business Day. The Agent shall remit to each
Bank its Pro Rata Share of all such payments received in
collected funds by the Agent for the account of such Bank in
respect of which such payment is made. Such payments shall be
made at the Payment Office of the Agent. Upon receipt of any
principal payment with respect to a Competitive Bid Loan, the
receiving Bank shall promptly (and in any event within one
Business Day thereof) notify the Agent with respect thereto.
E. Net Payments. (i) All payments by the
applicable Borrower or the Company under this Agreement and/or
the Notes shall be made without setoff or counterclaim and
(unless, in the case of Competitive Bid Loans only, otherwise
agreed to between the Borrower and the Bank making any such
Competitive Bid Loan), in such amounts as may be necessary in
order that all such payments (after deduction or withholding
for or on account of any present or future taxes, levies,
imposts, duties or other charges of whatsoever nature imposed
by any Governmental Authority, other than any tax on or
measured by the net income of a Bank pursuant to the income tax
laws of the United States or of the jurisdictions where such
Bank's principal or lending offices are located (collectively,
"Taxes")) shall not be less than the amounts otherwise
specified to be paid under this Agreement and/or the Notes. If
the applicable Borrower or the Company is required by law to
make any deduction or withholding from any payment due
hereunder, then the amount payable will be increased to such
amount which, after deduction from such increased amount of all
amounts required to be deducted or withheld therefrom, will not
be less than the amount otherwise due and payable. Without
prejudice to the foregoing, if any Bank or the Agent is
required to make any payment on account of taxes, the Company
will, upon notification by the Bank or the Agent promptly
indemnify such person against such Taxes, together with any
interest, penalties and expenses payable or incurred in
connection therewith. The Company shall also reimburse each
Bank, upon the written request of such Bank, for taxes imposed
on or measured by the net income of such Bank pursuant to the
laws of the United States of America, any State or political
subdivision thereof, or the jurisdiction in which the principal
office or lending office of such Bank is located or under the
laws of any political subdivision or taxing authority of any
such jurisdiction as such Bank shall determine are payable by
such Bank in respect of Taxes paid to or on behalf of such Bank
pursuant to Section 2. For purposes of this Section, the term
"Taxes" includes interest, penalties and expenses payable or
incurred in connection therewith. A certificate as to any
additional amounts payable to a Bank under this Section 2.9E
submitted to the Company by such Bank shall, absent manifest
error, be final, conclusive and binding for all purposes upon
all parties hereto. With respect to each deduction or
withholding for or on account of any Taxes, the Company shall
promptly furnish to each Bank such certificates, receipts and
other documents as may be required (in the judgment of such
Bank) to establish any tax credit to which such Bank may be
entitled.
(ii) Each Bank shall supply to the Company, within a
reasonable period after the date of execution of this
Agreement, executed copies of Internal Revenue Service Form
4224 or Form 1001 (which indicates that the respective Bank is
entitled to receive interest exempt from United States
withholding tax) or any successor Forms, and shall update such
Forms as necessary in order to retain their effectiveness, to
the extent each such Bank is legally entitled to execute and
deliver either of such Forms.
(iii) With respect to any Taxes which are paid by any
Borrower in accordance with the provisions of this Section
2.09E, each Bank receiving the benefits of such payments of
Taxes hereby agrees to pay to such Borrower any amounts
refunded to such Bank which such Bank determines in its sole
discretion to be a refund in respect of such Taxes.
F. Order of Payment. Subject to the last sentence
of this Section 2.9F, all payments made by the applicable
Borrower to the Agent (other than payments to the Agent in its
capacity as a Bank which has made Competitive Bid Loans to such
Borrower and or in connection with any fee or indemnification
payments not specifically designated under the terms of this
Agreement as being for the benefit of the Banks) shall be
applied by the Agent, on behalf of each Bank based on its Pro
Rata Share, (a) first, to the payment of expenses referred to
in Section 10.2 hereof, (b) second, to the payment of the fees
referred to in Section 2.8 hereof, (c) third, to the payment of
accrued and unpaid interest on such Bank's Base Rate Loans
until all such accrued interest has been paid, (d) fourth, to
the payment of accrued and unpaid interest on such Bank's
Eurodollar Rate Loans until all such accrued interest has been
paid, (e) fifth, to the payment of the unpaid principal amount
of such Bank's Base Rate Loans, and (f) sixth, to the payment
of the unpaid principal amount of such Bank's Eurodollar Rate
Loans. Notwithstanding the foregoing, upon the occurrence and
during the continuance of a Potential Event of Default or an
Event of Default, all payments made by the applicable Borrower
with respect to Loans shall be made to the Agent and after
being applied in accordance with clauses (a) and (b) of this
Section 2.9F, shall be paid to the Banks pro rata based upon
the aggregate principal amount of Loans outstanding made by
each Bank, and the payments allocable to Syndicated Loans shall
then be applied in accordance with clauses (c), (d), (e) and
(f) of this Section 2.9F.
2.10 Use of Proceeds
The proceeds of the Loans made by the Banks to the
Borrowers may be used for acquisitions, repurchases of capital
stock of the Company, the funding of dividends payable to
shareholders of the Company and for general corporate purposes
of the Borrowers.
2.11 Special Provisions Governing Eurodollar
Rate Loans and/or Competitive Bid Loans
Notwithstanding any other provisions of this
Agreement, the following provisions shall govern with respect
to Eurodollar Rate Loans and Competitive Bid Loans as to the
matters covered, unless, in the case of Competitive Bid Loans,
otherwise agreed to between the Borrower and the Bank making
any such Competitive Bid Loan:
A. Determination of Interest Rate. As soon as
practicable after 10:00 a.m. (New York City time) on an
Interest Rate Determination Date, the Agent shall
determine (which determination shall, absent manifest
error, be final, conclusive and binding upon all parties)
the interest rate which shall apply to the Eurodollar Rate
Loans for which an interest rate is then being determined
for the applicable Interest Period and shall promptly give
notice thereof (in writing or by telephone confirmed in
writing) to the Borrower requesting such Eurodollar Loan
and to each Bank.
B. Substituted Rate of Borrowing. In the event that
on any Interest Rate Determination Date any Bank
(including the Agent) shall have determined (which
determination shall be final and conclusive and binding
upon all parties but, with respect to the following
clauses (i) and (ii)(b), shall be made only after
consultation with the Company and the Agent) that:
(i) by reason of any changes arising after the
date of this Agreement affecting the Eurodollar
market or affecting the position of that Bank in such
market, adequate and fair means do not exist for
ascertaining the applicable interest rate by
reference to the Eurodollar Rate with respect to the
Eurodollar Rate Loans as to which an interest rate
determination is then being made; or
(ii) by reason of (a) any change (including any
changes proposed or published prior to the date
hereof) after the date hereof in any applicable law
or any governmental rule, regulation or order (or any
interpretation or administration thereof and
including the introduction of any new law or
governmental rule, regulation or order (including any
thereof proposed or published, prior to the date
hereof)) or (b) other circumstances affecting that
Bank or the Eurodollar market or the position of that
Bank in such market (such as, for example, but not
limited to, official reserve requirements required by
Regulation D to the extent not given effect in the
Eurodollar Rate), the Adjusted Eurodollar Rate shall
not represent the effective pricing to that Bank for
Dollar deposits of comparable amounts for the
relevant period;
then, and in any such event, that Bank shall be an
Affected Bank and it shall promptly (and in any event as
soon as possible after being notified of a Borrowing) give
notice (by telephone confirmed in writing) to the
applicable Borrower and the Agent (which notice the Agent
shall promptly transmit to each other Bank) of such
determination. Thereafter, such Borrower shall pay to the
Affected Bank with respect to such Eurodollar Rate Loans,
upon written demand therefor, but only if such demand is
made within 60 days of the end of the fiscal quarter in
which such Interest Rate Determination Date falls, such
additional amounts (in the form of an increased rate of,
or a different method of calculating, interest or
otherwise as the Affected Bank in its sole discretion
shall reasonably determine) as shall be required to cause
the Affected Bank to receive interest with respect to such
Affected Bank's Eurodollar Rate Loans for the Interest
Period following that Interest Rate Determination Date
(such Interest Period being an "Affected Interest Period")
at a rate per annum equal to the Applicable Margin in
excess of the effective pricing to the Affected Bank for
Dollar deposits to make or maintain Eurodollar Rate Loans.
A certificate as to additional amounts owed the Affected
Bank, showing in reasonable detail the basis for the
calculation thereof, submitted in good faith to the
applicable Borrower and the Agent by the Affected Bank
shall, absent manifest error, be final, conclusive and
binding for all purposes.
C. Required Termination and Prepayment. In the
event that on any date any Bank shall have reasonably
determined (which determination shall be final and
conclusive and binding upon all parties) that the making
or continuation of its Eurodollar Rate Loans (i) has
become unlawful by, or would be inconsistent with,
compliance by that Bank in good faith with any law,
governmental rule, regulation or order (whether or not
having the force of law and whether or not failure to
comply therewith would be unlawful), or (ii) has become
impracticable as a result of a contingency occurring after
the date of this Agreement which materially and adversely
affects the Eurodollar market, then, and in any such
event, that Bank shall be an Affected Bank and it shall
promptly give notice (by telephone confirmed in writing)
to the applicable Borrower and the Agent (which notice the
Agent shall promptly transmit to each Bank) of that
determination. Subject to the prior withdrawal of a
Notice of Syndicated Borrowing or prepayment of the
Eurodollar Rate Loans of the Affected Bank as contemplated
by the following Section 2.11D hereof, the obligation of
the Affected Bank to make Eurodollar Rate Loans during any
such period shall be terminated at the earlier of the
termination of the Interest Period then in effect or when
required by law and the applicable Borrower shall no later
than the termination of the Interest Period in effect at
the time any such determination pursuant to this Section
2.11C is made or earlier, when required by law, repay
Eurodollar Rate Loans of the Affected Bank together with
all interest accrued thereon.
D. Options of the Borrowers. In lieu of paying an
Affected Bank such additional moneys as are required by
Section 2.11B, 2.11I or 2.12 hereof or the prepayment of
an Affected Bank required by Section 2.11C hereof, but in
no event in derogation of Section 2.11E hereof, any
Borrower may exercise any one of the following options:
(i) If the determination by an Affected Bank
relates only to Eurodollar Rate Loans then being
requested by such Borrower pursuant to a Notice of
Syndicated Borrowing or a Notice of Conver-
sion/Continuation, the Borrower may by giving notice
(by telephone confirmed in writing) to the Agent (who
shall promptly give similar notice to each Bank) no
later than the date immediately prior to the date on
which such Eurodollar Rate Loans are to be made,
withdraw as to the Affected Bank that Notice of
Syndicated Borrowing or Notice of Conversion/Contin-
uation, as the case may be; or
(ii) Upon written notice to the Agent and each
Bank, such Borrower may terminate the obligations of
the Banks to make Loans as, and to convert Loans
into, Eurodollar Rate Loans and in such event, the
Borrower shall, prior to the time any payment
pursuant to Section 2.11C hereof is required to be
made or, if the provisions of Section 2.11B hereof
are applicable, at the end of the then current
Interest Period, convert all of such Eurodollar Rate
Loans into Base Rate Loans; or
(iii) Such Borrower may give notice (by telephone
confirmed in writing) to the Affected Bank and the
Agent (who shall promptly give similar notice to each
Bank) and require the Affected Bank to make the
Eurodollar Rate Loan then being requested as a Base
Rate Loan or to continue to maintain its outstanding
Base Rate Loan then the subject of a Notice of
Conversion/Continuation as a Base Rate Loan or to
convert its Eurodollar Rate Loan then outstanding
that is so affected into Base Rate Loans at the end
of the then current Interest Period (or at such
earlier time as prepayment is otherwise required to
be made pursuant to Section 2.11C hereof), that
notice to pertain only to the Loans of the Affected
Bank and to have no effect on the obligations of the
other Banks to make or maintain Eurodollar Rate Loans
or to convert Base Rate Loans into Eurodollar Rate
Loans.
E. Compensation. The Company shall compensate each
Bank, upon written request by that Bank (which request
shall set forth in reasonable detail the basis for
requesting such amounts), for all reasonable losses,
expenses and liabilities (including, without limitation,
any interest paid by that Bank to lenders of funds
borrowed by it to make or carry its Eurodollar Rate Loans
and Competitive Bid Loans and any loss (other than loss of
margins) sustained by that Bank in connection with the
re-employment of such funds), which that Bank may sustain
with respect to any Borrower's Eurodollar Rate Loans or
Competitive Bid Loans if for any reason (other than a
default or error by that Bank) (i) a borrowing of any
Eurodollar Rate Loan or Competitive Bid Loan does not
occur on a date specified therefor in a Notice of
Borrowing or a telephonic request for borrowing, (ii) any
repayment or conversion of any of such Bank's Eurodollar
Rate Loans or Competitive Bid Loans occurs on a date which
is not the last day of the Interest Period applicable to
that Eurodollar Rate Loan or Competitive Bid Loan (if
applicable), (iii) any repayment of any such Bank's
Eurodollar Rate Loans or Competitive Bid Loans is not made
on any date specified in a notice of repayment given by
the Borrower, or (iv) as a consequence of any other
failure by the Borrower to repay such Bank's Eurodollar
Rate Loans or Competitive Bid Loans when required by the
terms of this Agreement.
F. Quotation of Eurodollar Rate. Anything herein to
the contrary notwithstanding, if on any Interest Rate
Determination Date no Eurodollar Rate is available by
reason of the failure or inability of the Reference Banks
to provide offered quotations to the Agent in accordance
with the definition of "Eurodollar Rate", the Agent shall
give the applicable Borrowers and each Bank prompt notice
thereof and the Syndicated Loans requested shall be made
as Base Rate Loans.
G. Affected Bank's Obligation to Mitigate. Each
Bank agrees that, as promptly as practicable after it
becomes aware of the occurrence of an event or the
existence of a condition that would cause it to be an
Affected Bank under Section 2.11B or 2.11C hereof, it
will, to the extent not inconsistent with such Bank's
internal policies, use reasonable efforts to make, fund or
maintain the affected Eurodollar Rate Loans of such Bank
through another lending office of such Bank if as a result
thereof the additional moneys which would otherwise be
required to be paid in respect of such Loans pursuant to
Section 2.11B hereof would be materially reduced or the
illegality or other adverse circumstances which would
otherwise require prepayment of such Loans pursuant to
Section 2.11C hereof would cease to exist and if, as
determined by such Bank, in its sole discretion, the
making, funding or maintaining of such Loans through such
other lending office would not otherwise materially
adversely affect such Loans or such Bank. The Company
hereby agrees to pay all reasonable expenses incurred by
any Bank in utilizing another lending office of such Bank
pursuant to this Section 2.11G.
H. Booking of Eurodollar Rate Loans. Any Bank may
make, carry or transfer Eurodollar Rate Loans at, to, or
for the account of, any of its branch offices or the
office of an Affiliate of that Bank.
I. Increased Costs. Except as provided in Section
2.11B, if, by reason of (x) after the date hereof, the
introduction of or any change (including, without
limitation, any change by way of imposition or increase of
reserve requirements) in or in the interpretation of any
law or regulation (whether or not proposed or published
prior to the date hereof), or (y) the compliance with any
guideline or request from any central bank or other
Governmental Authority or quasi-governmental authority
exercising control over banks or financial institutions
generally (whether or not having the force of law):
(i) any Bank (or its applicable lending office)
shall be subject to any tax, duty or other charge
with respect to its Eurodollar Rate Loans or
Competitive Bid Loans or its obligation to make
Eurodollar Rate Loans or Competitive Bid Loans, or
shall change the basis of taxation of payments to any
Bank of the principal of or interest on its
Eurodollar Rate Loans or Competitive Bid Loans or its
obligation to make Eurodollar Rate Loans or
Competitive Bid Loans (except for changes in the rate
of tax on the overall net income of such Bank or its
applicable lending office imposed by the jurisdiction
in which such Bank's principal executive office or
applicable lending office is located); or
(ii) any reserve (including, without limitation,
any imposed by the Board), special deposit or similar
requirement against assets of, deposits with or for
the account of, or credit extended by, any Bank's
applicable lending office shall be imposed or deemed
applicable or any other condition affecting its
Eurodollar Rate Loans or Competitive Bid Loans or its
obligation to make Eurodollar Rate Loans or
Competitive Bid Loans shall be imposed on any Bank or
its applicable lending office or the interbank
Eurodollar market;
and as a result thereof there shall be any increase in the
cost to that Bank of agreeing to make or making, funding
or maintaining Eurodollar Rate Loans or Competitive Bid
Loans (except to the extent already included in the
determination of the applicable Adjusted Eurodollar Rate
or the rate on a Competitive Bid Loan), or there shall be
a reduction in the amount received or receivable by that
Bank or its applicable lending office, then the Borrower
shall from time to time, upon written notice from and
demand by that Bank (which shall be promptly furnished
upon the Banks being made subject thereto) (with a copy of
such notice and demand to the Agent), pay to the Agent for
the account of that Bank, within five Business Days after
the date specified in such notice and demand, additional
amounts sufficient to indemnify that Bank against such
increased cost. A certificate as to the basis for and
calculation of the amount of such increased cost,
submitted to the Borrower and the Agent by that Bank,
shall, absent manifest error, be final, conclusive and
binding for all purposes.
J. Assumptions Concerning Funding of Eurodollar Rate
Loans. Calculation of all amounts payable to a Bank under
this Section 2.11 in respect of a Eurodollar Rate Loan
shall be made as though that Bank had actually funded its
Eurodollar Rate Loan through the purchase of a Eurodollar
deposit, bearing interest at the Eurodollar Rate
applicable to such Eurodollar Rate Loan in an amount equal
to the amount of the Eurodollar Rate Loan and having a
maturity comparable to the relevant Interest Period and
through the transfer of such Eurodollar deposit, from an
offshore office of that Bank to a domestic office of that
Bank in the United States of America; provided, however,
that each Bank may fund each of its Eurodollar Rate Loans
in any manner it sees fit and the foregoing assumption
shall be utilized only for the calculations of amounts
payable under this Section 2.11.
K. Eurodollar Rate Loans and Competitive Bid Loans
After Default. Unless the Required Banks shall otherwise
agree, after the occurrence of and during the continuance
of a Potential Event of Default or an Event of Default,
the Borrowers may not elect to have a Eurodollar Rate Loan
or Competitive Bid Loan be made or have any Eurodollar
Rate Loan continued or have any Base Rate Loan converted
into a Eurodollar Rate Loan.
L. Eurodollar Rate Taxes. The Borrower agrees that:
(i) Promptly upon notice from any Bank to the
Company, the Company will pay, prior to the date on
which penalties attach thereto, all present and
future income, stamp and other taxes, levies, or
costs and charges whatsoever imposed, assessed,
levied or collected on or in respect of any
Borrower's Eurodollar Rate Loans solely as a result
of the interest rate being determined by reference to
the Eurodollar Rate, as the case may be, and/or the
provisions of this Agreement relating to the
Eurodollar Rate and/or the recording, registration,
notarization or other formalization of any thereof
(all such taxes, levies, costs and charges being
herein collectively called "Eurodollar Rate Taxes");
provided that Eurodollar Rate Taxes shall not include
taxes imposed on or measured by the overall net
income of that Bank by the country under the laws of
which such Bank is organized or any political
subdivision or taxing authority thereof or therein,
or taxes imposed on or measured by the overall income
of any branch or subsidiary of that Bank (whether
gross or net income) by any jurisdiction or
subdivision thereof in which that branch or
subsidiary is doing business. The Company shall also
pay such additional amounts equal to increases in
taxes payable by that Bank which increases are
attributable to payments made by the Company
described in the immediately preceding sentence or
this sentence. Promptly after the date on which
payment of any such Eurodollar Rate Tax is due
pursuant to applicable law, the Company will, at the
request of that Bank, furnish to that Bank evidence,
in form and substance satisfactory to that Bank, that
the Company has met its obligation under this
Section 2.11L; and
(ii) The Company will indemnify each Bank
against, and reimburse each Bank on demand for, any
Eurodollar Rate Taxes payable under clause (i) above,
as the case may be, as determined by that Bank in its
good faith discretion. That Bank shall provide the
Company with appropriate receipts for any payments or
reimbursements made by the Borrower pursuant to this
clause (ii) of Section 2.11L.
2.12 Capital Requirements
If while any portion of the Total Commitment is in
effect or any Loans are outstanding, any Bank determines that
the adoption of any law, treaty, rule, regulation, guideline or
order regarding capital adequacy or capital maintenance or any
change therein, or any change in the interpretation or
administration thereof by any Governmental Authority, central
bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such Bank, with any
request or directive regarding capital adequacy or capital
maintenance (whether or not having the force of law and whether
or not the failure to comply therewith would be unlawful) of
any such Governmental Authority, central bank or comparable
agency, has or would have the effect of increasing the amount
of capital required to be maintained by such Bank (including,
without limitation, with respect to any Bank's Commitment or
Competitive Bid Loans outstanding), then the Company shall from
time to time, within 15 days of written notice and demand from
such Bank (with a copy to the Agent), pay to the Agent, for the
account of such Bank, additional amounts sufficient to
compensate such Bank for the cost of such additional required
capital. A certificate showing in reasonable detail the
computations made in arriving at such cost, submitted to the
Company and the Agent by such Bank shall, absent manifest
error, be final, conclusive and binding for all purposes.
Section 3 CONDITIONS TO LOANS
3.1 Conditions to Initial Loans
The obligation of each Bank to make the Initial Loans
is, in addition to the conditions precedent specified in
Section 3.2, subject to satisfaction of each of the following
conditions:
A. On or before the Effective Date, the Company
shall have delivered to the Banks (or to the Agent with
sufficient copies, originally executed where appropriate,
for each Bank) each, unless otherwise noted, dated the
Effective Date:
1. Certified copies of its Certificate of
Incorporation , together with a good standing
certificate from the Secretary of State of its
jurisdiction of incorporation, each to be dated a
recent date prior to the Effective Date;
2. Copies of its Bylaws, certified as of the
Effective Date by its corporate secretary or an
assistant secretary;
3. Resolutions of its Board of Directors
approving and authorizing the execution, delivery and
performance of this Agreement and any other
documents, instruments and certificates required to
be executed by the Company in connection herewith and
approving and authorizing the execution, delivery and
payment of the Notes to be issued by the Company and
the incurrence of the Loans, each certified as of the
Effective Date by its corporate secretary or an
assistant secretary as being in full force and effect
without modification or amendment;
4. Signature and incumbency certificates with
respect to the Persons executing this Agreement and
the Notes;
5. Executed copies of this Agreement and the
Credit Agreement;
6. Revolving Notes executed by the Company,
substantially in the form of Exhibit A-1 annexed
hereto and in accordance with Section 2.4A hereof,
drawn to the order of each Bank and with appropriate
insertions; and
7. Such other documents as the Agent may
reasonably request.
B. The Agent shall have received an originally
executed copy of the favorable written opinion of Thomas
D. Soutter, Esq., General Counsel of the Company, dated as
of the Effective Date, substantially in the form of
Exhibit B annexed hereto; the Company hereby expressly
instructs such counsel to prepare such opinion and deliver
it to the Banks for their benefit and such opinion shall
contain a statement to that effect.
C. The Agent shall have received an originally
executed copy of the favorable written opinion of Cahill
Gordon & Reindel, counsel to the Banks, dated as of the
Effective Date, substantially in the form of Exhibit C
annexed hereto.
D. The Credit Agreement, dated as of October 30,
1987, as amended (the "1987 Credit Agreement"), among the
Borrower, the Lenders listed therein and BT Co, as
administrative agent, and all commitments to lend
thereunder shall have been terminated and discharged in
full (other than the competitive bid loans continued under
the Credit Agreement) and the notes issued by the Borrower
thereunder shall have been returned by such lenders to the
Borrower, marked "Cancelled."
3.2 Conditions to All Loans
The obligation of each Bank to make any Loans
pursuant to a Notice of Borrowing is subject to prior or
concurrent satisfaction or waiver by the Required Banks in the
case of Syndicated Loans, and the Bank making the relevant Loan
in the case of Competitive Bid Loans, of the following further
conditions precedent:
A. With respect to any such Loan, the Agent shall
have received, (i) before the Funding Date thereof, an
originally executed Notice of Borrowing signed by any of
the chief executive officer, the chief financial officer,
the treasurer or any assistant treasurer of the Company
(the furnishing by the Company of each such Notice of
Borrowing shall be deemed to constitute a representation
and warranty of the Company that each of the conditions
set forth in Section 3.2B hereof (and, in the case of a
Notice of Competitive Bid Borrowing, Section 3.3 hereof)
will be satisfied on the related Funding Date).
B. As of the Funding Date of such Loan:
1. With respect to such Loan the
representations and warranties contained herein shall
be true, correct and complete in all material
respects on and as of that Funding Date to the same
extent as though made on and as of that date, except
that the representations and warranties need not be
true and correct to the extent that changes in the
facts and conditions on which such representations
and warranties are based are required or permitted
under this Agreement, and except that the
representations and warranties set forth in Sections
4.4 and 4.5 shall not apply to Competitive Bid Loans
which do not increase the aggregate principal amount
of such Competitive Bid Loans then outstanding with
Banks making the same;
2. No event shall have occurred and be
continuing or would result from the consummation of
the Loans on such Funding Date and the use of the
proceeds thereof which would constitute (a) an Event
of Default or (b) a Potential Event of Default;
3. Each Borrower shall have performed in all
material respects all agreements and satisfied in all
material respects all conditions which this Agreement
provides shall be performed by it on or before such
Funding Date;
4. No order, judgment or decree of any court,
arbitrator or governmental authority shall purport to
enjoin or restrain that Bank from making that Loan;
and
5. The making of the Loans requested on such
Funding Date shall not violate Regulation G, Regula-
tion T, Regulation U or Regulation X of the Board or
any other regulation of the Board or the Exchange
Act.
3.3 Conditions to All Competitive Bid Loans
A. Each Borrower shall, upon the request of the
applicable Bank pursuant to Section 2.4B hereof, on or before
the Funding Date of any Competitive Bid Loan, deliver to the
Bank making such Competitive Bid Loan, the Competitive Bid Note
executed by such Borrower in accordance with Section 2.14B,
substantially in the form of Exhibit A-2 annexed hereto, drawn
to the order of such Bank with appropriate insertions.
B. The obligation of each Bank to make any
Competitive Bid Loan is subject to concurrent satisfaction of
the further condition precedent that on the date any
Competitive Bid Loan is made there shall be outstanding a
publicly held issue of unsecured Indebtedness of the Company
described in clause (i) of the definition of Indebtedness which
ranks pari passu with the Indebtedness represented by the Notes
and which is classified as long-term indebtedness in accordance
with generally accepted accounting principles then applied by
the Company and rated greater than or equal to BBB- by
Standard & Poor's Corporation or any successor equivalent
rating and greater than or equal to Baa3 by Moody's Investors
Service, Inc. or any successor equivalent rating.
3.4 Conditions to Loans to Subsidiary Borrowers
A. Concurrently with or before the designation by
the Company of any of its Subsidiaries as a Subsidiary
Borrower, the Company shall deliver, or cause to be delivered,
to the Banks (or to the Agent for the Banks with sufficient
originally executed copies, where appropriate, for each Bank)
with respect to such Subsidiary Borrower, each, unless
otherwise noted, dated the Designation Date:
1. Certified copies of such Subsidiary Borrower's
Certificate of Incorporation, together with a good
standing certificate from the Secretary of State of the
State of incorporation of such Subsidiary Borrower, each
to be dated a recent date prior to the Designation Date;
2. Copies of such Subsidiary Borrower's Bylaws,
certified as of the Designation Date by its corporate
secretary or an assistant secretary;
3. Resolutions of such Subsidiary Borrower's Board
of Directors approving and authorizing the execution,
delivery and performance of this Agreement and any other
documents, instruments and certificates to be executed by
such Subsidiary Borrower in connection herewith or
therewith and approving and authorizing the execution,
delivery and payment of the Notes to be issued by such
Subsidiary Borrower and the incurrence of Loans by such
Subsidiary Borrower, each, certified as of the Designation
Date by its corporate secretary or an assistant secretary
as being in full force and effect without modification or
amendment;
4. Signature and incumbency certificates of its
officers executing a Loan Assumption Agreement
substantially in the form of Exhibit G hereto and the
Notes issued by it;
5. Revolving Notes executed by it substantially in
the form of Exhibit A-1 annexed hereto and in accordance
with Section 2.4, drawn to the order of each Bank and with
appropriate insertions, with such changes as are
acceptable to the Agent to reflect that such Revolving
Notes are obligations of such Subsidiary Borrower, rather
than of the Company; and
6. Such other documents as the Agent may reasonably
request.
B. The Agent shall have received an originally
executed copy of the favorable written opinion of Thomas D.
Soutter, Esq., General Counsel of the Company, dated as of the
Designation Date, relating to such Subsidiary Borrower,
substantially in the form of Exhibit B annexed hereto, with
such changes as are acceptable to the Agent to reflect that
such opinion relates to such Subsidiary Borrower rather than to
the Company; the Company hereby expressly instructs such
counsel to prepare such opinion and deliver it to the Banks for
their benefit and such opinion shall contain a statement to
that effect.
Section 4 REPRESENTATIONS AND WARRANTIES
In order to induce the Banks to enter into this
Agreement and to make the Loans, the Company and each Borrower
(as to itself only) represents and warrants to each Bank that
the following statements are true, correct and complete:
4.1 Organization, Powers and Good Standing
A. Organization and Powers. Each Borrower is a
corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation.
Each Borrower has all requisite corporate power and authority
(i) to own and operate its properties and to carry on its
business as now conducted and proposed to be conducted, except
where the lack of corporate power and authority would not have
a Material Adverse Effect and (ii) to enter into this Agreement
and to carry out the transactions contemplated hereby, and to
issue the Notes.
B. Good Standing. Each Borrower is in good standing
wherever necessary to carry on its present business and
operations, except in jurisdictions in which the failure to be
in good standing would not have a Material Adverse Effect.
4.2 Authorization of Borrowing, etc.
A. Authorization of Borrowing. The execution,
delivery and performance of this Agreement, and the issuance,
delivery and payment of the Notes and the borrowing of the
Loans have been duly authorized by all necessary corporate
action by each Borrower.
B. No Conflict. The execution, delivery and
performance by each Borrower of this Agreement and the
issuance, delivery and performance of the Notes by each
Borrower, and the borrowing of the Loans do not and will not
(i) violate any provision of law applicable to the Company or
any of its Subsidiaries, (ii) violate the Certificate of
Incorporation or Bylaws of the Company or any of its
Subsidiaries, (iii) violate any order, judgment or decree of
any court or other Governmental Authority binding on the
Company or any of its Subsidiaries, (iv) conflict with, result
in a breach of or constitute (with due notice or lapse of time
or both) a default under any Contractual Obligation of the
Company or any of its Subsidiaries, or (v) result in or require
the creation or imposition of any material Lien upon any of the
material properties or assets of the Company or any of its
Subsidiaries or require any approval of stockholders or any
approval or consent of any Person under any Contractual
Obligation of the Company or any of its Subsidiaries other than
such approvals and consents which have been or will be obtained
on or before the Effective Date.
C. Governmental Consents. The execution, delivery
and performance by each Borrower of this Agreement and the
issuance, delivery and performance by each Borrower of the
Notes will not require on the part of such Borrower any
registration with, consent or approval of, or notice to, or
other action to, with or by, any Governmental Authority other
than any such registration, consent, approval, notice or other
action which has been duly made, given or taken.
D. Binding Obligation. This Agreement is and each
of the Notes when executed and delivered and each Loan when
made will be a legally valid and binding obligation of the
Company and/or the applicable Borrower, as the case may be,
enforceable against the Company and/or the applicable Borrower,
as the case may be, in accordance with its respective terms,
except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or
limiting creditors' rights generally or by equitable principles
relating to enforceability.
4.3 Financial Condition
The Company has delivered to the Banks the following
materials: (i) audited consolidated financial statements of
the Company and its subsidiaries for the year ended January 2,
1993 as set forth in the 1992 Annual Report to Shareholders of
the Company and (ii) unaudited consolidated financial
statements of the Company and its subsidiaries for the fiscal
quarters ended April 3, 1993 and July 3, 1993 as set forth in
the Quarterly Report of the Borrower on Form 10-Q for each such
fiscal quarter (collectively, the "Financial Statements"). All
such Financial Statements were prepared in accordance with
generally accepted accounting principles except for the
preparation of footnote disclosures for the unaudited
statements. All such Financial Statements fairly present the
consolidated financial position of the Company and its
subsidiaries as at the respective dates thereof and the
consolidated statements of income and cash flows of the Company
and its Subsidiaries for each of the periods covered thereby,
subject, in the case of any unaudited interim financial
statements, to changes resulting from normal year-end
adjustments.
4.4 No Adverse Material Change
Since January 2, 1993, there has been no change in
the business, operations, properties, assets or condition
(financial or otherwise) of the Company or any of its
Subsidiaries, which has been, either in any case or in the
aggregate, materially adverse to the Company and its
Subsidiaries, taken as a whole.
4.5 Litigation
Except as disclosed in the Company's Annual Report on
Form 10-K for the fiscal year ended January 2, 1993 and in the
Financial Statements delivered to the Banks pursuant to
Section 4.3 hereof, there is no action, suit, proceeding,
governmental investigation (including, without limitation, any
of the foregoing relating to laws, rules and regulations
relating to the protection of the environment, health and
safety) of which the Company has knowledge or arbitration
(whether or not purportedly on behalf of the Company or any of
its Subsidiaries) at law or in equity or before or by any
Governmental Authority, domestic or foreign, pending or, to the
knowledge of the Company, threatened against or affecting the
Company or any of its Subsidiaries or any property of the
Company or any of its Subsidiaries which is probable of being
successful and which would have a Material Adverse Effect.
4.6 Payment of Taxes
Except to the extent permitted by Section 5.3, all
taxes, assessments, fees and other governmental charges upon
the Company and each of its Subsidiaries and upon their
respective properties, assets, income and franchises which are
material to the Company and its Subsidiaries, taken as a whole,
and were due and payable, have been paid.
4.7 Governmental Regulation
Neither the Company nor any of its Subsidiaries is
subject to regulation under the Public Utility Holding Company
Act of 1935 or to any federal or state statute or regulation
limiting its ability to incur Indebtedness for money borrowed
as contemplated by this Agreement.
4.8 Securities Activities
Neither the Company nor any of its Subsidiaries is
engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing
or carrying any Margin Stock.
4.9 ERISA Compliance
A. The Company and its Subsidiaries and each of
their respective ERISA Affiliates are in compliance in all
material respects with all applicable provisions of ERISA and
the regulations and published interpretations thereunder with
respect to all Pension Plans and all Multiemployer Plans.
B. No Termination Event has occurred or is
reasonably expected to occur with respect to any Pension Plan,
as the case may be, which has resulted or would result in any
material liability to the PBGC (or any successor thereto) or to
any other Person under Section 4062, 4063, or 4064 of ERISA.
C. Neither the Company nor any of its ERISA
Affiliates has incurred or reasonably expects to incur any
withdrawal liability under Part E of Title IV of ERISA to any
Multiemployer Plan individually or in the aggregate in excess
of $50,000,000.
D. The sum of the amount of unfunded benefit
liabilities under all Pension Plans (excluding each Pension
Plan with an amount of unfunded benefit liabilities of zero or
less) is not more than $100,000,000.
E. Neither the Company nor any of its ERISA
Affiliates has incurred any accumulated funding deficiency
(whether or not waived) with respect to any Pension Plan
individually or in the aggregate in excess of $2,000,000.
F. Neither the Company nor any of its ERISA
Affiliates has or reasonably expects to become subject to a
lien in favor of any Pension Plan under Section 302(f) of ERISA
individually or in the aggregate in excess of $1,000,000.
G. Neither the Company nor any of its ERISA
Affiliates has or reasonably expects to become subject to a
requirement to provide security to any Pension Plan under
Section 307 of ERISA individually or in the aggregate in excess
of $10,000,000.
As used in this subsection 4.9, the term "amount of
unfunded benefit liabilities" has the meaning specified in
Section 4001(a)(18) of ERISA, and the term "accumulated funding
deficiency" has the meaning specified in Section 302 of ERISA
and Section 412 of the Code.
4.10 Certain Fees
No broker's or finder's fee or commission will be
payable by the Company with respect to the offer, issuance and
sale of any Note or the borrowing of any Loan comprising a
Syndicated Loan or Competitive Bid Loan or the execution,
delivery and performance of this Agreement.
Section 5 AFFIRMATIVE COVENANTS
The Company covenants and agrees that, so long as any
of the Commitments hereunder shall be in effect and until
payment in full of all Loans and Notes unless Required Banks
shall otherwise give prior written consent, it shall perform
all covenants in this Section 5:
5.1 Financial Statements and Other Reports
The Company will maintain, and cause each of its
subsidiaries to maintain, a system of accounting established
and administered in accordance with sound business practices to
permit preparation of consolidated financial statements in
conformity with generally accepted accounting principles in
effect from time to time. The Company will deliver to the
Banks (except to the extent otherwise expressly provided below
in subsection 5.1B(ii)):
A. (i) as soon as practicable and in any event
within 45 days after the end of each fiscal quarter ending
after the Effective Date in the Company's fiscal year the
consolidated balance sheet of the Company and its
consolidated subsidiaries as at the end of such period,
and the related consolidated statements of income and cash
flows of the Company and its consolidated subsidiaries in
each case certified by the chief financial officer or
controller of the Company that they fairly present the
financial condition of the Company and its consolidated
subsidiaries as at the dates indicated and the results of
their operations and changes in their cash flows, subject
to changes resulting from audit and normal year-end
adjustments, based on their respective normal accounting
procedures applied on a consistent basis (except as noted
therein);
(ii) as soon as practicable and in any event
within 90 days after the end of each fiscal year the
consolidated balance sheet of the Company and its
consolidated subsidiaries as at the end of such year and
the related consolidated statements of income and cash
flows of the Company and its consolidated subsidiaries for
such fiscal year, accompanied by a report thereon of
independent certified public accountants of recognized
national standing selected by the Company which report
shall be unqualified as to going concern and scope of
audit and shall state that such consolidated financial
statements present fairly the financial position of the
Company and its consolidated subsidiaries as at the dates
indicated and the results of their operations and changes
in their cash flows for the periods indicated in
conformity with generally accepted accounting principles
applied on a basis consistent with prior years (except as
noted in such report) and that the examination by such
accountants in connection with such consolidated financial
statements has been made in accordance with generally
accepted auditing standards;
B. (i) together with each delivery of financial
statements of the Company and its consolidated
subsidiaries pursuant to subdivision A(i) and A(ii) above,
(a) an Officer's Certificate of the Company stating that
the signer has reviewed the terms of this Agreement and
has made, or caused to be made under such signer's
supervision, a review in reasonable detail of the
transactions and condition of the Company and its
consolidated subsidiaries during the accounting period
covered by such financial statements and that such review
has not disclosed the existence during or at the end of
such accounting period, and that the signer does not have
knowledge of the existence as at the date of the Officers'
Certificate, of any condition or event which constitutes
an Event of Default or Potential Event of Default, or, if
any such condition or event existed or exists, specifying
the nature and period of existence thereof and what action
the Company has taken, is taking and proposes to take with
respect thereto; and (b) a Compliance Certificate
demonstrating in reasonable detail compliance (as
determined in accordance with GAAP during and at the end
of such accounting periods) with the restrictions
contained in Section 6.3 and, in addition, a written
statement of the chief accounting officer, chief financial
officer, any vice president or the treasurer or any
assistant treasurer of the Company describing in
reasonable detail the differences between the financial
information contained in such financial statements and the
information contained in the Compliance Certificate
relating to the Company's compliance with Section 6.3
hereof;
(ii) promptly upon their becoming available but only
to the extent requested by a Bank, copies of all publicly
available financial statements, reports, notices and proxy
statements sent or made available generally by the Company
to its security holders or by any Subsidiary of the
Company to its security holders other than the Company or
another Subsidiary, of all regular and periodic reports
and all registration statements and prospectuses, if any,
filed by the Company or any of its Subsidiaries with any
securities exchange or with the Securities and Exchange
Commission and of all press releases and other statements
made available generally by the Company or any Subsidiary
to the public concerning material developments in the
business of the Company and its Subsidiaries;
(iii) promptly upon the chairman of the board, the
chief executive officer, the president, the chief
accounting officer, the chief financial officer, the
treasurer or the general counsel of the Company obtaining
knowledge (a) of any condition or event which constitutes
an Event of Default or Potential Event of Default, (b)
that any Person has given any notice to the Company or any
Subsidiary of the Company or taken any other action with
respect to a claimed default or event or condition of the
type referred to in Section 7.2, or (c) of a material
adverse change in the business, operations, properties,
assets or condition (financial or otherwise) of the
Company and its Subsidiaries, taken as a whole, an
Officer's Certificate specifying the nature and period of
existence of any such condition or event, or specifying
the notice given or action taken by such holder or Person
and the nature of such claimed default, Event of Default,
Potential Event of Default, event or condition, and what
action the Borrower has taken, is taking and proposes to
take with respect thereto; and
(iv) with reasonable promptness, such other
information and data with respect to the Company or any of
its subsidiaries as from time to time may be reasonably
requested by any Bank.
5.2 Corporate Existence
Except as permitted by Section 6.1, the Company will
at all times preserve and keep in full force and effect its
corporate existence and rights and franchises material to the
business of the Company and its Subsidiaries, taken as a whole.
5.3 Payment of Taxes
The Company will, and will cause each of its
Subsidiaries to, pay all taxes, assessments and other
governmental charges imposed upon it or any of its properties
or assets or in respect of any of its franchises, business,
income or property when due which are material to the Company
and its Subsidiaries, taken as a whole, provided that no such
amount need be paid if being contested in good faith by
appropriate proceedings promptly instituted and diligently
conducted and if such reserve or other appropriate provision,
if any, as shall be required in conformity with generally
accepted accounting principles shall have been made therefor.
5.4 Maintenance of Properties; Insurance
The Company will maintain or cause to be maintained
in good repair, working order and condition all material
properties used or useful in the business of the Company and
its Subsidiaries and from time to time will make or cause to be
made all appropriate material repairs and renewals thereto and
replacements thereof. The Company will maintain or cause to be
maintained, with financially sound and reputable insurers,
insurance with respect to its material properties and business
and the material properties and business of its Subsidiaries
against loss or damage of the kinds customarily insured against
by corporations of established reputation engaged in the same
or similar businesses and similarly situated, of such types and
in such amounts as are customarily carried under similar
circumstances by such other corporations and to the extent
reasonably prudent may self-insure.
5.5 Inspection
The Company shall permit any authorized
representatives designated by any Bank to visit and inspect any
of the properties of the Company or any of its Subsidiaries,
including its and their financial and accounting records, and,
to make copies and take extracts therefrom, and to discuss its
and their affairs, finances and accounts with its and their
officers, all upon reasonable notice and at such reasonable
times during normal business hours and as often as may be
reasonably requested; provided that any confidential
information so obtained by any Bank shall remain confidential
except where disclosure is mandated by applicable laws or such
information otherwise becomes public other than by a breach by
such Bank of this Section 5.5; provided further that this
Section shall not prohibit any Bank from disclosing to the
Agent (or the Agent to any Bank) any Event of Default or
Potential Event of Default.
5.6 Compliance with Laws
The Company and its Subsidiaries shall exercise all
due diligence in order to comply in all material respects with
the requirements of all applicable laws, rules, regulations and
orders of any Governmental Authority (including, without
limitation, laws, rules and regulations relating to the
disposal of hazardous wastes and asbestos in the environment),
noncompliance with which would have a Material Adverse Effect.
Section 6 NEGATIVE COVENANTS
The Company covenants and agrees that, so long as any
of the Commitments shall be in effect and until payment in full
of all of the Loans and the Notes, unless the Required Banks
shall otherwise give prior written consent, it will perform all
covenants in this Section 6:
6.1 Merger
The Company may not consolidate with, merge with or
into or sell, lease or otherwise transfer all or substantially
all of its assets (as an entirety or substantially as an
entirety in one transaction or a series of related
transactions) to any Person unless:
(i) the Company shall be the continuing Person, or
the Person (if other than the Company) formed by such
consolidation or into which the Company is merged or to
which the properties and assets of the Company are sold,
leased or transferred shall be a solvent corporation
organized and existing under the laws of the United States
or any State thereof or the District of Columbia and shall
expressly assume, by an agreement, executed and delivered
to the Banks, in form and substance reasonably
satisfactory to the Required Banks, all of the obligations
of the Company under this Agreement, the Notes and the
Competitive Bid Loans;
(ii) immediately before and immediately after giving
effect to such transaction, no Event of Default and no
Potential Event of Default shall have occurred and be
continuing (with the interest coverage ratio required by
Section 6.3B being calculated on a pro forma basis for the
four fiscal quarters of the Company and such Person ending
immediately prior to the date of such consolidation,
merger, sale, lease or transfer); and
(iii) the Company shall deliver the Banks an Officer's
Certificate (attaching the arithmetic computations to
demonstrate compliance with Section 6.3) and an opinion of
counsel, each stating that such consolidation, merger,
sale, lease or transfer and such agreement comply with
this Section 6.1 and that all conditions precedent herein
provided for relating to such transaction have been
complied with.
6.2 Liens
The Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume
or permit to exist any Lien on or with respect to any property
or asset (including any document or instrument in respect of
goods or accounts receivable) (other than Margin Stock) of the
Company or any of its Subsidiaries, whether now owned or
hereafter acquired, or any income or profits therefrom, except:
(i) Liens in existence on the date hereof;
(ii) Permitted Encumbrances;
(iii) Liens on accounts receivable sold with recourse;
(iv) Liens incurred in connection with the
acquisition of equipment by the Company or any of its
Subsidiaries for a cost less than $2,000,000 in any case,
provided that the principal amount of the indebtedness so
secured shall not exceed in any case 100% of the cost to
the Company or such Subsidiary of the equipment acquired
and provided, further, that each such Lien shall cover
only the equipment acquired and the proceeds thereof,
substitutions therefor and replacements thereof; and
(v) Liens (other than Liens permitted by clauses
(i)-(iv) above) securing obligations of the Company and
its Subsidiaries (including Indebtedness) not in excess of
an amount equal to 5% of the consolidated total assets of
the Company and its Subsidiaries, all as determined in
accordance with GAAP on a consolidated basis for the
Company and its Subsidiaries.
Nothing in this Section 6.2 shall prohibit the sale,
assignment, transfer, conveyance or other disposition of any
Margin Stock owned by the Company or any of its Subsidiaries at
its fair value, or the creation, incurrence, assumption or
existence of any Lien on or with respect to any Margin Stock.
6.3 Financial Covenants
A. Minimum Consolidated Net Worth.
The Company will not permit its Consolidated Net
Worth (less the Textron Affiliate Amount) at any time during
any fiscal quarter (each a "Measurement Quarter") ending on and
after July 3, 1993 to be less than the sum of
(x) $2,000,000,000, plus (y) an amount equal to 40% of the
Consolidated Net Income of the Company for each fiscal quarter
of the Company in which the Company had a Consolidated Net
Income for such fiscal quarter in excess of $0 and which such
fiscal quarter commenced on or after July 3, 1993 and ended on
or prior to the first day of such Measurement Quarter plus (z)
100% of the proceeds of any equity issuances by the Company
(excluding issuances as a result of the exercise of employee
stock options) on and after the date of this Agreement.
B. Interest Coverage Ratio.
The Company shall not permit the ratio of
(i) Consolidated EBITDA to (ii) Consolidated Interest Expense
at any date to be less than 1.5 to 1.0 calculated at the end of
each fiscal quarter of the Company by reference to the four
fiscal quarter periods ending on such date of calculation.
6.4 Existing Subordinated Debt
The Company will not amend or otherwise change the
terms of any Existing Subordinated Debt except as specifically
permitted hereby, or make, directly or indirectly, any payment
consistent with an amendment or change thereto, if the effect
of such amendment or change is to increase the interest rate on
such Debt, change the dates upon which payments of principal or
interest are due thereon, change any event of default or
condition to an event of default with respect to such Debt,
grant any security interest in favor of such Existing
Subordinated Debt, change the redemption provisions thereof,
change the subordination provisions thereof, cause the Existing
Subordinated Debt to be guaranteed by any Person or which,
together with all other amendments or changes made, increase
materially the obligations of the obligor or confer additional
rights on the holder of such Debt which would be adverse to the
Company or the Banks.
6.5 Use of Proceeds
Notwithstanding any provisions of this Agreement to
the contrary, no portion of the proceeds of any borrowing under
this Agreement shall be used by the Company in any manner which
would cause the borrowing or the application of such proceeds
to violate Regulation G, Regulation U, Regulation T, or
Regulation X of the Board or any other regulation of the Board
or to violate the Exchange Act, in each case as in effect on
the date or dates of such borrowing and such use of proceeds.
Section 7 EVENTS OF DEFAULT
If any of the following conditions or events ("Events
of Default") shall occur and be continuing:
7.1 Failure To Make Payments When Due
Failure to pay any installment of principal of any
Loan when due, whether at stated maturity, by acceleration, by
notice of prepayment or otherwise; or failure to pay any
interest on any Loan or any other amount due under this
Agreement when due and such default shall continue for 5 days;
or
7.2 Default in Other Agreements
(i) Failure of the Company or any of its
Subsidiaries to pay when due any principal or interest on any
Indebtedness (other than Indebtedness referred to in
Section 7.1) in an individual principal amount of $20,000,000
or more or items of Indebtedness with an aggregate principal
amount of $20,000,000 or more beyond the end of any period
prior to which the obligee thereunder is prohibited from
accelerating payment thereunder or any grace period after the
maturity thereof, or (ii) breach or default of the Company or
any of its Subsidiaries (other than a default arising under any
restrictive provision relating to any sale, pledge or other
disposition of Margin Stock contained in a lending agreement to
which any Bank or Affiliate thereof is a party) with respect to
any other term of (y) any evidence of any Indebtedness in an
individual principal amount of $20,000,000 or more or items of
Indebtedness with an aggregate principal amount of $20,000,000
or more; or (z) any loan agreement, mortgage, indenture or
other agreement relating thereto, if such failure, default or
breach shall continue for more than the period of grace, if
any, specified therein and shall not at the time of
acceleration hereunder be cured or waived; or
7.3 Breach of Certain Covenants
Failure of any Borrower to perform or comply with any
term or condition contained in Section 5.2, 6.1, 6.3, 6.4 or
6.5 of this Agreement; or
7.4 Breach of Warranty
Any representation or warranty made by any Borrower
in this Agreement or in any statement or certificate at any
time given by such Person in writing pursuant hereto or thereto
or in connection herewith or therewith shall be false in any
material respect on the date as of which made; or
7.5 Other Defaults Under Agreement
Any Borrower shall default in the performance of or
compliance with any term contained in this Agreement other than
those referred to above in Section 7.1, 7.3 or 7.4 and such
default shall not have been remedied or waived within 30 days
after receipt of notice from the Agent or any Bank of such
default; or
7.6 Involuntary Bankruptcy; Appointment of Receiver, etc.
(A) A court having jurisdiction in the premises
shall enter a decree or order for relief in respect of the
Company or any of its Restricted Subsidiaries or any Subsidiary
Borrower in an involuntary case under the Bankruptcy Code or
any applicable bankruptcy, insolvency or other similar law now
or hereafter in effect, which decree or order is not stayed; or
any other similar relief shall be granted under any applicable
federal or state law; or (B) an involuntary case is commenced
against the Company or any of its Restricted Subsidiaries or
any Subsidiary Borrower under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect; or
a decree or order of a court having jurisdiction in the
premises for the appointment of a receiver, liquidator,
sequestrator, trustee, custodian or other officer having
similar powers over the Company or any of its Restricted
Subsidiaries or any Subsidiary Borrower, or over all or a
substantial part of its property, shall have been entered; or
an interim receiver, trustee or other custodian of the Company
or any of its Restricted Subsidiaries or any Subsidiary
Borrower for all or a substantial part of the property of the
Company or any of its Restricted Subsidiaries or any Subsidiary
Borrower is involuntarily appointed; or a warrant of
attachment, execution or similar process is issued against any
substantial part of the property of the Company or any of its
Restricted Subsidiaries or any Subsidiary Borrower, and the
continuance of any such events in subpart (B) for 60 days
unless dismissed, bonded or discharged; or
7.7 Voluntary Bankruptcy; Appointment of Receiver, etc.
The Company or any of its Restricted Subsidiaries or
any Subsidiary Borrower shall have an order for relief entered
with respect to it or commence a voluntary case under the
Bankruptcy Code or any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or shall consent
to the entry of an order for relief in an involuntary case, or
to the conversion of an involuntary case to a voluntary case,
under any such law, or shall consent to the appointment of or
taking possession by a receiver, trustee or other custodian for
all or a substantial part of its property; the making by the
Company or any of its Restricted Subsidiaries or any Subsidiary
Borrower of any assignment for the benefit of creditors; or the
inability or failure of the Company or any of its Restricted
Subsidiaries or any Subsidiary Borrower, or the admission by
the Company or any of its Restricted Subsidiaries or any
Subsidiary Borrower in writing of its inability to pay its
debts as such debts become due; or the Board of Directors of
the Company or any Restricted Subsidiary or any Subsidiary
Borrower (or any committee thereof) adopts any resolution or
otherwise authorizes action to approve any of the foregoing; or
7.8 Judgments and Attachments
Any money judgment, writ or warrant of attachment, or
similar process involving individually or in the aggregate an
amount in excess of $50,000,000 shall be entered or filed
against the Company or any Restricted Subsidiary or any of its
assets and shall remain undischarged, unvacated, unbonded or
unstayed, as the case may be, for a period of 30 days or in any
event later than five days prior to the date of any proposed
sale thereunder; or
7.9 Dissolution
Any order, judgment or decree shall be entered
against the Company or any of its Restricted Subsidiaries or
any Subsidiary Borrower decreeing the dissolution or split up
of the Company or that Restricted Subsidiary and such order
shall remain undischarged or unstayed for a period in excess of
30 days; or
7.10 ERISA Title IV Liabilities
(i) The Company or any of its ERISA Affiliates shall
terminate or suffer the termination of (by action of the PBGC
or any successor thereto) any Pension Plan, or shall suffer the
appointment of or the institution of proceedings to appoint a
trustee to administer any Pension Plan, or shall withdraw
(under Section 4063 of ERISA) from a Pension Plan, if as of the
date thereof or any subsequent date the sum of the Company's
and each ERISA Affiliate's liabilities to the PBGC or any other
Person under Sections 4062, 4063 and 4064 of ERISA (calculated
after giving effect to the tax consequences thereof) resulting
from or otherwise associated with the above-described events
exceeds $50,000,000; or
(ii) The Company or any of its ERISA Affiliates
shall withdraw from any Multiemployer Plan and the aggregate
amount of withdrawal liability (determined pursuant to
Sections 4201 et seq. of ERISA) to which the Company and its
ERISA Affiliates become obligated to all Multiemployer Plans
requires annual payments in excess of $5,000,000;
THEN (i) upon the occurrence of any Event of Default
described in the foregoing Sections 7.6 or 7.7, the unpaid
principal amount of and accrued interest on all the Loans shall
automatically become immediately due and payable, without
presentment, demand, protest or other requirements of any kind,
all of which are hereby expressly waived by the Company and
each Borrower and the obligation of each Bank to make any Loans
hereunder shall thereupon terminate, and (ii) upon the
occurrence of any other Event of Default, the Required Banks
may, by written notice to the Company and each Borrower,
declare the unpaid principal amount of and accrued interest on
all the Loans to be, and the same shall forthwith become,
immediately due and payable, and the obligation of each Bank to
make any Loan hereunder shall thereupon terminate.
Nevertheless, if at any time within 60 days after acceleration
of the maturity of the Loans, each Borrower shall pay all
arrears of interest and all payments on account of the
principal which shall have become due otherwise than by
acceleration (with interest on principal and, to the extent
permitted by law, on overdue interest, at the rates specified
in this Agreement or the Notes) and all other fees and expenses
then owed hereunder and all Events of Default and Potential
Events of Default (other than non-payment of principal of and
accrued interest on the Loans and the Notes), in each case due
and payable solely by virtue of acceleration) shall be remedied
or waived pursuant to Section 10.6, then the Required Banks by
written notice to the Company may (in their sole discretion)
rescind and annul the acceleration and its consequences; but
such action shall not affect any subsequent Event of Default or
Potential Event of Default or impair any right consequent
thereon.
Section 8 AGENT
8.1 Appointment
Each of the Banks hereby appoints BT Co as its Agent
(the "Agent") hereunder and each Bank hereby authorizes the
Agent to act hereunder and under the other instruments and
agreements referred to herein as its agent hereunder and
thereunder. BT Co agrees to act as such upon the express
conditions contained in this Section 8. The provisions of this
Section 8 are solely for the benefit of the Agent, and neither
the Company nor any other Borrower shall have any rights as a
third party beneficiary of or any obligations under any of the
provisions hereof. In performing its functions and duties
under this Agreement, the Agent shall act solely as agent of
the Banks and does not assume and shall not be deemed to have
assumed any obligation towards or relationship of agency or
trust with or for the Company or any other Borrower.
8.2 Powers; General Immunity
A. Duties Specified. Each Bank irrevocably
authorizes the Agent to take such action on such Bank's behalf
and to exercise such powers hereunder and under the other
instruments and agreements referred to herein as are
specifically delegated to the Agent by the terms hereof and
thereof, together with such powers as are reasonably incidental
thereto. The Agent shall have only those duties and
responsibilities which are expressly specified in this
Agreement and it may perform such duties by or through its
agents or employees. The duties of the Agent shall be
mechanical and administrative in nature; and the Agent shall
not have by reason of this Agreement a fiduciary or trust
relationship in respect of any Bank; and nothing in this
Agreement, expressed or implied, is intended to or shall be so
construed as to impose upon the Agent any obligations in
respect of this Agreement or the other instruments and
agreements referred to herein except as expressly set forth
herein or therein.
B. No Responsibility for Certain Matters. The Agent
shall not be responsible to any Bank for the execution,
effectiveness, genuineness, validity, enforceability,
collectibility or sufficiency of this Agreement or the Notes
issued hereunder or any Loan, or for any representations,
warranties, recitals or statements made herein or therein or
made in any written or oral statement or in any financial or
other statements, instruments, reports, certificates or any
other documents in connection herewith or therewith furnished
or made by the Agent to any Bank or by or on behalf of the
Borrower to the Agent or any Bank, or for the accuracy of any
information relating to Competitive Bid Loans (including as to
amounts outstanding at any time), or be required to ascertain
or inquire as to the performance or observance of any of the
terms, conditions, provisions, covenants or agreements
contained herein or therein or as to the use of the proceeds of
the Loans, or of the existence or possible existence of any
Event of Default or Potential Event of Default.
C. Exculpatory Provisions. Neither the Agent nor
any of its officers, directors, employees or agents shall be
responsible or liable to any Bank for any action taken or
omitted hereunder or under any of the other Loan Documents or
in connection herewith or therewith unless caused by its or
their gross negligence or willful misconduct. If the Agent
shall request instructions from any Bank with respect to any
act or action (including the failure to take an action) in
connection with this Agreement or the Notes, the Agent shall be
entitled to refrain from such act or taking such action unless
and until the Agent shall have received instructions from the
Required Banks. Without prejudice to the generality of the
foregoing, (i) the Agent shall be entitled to rely, and shall
be fully protected in relying, upon any communication,
instrument or document believed by it to be genuine and correct
and to have been signed or sent by the proper person or
persons, and shall be entitled to rely and shall be protected
in relying on opinions and judgments of attorneys (who may be
attorneys for the Borrower), accountants, experts and other
professional advisors selected by it; and (ii) no Bank shall
have any right of action whatsoever against the Agent as a
result of the Agent acting or (where so instructed) refraining
from acting under this Agreement, any Note or the other
instruments and agreements referred to herein or therein in
accordance with the instructions of the Required Banks. The
Agent shall be entitled to refrain from exercising any power,
discretion or authority vested in it under this Agreement, any
Note or the other instruments and agreements referred to herein
or therein unless and until it has obtained the instructions of
the Required Banks.
D. Agent Entitled To Act as Bank. The agency hereby
created shall in no way impair or affect any of the rights and
powers of, or impose any duties or obligations upon, the Agent
in its individual capacity as a Bank hereunder. With respect
to its participation in the Loans, the Agent shall have the
same rights and powers hereunder as any other Bank and may
exercise the same as though it were not performing the duties
and functions delegated to it hereunder, and the term "Bank" or
"Banks" or any similar term shall, unless the context clearly
otherwise indicates, include the Agent in its individual
capacity. The Agent and its Affiliates may accept deposits
from, lend money to and generally engage in any kind of
banking, trust, financial advisory or other business with the
Company or any Affiliate or Subsidiary of the Company as if it
were not performing the duties specified herein, and may accept
fees and other consideration from the Company or any such
Affiliate or Subsidiary for services in connection with this
Agreement or the Notes and otherwise without having to account
for the same to the Banks.
8.3 Representations and Warranties; No Responsibility
for Appraisal of Creditworthiness________________
Each Bank represents and warrants that it has made
its own independent investigation of the financial condition
and affairs of the Company and each other Borrower in
connection with the making of the Loans hereunder and has made
and shall continue to make its own appraisal of the
creditworthiness of the Company. The Agent shall not have any
duty or responsibility either initially or on a continuing
basis to make any such investigation or any such appraisal on
behalf of any Bank or to provide any Bank with any credit or
other information with respect thereto whether coming into its
possession before the making of any Loan or any time or times
thereafter, and the Agent shall further not have any
responsibility with respect to the accuracy of or the
completeness of the information provided to the Banks.
8.4 Right to Indemnity
Each Bank severally agrees to indemnify the Agent in
accordance with its Pro Rata Share to the extent the Agent
shall not have been reimbursed by the Company, for and against
any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses
(including, without limitation, counsel fees and disbursements)
or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by or asserted against the Agent in
performing its duties hereunder or under the other Loan
Documents or in any way relating to or arising out of this
Agreement or the Notes; provided that no Bank shall be liable
for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses
or disbursements resulting from the Agent's negligence or
willful misconduct. If any indemnity furnished to the Agent
for any purpose shall, in the opinion of the Agent, be
insufficient or become impaired, the Agent may call for
additional indemnity and cease, or not commence, to do the acts
indemnified against until such additional indemnity is
furnished.
8.5 Payee of Note Treated as Owner
The Agent may deem and treat the payee of any Note as
the owner thereof for all purposes hereof unless and until a
written notice of the assignment or transfer thereof shall have
been filed with the Agent. Any request, authority or consent
of any person or entity who, at the time of making such request
or giving such authority or consent, is the holder of any Note
shall be conclusive and binding on any subsequent holder,
transferee or assignee of that Note or of any Note or Notes
issued in exchange for such Note.
8.6 Resignation by the Agent
(a) The Agent may resign from the performance of all
its functions and duties hereunder at any time by giving 30
days' prior written notice to the Company and the Banks. Such
resignation shall take effect upon the acceptance by a
successor Agent of appointment pursuant to clauses (b) and (c)
below or as otherwise provided below.
(b) Upon any such notice of resignation, the
Required Banks shall appoint a successor Agent who shall be
satisfactory to the Company and shall be an incorporated bank
or trust company with a combined surplus and undivided capital
of at least $500 million.
(c) If a successor Agent shall not have been so
appointed within said 30 day period, the resigning Agent, with
the consent of the Company, shall then appoint a successor
Agent who shall serve as the Agent until such time, if any, as
the Required Banks, with the consent of the Company, appoint a
successor Agent as provided above.
8.7 Successor Agent
The Agent may resign at any time as provided in
Section 8.6 hereof. Upon any such notice of resignation, the
Required Banks shall have the right, upon five days' notice to
the Company and subject to Section 8.6 hereof, to appoint a
successor Agent. Upon the acceptance of any appointment as the
Agent hereunder by a successor Agent, that successor Agent
shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and
obligations as the Agent under this Agreement. After any
retiring Agent's resignation hereunder as the Agent the
provisions of this Section 8 shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was the
Agent under this Agreement.
Section 9 GUARANTEE
9.1 Guarantee
The Company hereby unconditionally guarantees the due
and punctual payment of all principal of and interest on, and
all other amounts now or hereafter payable by any Subsidiary
Borrower to any Bank or Banks or the Agent under this
Agreement, any Note or any Loans (collectively, "Guaranteed
Obligations") when any of the same shall become due, whether at
stated maturity, by required payment, declaration,
acceleration, demand or otherwise (including amounts which
would become due but for the operation of the automatic stay
under Section 362(a) of the Bankruptcy Code, 11
U.S.C.{ 362(a)), and agrees to pay any and all costs and
expenses (including reasonable fees and disbursements of
counsel) incurred by the Agent or the Banks in enforcing any
rights under this Section 9.
The Company agrees that the Guaranteed Obligations
may be extended or renewed, in whole or in part, without notice
or further assent from it, and that the Company will remain
bound under this Section 9 notwithstanding any extension,
renewal or other alteration of any Guaranteed Obligation.
9.2 Obligation Not Affected by
Certain Events
The Company waives presentation of, demand of, and
protest of any Guaranteed Obligation and also waives notice of
protest for nonpayment. The obligations of the Company under
this Section 9 shall not be affected by:
(a) the failure of any Bank, the Agent or any other
Person to assert any claim or demand or to enforce
any right or remedy against any Subsidiary Borrower
or any successor thereto under the provisions of this
Agreement or any other agreement or otherwise;
(b) any extension or renewal of any provision of any
thereof;
(c) any change in the time, manner or place of
payment of any of the Guaranteed Obligations or any
rescission, waiver, amendment or modification of any
of the terms or provisions of this Agreement or any
instrument or agreement executed pursuant thereto; or
(d) the failure to perfect any security interest in,
or the release of, any of the security held by any
Bank, the Agent or other Person for any of the
Guaranteed Obligations.
9.3 Guarantee a Guarantee of Payment
The Company further agrees that this Section 9
constitutes a guarantee of payment when due and not of
collection and waives any right to require that any resort be
had by any Bank or the Agent or any other Person to any
security held for payment of any of the Guaranteed Obligations
or to any balance of any deposit account or credit on the books
of any Bank, the Agent or any other Person in favor of any
Subsidiary Borrower or any other Person.
9.4 Obligation Not Subject to Limitation
The obligation of the Company under this Section 9
shall not be subject to any reduction, limitation, impairment,
or termination for any reason, including, without limitation,
any claim of waiver, release, surrender, alteration or
compromise of any of the Guaranteed Obligations, and shall not
be subject to any defense or setoff, counterclaim, recoupment
or termination whatsoever by reason of the invalidity,
illegality or unenforceability of any of the Guaranteed
Obligations or discharge of any Subsidiary Borrower from any of
the Guaranteed Obligations in a bankruptcy or similar
proceeding or otherwise. Without limiting the generality of
the foregoing, the obligation of the Company under this
Section 9 shall not be discharged or impaired or otherwise
affected by the failure of any Bank or the Agent or any other
Person to assert any claim or demand or to enforce any remedy
under this Agreement or any other agreement or instrument or
any other guarantee, by any waiver or modification of any
thereof, by any default, or by any other act or thing or
omission or delay to do any other act or thing which may or
might in any manner or to any extent vary the risk of the
Company or which would otherwise operate as a discharge of the
Company as a matter of law or equity.
The Company further agrees that this Section 9 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,
interest on or any other amount with respect to, any Guaranteed
Obligation is rescinded or must otherwise be restored by any
Bank, the Agent or any other Person upon the bankruptcy or
reorganization of any Subsidiary Borrower, any other Person or
otherwise.
9.5 Order of Payment
The Company further agrees, in furtherance of the
foregoing and not in limitation of any other right which any
Bank, the Agent or any other Person may have at law or in
equity against the Company by virtue of this Section 9, upon
the failure of any Subsidiary Borrower to pay any of the
Guaranteed Obligations when and as the same shall become due,
whether by required prepayment, acceleration or otherwise
(including amounts which would become due but for the operation
of the automatic stay under Section 362(a) of the Bankruptcy
Code, 11 U.S.C. { 362(a)), the Company will forthwith pay, or
cause to be paid, in cash, to the Agent for the ratable benefit
of the Banks or the Agent, as the case may be, an amount equal
to the sum of the unpaid principal amount of such Guaranteed
Obligations then due as aforesaid, accrued and unpaid interest
on such Guaranteed Obligations (including, without limitation,
interest which, but for the filing of a petition in bankruptcy
with respect to any Subsidiary Borrower, would have accrued on
such Guaranteed Obligations) and all other Guaranteed
Obligations then owed to Banks and the Agent as aforesaid. All
such payments shall be applied promptly, from time to time, by
the Agent:
First, to the payment of the costs and expenses of
any collection, or other realization under this Section 9,
including reasonable compensation to the Agent and its
agents and counsel, and all expenses, liabilities and
advances made or incurred by the Agent in connection
therewith;
Second, to the payment of accrued but unpaid interest
on the Notes and the Loans comprising the Guaranteed
Obligations;
Third, to the payment of the Guaranteed Obligations
not paid pursuant to clause Second above;
Fourth, after payment in full of all Guaranteed
Obligations, to the Company or its successors or assigns,
or to whomsoever may be lawfully entitled to receive the
same or as a court of competent jurisdiction may direct,
of any surplus then remaining from such payments.
9.6 Waiver by the Company
The Company hereby waives absolutely and irrevocably
any claim which it may have against any of the Subsidiary
Borrowers by reason of any payment to the Banks or the Agent or
to any other Person pursuant to or in respect of the guarantee
set forth in this Section 9, including any claim by way of
subrogation, contribution, reimbursement, indemnity or
otherwise.
Section 10 MISCELLANEOUS
10.1 Benefit of Agreement
A. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by the respective successors
and assigns of the parties hereto, provided that the Company
may not assign or transfer any of its interest hereunder
without the prior written consent of the Banks.
B. Any Bank may make, carry or transfer Loans at, to
or for the account of, any of its branch offices or the offices
of an Affiliate of such Bank, provided that doing so shall not
cause any Borrower to incur any additional costs hereunder at
the time of such transfer.
C. Any Bank may assign its rights and delegate its
obligations under this Agreement and further may sell
participations in all or any part of any Loan or Loans made by
it or its Commitment or any other interest herein or in its
Notes to another bank or other entity; provided that (i) in the
case of an assignment, such Bank shall (a) give to the Company
and the Agent prior notice thereof, and, in the case of any
assignment, the Company shall, except as set forth in the last
sentence of this Section 10.1C and in Section 10.1D, have
consented thereto and (b) comply with Section 10.1F hereof and
thereupon, the assignee "Purchasing Bank" shall have, to the
extent of such assignment (unless otherwise provided thereby),
the rights and benefits described in Section 10.1F hereof, and
(ii) in the case of a participation, except as set forth below,
the participant shall not have any rights under this Agreement
or any Note or any other document delivered in connection
herewith (the participant's rights against such Bank in respect
of such participation to be those set forth in the agreement
executed by such Bank in favor of the participant relating
thereto) and all amounts payable by the Borrower under Sections
2.11E and 2.11I hereof shall be determined as if the Bank had
not sold such participation. Except with respect to interest
rate, principal amount of any Loan, fees, scheduled dates for
payment of principal or interest or fees, scheduled termination
of commitments and commitment amounts, a Bank will not in any
such participation agreement restrict its ability to make any
modification, amendment or waiver to this Agreement without the
consent of the participant. Any Bank may furnish any
information concerning the Company in possession of such Bank
from time to time to Affiliates of such Bank and to assignees
and participants (including prospective assignees and
participants), provided, however, that (i) the furnishing Bank
shall give the Company prior notice of any furnishing of non-
public information (ii) the recipient shall agree to the terms
of Section 10.12 hereof and (iii) the furnishing of such
information (and the nature, manner and extent thereof) by any
Bank to its Affiliates and such assignees and participants
shall be further governed by the relevant agreement, assignment
or participation agreement relating to such arrangement,
assignment or participation, as the case may be. Notwithstand-
ing anything to the contrary in the foregoing, any Bank may,
without the consent of the Company, assign any of its rights
and interests in Loans hereunder to (x) a federal reserve bank
without the consent of the Company or (y) any Affiliate of such
Bank; provided that an Affiliate to whom such disposition has
been made shall not be considered a "Bank" for purposes of
Section 10.6 but shall be considered a "Bank" for purposes of
Sections 10.4 and 10.5.
D. Notwithstanding the foregoing provisions of this
Section 10.1, each Bank may at any time, upon 30 days' prior
written notice to the Agent and the Company, sell, assign,
transfer or negotiate all or any part of its Loans, Notes or
Commitment if, but only if, concurrently therewith or prior
thereto (a) any Person or two or more Persons acting in concert
shall have acquired beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission under the
Securities Exchange Act of 1934) of a majority of the
outstanding shares of voting stock of the Company pursuant to
one or more transactions not approved, in their capacities as
directors, by at least a majority of the individuals who served
as directors of the Company on the date one year prior to the
date of the first acquisition of voting stock leading to such
acquisition or (b) during any period of 12 consecutive months,
commencing before or after the date of this Agreement,
individuals who at the beginning of such 12 month period were
directors of the Company cease for any reason to constitute a
majority of the board of directors of the Company.
E. Except pursuant to an assignment permitted by
this Agreement but only to the extent set forth in such
assignment, no Bank shall, as between each Borrower and that
Bank, be relieved of any of its obligations hereunder as a
result of any sale, transfer or negotiation of, or granting of
participations in, all or any part of the Loans, the Notes or
Commitment of that Bank or other obligations owed to such Bank.
F. Any assignment made pursuant to Section 10.1C
hereof shall be made pursuant to a Transfer Supplement,
substantially in the form of Exhibit F annexed hereto, executed
by the Purchasing Bank, the transferor Bank, the Company and
the Agent. Upon (i) such execution of such Transfer
Supplement, (ii) delivery of an executed copy thereof to the
Borrower, (iii) payment by such Purchasing Bank to such
transferor Bank of an amount equal to the purchase price agreed
between such transferor Bank and such Purchasing Bank, and
(iv) payment by such Purchasing Bank or transferor Bank (as
they shall mutually agree) to the Agent of a non-refundable fee
of $3,000 to cover administrative and other expenses which may
be incurred in connection with such assignment, such Purchasing
Bank shall for all purposes be a Bank party to this Agreement
and shall have the rights (including without limitation the
benefits of Sections 2.11 and 2.12) and obligations of a Bank
under this Agreement to the same extent as if it were an
original party hereto and thereto with the Pro Rata Share of
the applicable Commitment set forth in such Transfer
Supplement, and no further consent or action by the Company,
the Banks or the Agent shall be required. Such Transfer
Supplement shall be deemed to amend this Agreement to the
extent, and only to the extent, necessary to reflect the
addition of such Purchasing Bank and the resulting adjustment
of Pro Rata Shares arising from the purchase by such Purchasing
Bank of all or a portion of the rights and obligations of such
transferor Bank under this Agreement, the Loans and the Notes.
Upon the consummation of any transfer to a Purchasing Bank
pursuant to this paragraph F, the transferor Bank, the Agent
and the Company shall make appropriate arrangements so that, if
required, a replacement Note is issued to such transferor Bank
and a new Note or, as appropriate, a replacement Note, issued
to such Purchasing Bank, in each case in principal amounts
reflecting their Pro Rata Shares or, as appropriate, their
outstanding Loans, as adjusted pursuant to such Transfer
Supplement.
10.2 Expenses
Whether or not the transactions contemplated hereby
shall be consummated, the Company agrees to promptly pay
(i) all the actual and reasonable out-of-pocket costs and
expenses of the Agent in connection with the negotiation,
preparation and execution of this Agreement, and the Notes;
(ii) the reasonable fees, expenses and disbursements of Cahill
Gordon & Reindel, counsel to the Agent and the Banks, in
connection with the negotiation, preparation, execution and
administration of this Agreement, the Notes, the Loans and any
amendments and waivers hereto or thereto; and (iii) all
reasonable costs and expenses (including reasonable attorneys'
fees, expenses and disbursements, and costs of settlement)
incurred by the Banks in enforcing any obligations of or in
collecting any payments due from any Borrower hereunder or
under the Notes by reason of the occurrence of any Event of
Default or in connection with any refinancing or restructuring
of the credit arrangements provided under this Agreement in the
nature of a "work-out" or of any insolvency or bankruptcy
proceedings or otherwise.
10.3 Indemnity
In addition to the payment of expenses pursuant to
Section 10.2 hereof, whether or not the transactions
contemplated hereby shall be consummated, the Company agrees to
indemnify, pay and hold the Agent and each Bank and any holder
of any of the Notes and the officers, directors, employees,
agents, advisors and affiliates of each of them (collectively
called the "Indemnitees") harmless from and against any and all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, expenses and disbursements of
any kind or nature whatsoever (including, without limitation,
the reasonable fees, expenses and disbursements of counsel for
such Indemnitees in connection with any investigative,
administrative or judicial proceeding commenced or threatened,
whether or not such Indemnitee shall be designated a party
thereto), which may be imposed on, incurred by, or asserted
against that Indemnitee, in any manner relating to or arising
out of this Agreement, the Banks' agreement to make the Loans
or the use or intended use of the proceeds of any of the Loans
hereunder (the "indemnified liabilities"); provided that, the
Company shall have no obligation to an Indemnitee hereunder to
the extent that such indemnified liabilities arose from the
negligence or willful misconduct of that Indemnitee. To the
extent that the undertaking to indemnify, pay and hold harmless
set forth in the preceding sentence may be unenforceable
because it is violative of any law or public policy or
otherwise, the Company shall contribute the maximum portion
which it is permitted to pay and satisfy under applicable law,
to the payment and satisfaction of all indemnified liabilities
incurred by the Indemnitees or any of them.
10.4 Setoff
In addition to any rights now or hereafter granted
under applicable law and not by way of limitation of any such
rights, upon the occurrence of any Event of Default, each Bank
and each subsequent holder of any Note is hereby authorized by
such Borrower at any time and from time to time, without notice
to such Borrower, or to any other Person, and without
presentment demand or protest, any such being hereby expressly
waived, to set off and to appropriate and to apply any and all
deposits (general or special, including, but not limited to,
Indebtedness evidenced by certificates of deposit, whether
matured or unmatured but not including trust accounts) and any
other Indebtedness at any time held or owing by that Bank or
that subsequent holder (including, without limitation, any
branches or agencies thereof, wherever located) to or for the
credit or the account of such Borrower against and on account
of the obligations and liabilities of such Borrower to that
Bank or that subsequent holder under this Agreement, or the
Notes including, but not limited to, all claims of any nature
or description arising out of or connected with this Agreement
or the Notes or the Loans, irrespective of whether or not
(a) that Bank or that subsequent holder shall have made any
demand hereunder or (b) that Bank or that subsequent holder
shall have declared the principal or the interest on the Loans
and Notes, and other amounts due hereunder to be due and
payable as permitted by Section 7 and although said obligations
and liabilities, or any of them, may be contingent or
unmatured.
10.5 Ratable Sharing
Subject to the last sentence of this Section 10.5,
each Bank and each subsequent holder by acceptance of a
Revolving Note or a Syndicated Loan agree among themselves that
(i) with respect to all amounts received by them which are
applicable to the payment of principal of or interest on the
Syndicated Loans and Revolving Notes and amounts payable in
respect of facility fees, equitable adjustment will be made so
that, in effect, all such amounts will be shared among the
Banks proportionately to their respective Pro Rata Shares
whether received by voluntary payment, by the exercise of the
right of setoff or banker's lien, by counterclaim or cross
action or by the enforcement of any or all of the Revolving
Notes and Syndicated Loans, (ii) if any of them shall exercise
any right of counterclaim, setoff, banker's lien or similar
right with respect to amounts owed by any Borrower hereunder or
under the Revolving Notes or the Syndicated Loans, then the
Bank or holder, as the case may be, shall apportion the amount
recovered as a result of the exercise of such right in
accordance with each Bank's Pro Rata Share, and (iii) if any of
them shall thereby through the exercise of any right of
counterclaim, setoff, banker's lien or otherwise or as adequate
protection of a deposit treated as cash collateral under the
Bankruptcy Code, receive payment or reduction of a proportion
of the aggregate amount of principal and interest due with
respect to the Revolving Notes or Syndicated Loans held by the
Bank or holder, or any amount payable hereunder which is
greater than the proportion received by any other holder of the
Revolving Notes or Syndicated Loans in respect of the aggregate
amount of principal and interest due with respect to the
Revolving Notes or Syndicated Loans held by it, or any amount
payable hereunder, then the Bank or that holder of the
Revolving Notes or Syndicated Loans receiving such
proportionately greater payments shall (y) notify each other
Bank and the Agent of such receipt and (z) purchase
participations (which it shall be deemed to have done
simultaneously upon the receipt of such payment) in the
Revolving Notes or Syndicated Loans held by the other holders
so that all such recoveries of principal and interest with
respect to the Revolving Notes or Syndicated Loans shall be
proportionate to their Pro Rata Shares provided that, if all or
part of such proportionately greater payment received by such
purchasing holder is thereafter recovered from such holder,
those purchases shall be rescinded and the purchase prices paid
for such participations shall be returned to that holder to the
extent of such recovery, but without interest. Each Borrower
expressly consents to the foregoing arrangement and agrees that
any holder of a participation in any such Revolving Note or
Syndicated Loan so purchased and any other subsequent holder of
a participation in any Revolving Note or Syndicated Loan
otherwise acquired may exercise any and all rights of banker's
lien, set-off or counterclaim with respect to any and all
moneys owing by such Borrower to that holder as fully as if
that holder were a holder of such Revolving Note or Syndicated
Loan in the amount of the participation held by that holder.
Notwithstanding the foregoing, upon the occurrence and during
the continuance of a Potential Event of Default or an Event of
Default, the ratable sharing arrangements set forth in this
Section 10.5 shall be based on each Bank's pro rata share of
all Loans outstanding at such time, rather than on each Bank's
Pro Rata Share.
10.6 Amendments and Waivers
No amendment, modification, termination or waiver of
any provision of this Agreement or of the Notes or consent to
any departure by any Borrower therefrom shall in any event be
effective without the written concurrence of the Required
Banks; except that (A) any amendment, modification, termination
or waiver (i) of any provision that increases the principal
amount of the Commitments or the Loans, changes a Bank's Pro
Rata Share or affects the definitions of "Required Banks" and
"Final Maturity Date," (ii) of any provision that expressly
requires the approval or concurrence of all Banks, (iii) that
decreases the interest rates borne by the Syndicated Loans, or
postpones the payment of interest due on the Syndicated Loans,
(iv) that decreases the amount or changes the due date of any
amount payable in respect of the fees payable hereunder,
(v) that eliminates the Company's guarantee set forth in
Section 9 hereof or (vi) of any of the provisions contained in
Sections 2.11B, 2.11C and 7.1 hereof and this Section 10.6
shall be effective only if evidenced by a writing signed by or
on behalf of all Banks and (B) any waiver with respect to a
Competitive Bid Loan can be given only by the Bank affected
with respect thereto. No amendment, modification, termination
or waiver of any provision of Section 8 hereof or any of the
rights, duties, indemnities or obligations of the Agent, as
agent shall be effective without the written concurrence of the
Agent. The Agent may, but shall have no obligation to, with
the concurrence of any Bank, execute amendments, modifications,
waivers or consents on behalf of that Bank. Any waiver or
consent shall be effective only in the specific instance and
for the specific purpose for which it was given. No notice to
or demand on any Borrower in any case shall entitle such
Borrower to any further notice or demand in similar or other
circumstances. Any amendment, modification, termination,
waiver or consent effected in accordance with this Section 10.6
shall be binding upon each holder of the Notes or Loans, at the
time outstanding, each future holder of the Notes or Loans and,
if signed by such Borrower, on the Borrower.
10.7 Independence of Covenants
All covenants hereunder shall be given independent
effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be
permitted by an exception to, or be otherwise within the
limitation of, another covenant shall not avoid the occurrence
of an Event of Default or Potential Event of Default if such
action is taken or condition exists.
10.8 Notices
Unless otherwise provided herein, any notice or other
communication herein required or permitted to be given shall be
in writing and may be personally served, telecopied, telexed or
sent by United States mail and shall be deemed to have been
given when delivered in person, upon receipt of telecopy or
telex or four Business Days after depositing it in the United
States mail, registered or certified, with postage prepaid and
properly addressed; provided that notices to the Agent shall
not be effective until received by Agent. For the purposes
hereof, the addresses of the parties hereto (until notice of a
change thereof is delivered as provided in this Section 10.8)
shall be set forth under each party's name on the signature
pages hereto.
10.9 Survival of Warranties and Certain Agreements
A. All agreements, representations and warranties
made herein shall survive the execution and delivery of this
Agreement, the making of the Loans hereunder and the execution
and delivery of the Notes.
B. Notwithstanding anything in this Agreement or
implied by law to the contrary, the agreements of the Company
or any other Borrower set forth in Sections 2.11E, 2.11I and
2.11L, the agreements of the Company set forth in Sections 10.2
and 10.3 and the agreements of Banks set forth in Sections
8.2C, 8.4, 10.4 and 10.5 shall survive the payment of the
Loans, the Notes and the termination of this Agreement.
10.10 Failure or Indulgence Not Waiver;
Remedies Cumulative______________
No failure or delay on the part of any Bank or any
holder of any Note or lender of any Loan in the exercise of any
power, right or privilege hereunder or under the Notes or the
Loans shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such
power, right or privilege preclude other or further exercise
thereof or of any other right, power or privilege. All rights
and remedies existing under this Agreement or the Notes or the
Loans are cumulative to and not exclusive of any rights or
remedies otherwise available.
10.11 Severability
In case any provision in or obligation under this
Agreement or any Note or Loan shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations
thereof, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired
thereby.
10.12 Obligations Several; Independent Nature of
Banks' Rights_____________________________
The obligation of each Bank hereunder is several, and
no Bank shall be responsible for the obligation or commitment
of any other Bank hereunder. Nothing contained in this
Agreement and no action taken by the Banks pursuant hereto
shall be deemed to constitute the Banks to be a partnership, an
association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Bank shall be a
separate and independent debt, and each Bank shall be entitled
to protect and enforce its rights arising out of this Agreement
and it shall not be necessary for any other Bank to be joined
as an additional party in any proceeding for such purpose.
10.13 Headings
Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be
given any substantive effect.
10.14 APPLICABLE LAW; CONSENT TO JURISDICTION
AND SERVICE OF PROCESS_________________
A. THIS AGREEMENT, THE NOTES AND THE LOANS SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICT OF LAWS.
B. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY
BORROWER WITH RESPECT TO THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN THE STATE OF NEW YORK AND BY
EXECUTION AND DELIVERY OF THIS AGREEMENT EACH BORROWER ACCEPTS
FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID
COURTS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. THE
PARTIES HERETO HEREBY IRREVOCABLY WAIVE TRIAL BY JURY, AND EACH
BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING,
WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR
BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR
PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.
10.15 Successors and Assigns; Subsequent
Holders of Notes__________________
This Agreement shall be binding upon the parties
hereto and their respective successors and assigns and shall
inure to the benefit of the parties hereto and the successors
and assigns of the Banks. The terms and provisions of this
Agreement shall inure to the benefit of any assignee or
transferee of the Notes and Loans and in the event of such
transfer or assignment, the rights and privileges herein
conferred upon the Banks shall automatically extend to and be
vested in such transferee or assignee, all subject to the terms
and conditions hereof. The Company's or any Borrower's rights
or any interest therein hereunder may not be assigned without
the written consent of all the Banks except pursuant to a
merger, consolidation or sale, lease or transfer of assets
permitted by Section 6.1 hereof. The Banks' rights of
assignment are limited by and subject to Section 10.1 hereof.
The Company may, in its sole discretion, upon ten (10) days'
prior written notice, replace any of the Banks with one or more
Banks provided that (i) the Bank being replaced has
concurrently therewith been paid in full all amounts due to
such Bank hereunder and under any of its Notes, (ii) the full
amount of the Commitments remains unchanged and (iii) the
percentages of the total Commitments allocated to each other
Bank (or any successors thereto) remains unchanged unless the
prior written consent from such Bank has been obtained. Any
such Bank so replaced shall, upon written request of the
Company, execute and deliver such instruments and agreements as
are reasonably necessary to accomplish the same.
10.16 Counterparts; Effectiveness
This Agreement and any amendments, waivers, consents
or supplements may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute
but one and the same instrument. This Agreement shall become
effective on such date (the "Effective Date") as a counterpart
hereof shall be executed by each of the parties hereto and
copies hereof shall be delivered to the Company and the Agent.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed as of the date first above
written.
COMPANY:
TEXTRON INC.
By: s/Richard A. McWhirter
Executive Vice President and
Chief Financial Officer
By: s/Brian T. Downing
Vice President and Treasurer
Notice Address:
Textron Inc.
40 Westminster Street
Providence, RI 02903
Attention: Treasurer
with a copy to:
Textron Inc.
40 Westminster Street
Providence, RI 02903
Attention: General Counsel
S-2
BANKS AND AGENT:
BANKERS TRUST COMPANY,
as a Bank and as Agent
By: s/Edward G. Benedict
Name: Edward G. Benedict
Title: Vice President
Notice Address and Payment Office:
Bankers Trust Company
280 Park Avenue
14-E
New York, NY 10017
Attention: Edward G. Benedict
Telephone No. (212) 454-3591
Telecopy No. (212) 454-2942
Commitment: $8,991,223
Pro Rata Share: 3.5965%
S-3
ABN-AMRO BANK, N.V.
By: s/Elliott O. May
Name: Elliott O. May
Title: Group Vice President and
Marketing Manager
Notice Address and Payment Office:
ABN-Amro Bank, N.V.
53 State Street
Boston, MA 02109
Attention: Elliott May
Telephone No.
Telecopy No.
Commitment: $9,210,528
Pro Rata Share: 3.6842%
S-4
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By: s/Arlene S. Pedovitch
Name: Arlene S. Pedovitch
Title: Vice President
Notice Address and Payment Office:
Bank of America
1850 Gateway Boulevard, 4th fl.
Concord, California 94520
Attention: Lorine Stafford
Telephone No.
Telecopy No. (510) 675-7531
Commitment: $13,157,900
Pro Rata Share: 5.2632%
S-5
BANK OF BOSTON
By: s/Carol A. Lovell
Name: Carol A. Lovell
Title: Director
Notice Address and Payment Office:
First National Bank of Boston
100 Federal Street
Boston, MA 02110
Attention: Carol Lovell
Telephone No.
Telecpy No.
Commitment: $14,473,685
Pro Rata Share: 5.7895%
S-6
BANK OF MONTREAL/
HARRIS TRUST AND SAVINGS BANK
By: s/Cecily Mistarz
Name: Cecily Mistarz
Title: Director
Notice Address and Payment Office:
Bank of Montreal/
Harris Trust and Savings Bank
115 South LaSalle Street
12th Floor
Chicago, IL 60603
Attention: Calvin R. Myers
Telephone No.
Telecopy No.
Commitment: $3,289,475
Pro Rata Share: 1.3158%
S-7
THE BANK OF NEW YORK
By: s/David C. Judge
Name: David C. Judge
Title: Vice President
Notice Address and Payment Office:
The Bank of New York
One Wall Street
New York, NY 10286
Attention: David C. Judge
Telephone No.
Telecopy No.
Commitment: $9,868,425
Pro Rata Share: 3.9474%
S-8
THE BANK OF NOVA SCOTIA
By: s/M. R. Bradley
Name: M. R. Bradley
Title: Representative
Notice Address and Payment Office:
The Bank of Nova Scotia
101 Federal Street
16th Floor
Boston, MA 02110
Attention: Michael R. Bradley
Telephone No.
Telecopy No.
Commitment: $3,333,333
Pro Rata Share: 1.3333%
S-9
THE BANK OF TOKYO TRUST COMPANY
By: s/G. Stewart
Name: G. Stewart
Title: Vice President
Notice Address and Payment Office:
Bank of Tokyo Trust Company
Corporate Banking Department
100 Broadway, 12th Floor
New York, NY 10005
Attention: George C. Stewart
Telephone No.
Telecopy No.
Commitment: $3,728,067
Pro Rate Share: 1.4912%
S-10
BANQUE NATIONALE de PARIS
By: s/Phil Truesdale
Name: Phil Truesdale
Title: Vice President
Notice Address and Payment Office:
Banque Nationale de Paris
499 Park Avenue
New York, NY 10022
Attention: Philemon Truesdale
Telephone No.
Telecopy No.
Commitment: $2,631,575
Pro Rata Share: 1.0526%
S-11
BANQUE PARIBAS
By: s/Stanley B. Berkman
Name: Stanley B. Berkman
Title: Group Vice President
By: s/Stephen J. Kelly
Name: Stephen J. Kelly
Title: Vice President
Notice Address and Payment Office:
Banque Paribas
The Equitable Tower
787 Seventh Avenue
New York, NY 10019
Attention: Stephen Kelly
Telephone No. (212) 841-2382
Telecopy No. (212) 841-2333
Commitment: $6,535,092
Pro Rata Share: 2.6140%
S-12
BARCLAYS BANK PLC.
By: s/Gregory D. Amoruso
Name:
Title: Vice President
Notice Address and Payment Office:
Barclays Bank Plc.
222 Broadway
New York, NY 10038
Attention: Peter Nikitaidis
Telephone No.
Telecopy No.
Commitment: $2,631,575
Pro Rata Share: 1.0526%
S-13
CIBC INC.
By: s/W. B. Anderson
Name: W. B. Anderson
Title: Authorized Signatory
Notice Address and Payment Office:
Canadian Imperial Bank of Commerce
Two Paces West
2727 Paces Ferry Road
Atlanta, GA 30339
Attention: Michael J. Dorr
Telephone No. (404) 319-4815
Telecopy No. (404) 319-4950
Commitment: $9,868,425
Pro Rata Share: 3.9474%
S-14
THE CHASE MANHATTAN BANK, N.A.
By: s/Sherwood E. Exum, Jr.
Name: Sherwood E. Exum, Jr.
Title: Managing Director
Notice Address and Payment Office:
The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza
6th Floor
Manufacturing Component
New York, NY 10081
Attention: Sherwood Exum, Jr.
Telephone No.
Telecopy No.
Commitment: $9,868,425
Pro Rata Share: 3.9474%
S-15
CHEMICAL BANK
By: s/Anne Kuchinsky
Name: Anne Kuchinsky
Title: Vice President
Notice Address and Payment Office:
Chemical Bank
270 Park Avenue
New York, NY 10017
Attention: Stewart U. Wallace
Telephone No.
Telecopy No.
Commitment: $14,035,092
Pro Rata Share: 5.6140%
S-16
CITIBANK, N.A.
By: s/W. Martens
Name: W. Martens
Title: Vice President
Notice Address and Payment Office:
Citibank, N.A.
399 Park Avenue
New York, NY 10043
Attention: William G. Martens, III
Telephone No.
Telecopy No.
Commitment: $9,868,425
Pro Rata Share: 3.9474%
S-17
COMERICA BANK
By: s/Jon A. Bird
Name: Jon A. Bird
Title: Vice President
Notice Address and Payment Office:
Comerica Bank
500 Woodward Avenue
MC 3280
Detroit, MI 48226
Attention: Jon A. Bird
Telephone No.
Telecopy No.
Commitment: $1,315,785
Pro Rata Share: 0.5263%
S-18
CONTINENTAL BANK, N.A.
By: s/David Noda
Name: David Noda
Title: Vice President
Notice Address and Payment Office:
Continental Bank, N.A.
231 South LaSalle Street
Chicago, IL 60697
Attention: Elliot J. Jaffee
Telephone No.
Telecopy No.
Commitment: $2,631,575
Pro Rata Share: 1.0526%
S-19
CREDIT LYONNAIS
By: s/Robert Ivosevich
Name: Robert Ivosevich
Title: Senior Vice President
Notice Address and Payment Office:
Credit Lyonnais
Exchange Place
53 State Street - 26th Floor
Boston, MA 02109
Attention: Thierry Hauret
Telephone No.
Telecopy No.
Commitment: $2,631,575
Pro Rata Share: 1.0526%
S-20
CREDIT SUISSE
By: s/Juerg Johner
Name: Juerg Johner
Title:
Notice Address and Payment Office:
Credit Suisse
Tower 49
12 East 40th Street
New York, NY 10017
Attention: Juerg Johner
Telephone No.
Telecopy No.
Commitment: $4,166,667
Pro Rata Share: 1.6667%
S-21
DEUTSCHE BANK AG
NEW YORK BRANCH
By: s/Philip J. Palm
Name: Philip J. Palm
Title: Director
Notice Address and Payment Office:
Deutsche Bank AG
New York Branch
31 West 52nd Street
New York, NY 10019
Attention: Philip J. Palm
Telephone No.
Telecopy No.
Commitment: $9,868,425
Pro Rata Share: 3.9474%
S-22
FIRST AMERICAN NATIONAL
By: s/Scott M. Bane
Name: Scott M. Bane
Title: Vice President
Notice Address and Payment Office:
First American National
First American Center
Nashville, TN 37237
Attention: Scott M. Bane
Telephone No.
Telecopy No.
Commitment: $1,315,785
Pro Rata Share: 0.5263%
S-23
FIRST INTERSTATE BANK OF CALIFORNIA
By: s/Bruce L. Gregory
Name: Bruce L. Gregory
Title: Vice President
Notice Address and Payment Office:
First Interstate Bank of California
885 Third Avenue
New York, NY 10022
Attention: Bruce L. Gregory
Telephone No.
Telecopy No.
Commitment: $5,921,052
Pro Rata Share: 2.3684%
S-24
THE FIRST NATIONAL BANK OF CHICAGO
By: s/Courtenay R. Wood
Name: Courtenay R. Wood
Title: Vice President
Notice Address and Payment Office:
The First National Bank of Chicago
North American Banking Group
One First National Plaza
Mail Suite 0374
Chicago, IL 60670-0374
Attention: Thomas M. Harkless
Telephone No.
Telecopy No.
Commitment: $13,157,900
Pro Rata Share: 5.2632%
S-25
FLEET NATIONAL BANK
By: s/Kathleen A. Fitzgerald
Name: Kathleen A. Fitzgerald
Title: Vice President
Notice Address and Payment Office:
Fleet National Bank
111 Westminster Street
Providence, RI 02903
Attention: Kathleen A. Fitzgerald
Telephone No.:
Telecopy No.:
Commitment: $8,114,027
Pro Rata Share: 3.2456%
S-26
FUJI BANK, LTD.
By: s/Yoshihiko Shiotsugu
Name: Yoshihiko Shiotsugu
Title: Vice President and Manager
Notice Address and Payment Office:
Fuji Bank, Ltd.
Two World Trade Center
New York, NY 10048
Attention: Michael A. Imperiale
Telephone No.
Telecopy No.
Commitment: $3,728,067
Pro Rata Share: 1.4912%
S-27
INDUSTRIAL BANK OF JAPAN
By: s/Takeshi Kawano
Name: Takeshi Kawano
Title: Senior Vice President and
Senior Manager
Notice Address and Payment Office:
Industrial Bank of Japan
245 Park Avenue
New York, NY 10167-0037
Attention: John Veltri
Telephone No.
Telecopy No.
Commitment: $3,728,067
Pro Rata Share: 1.4912%
S-28
MELLON BANK, N.A.
By: s/Diane P. Durnin
Name: Diane P. Durnin
Title: Vice President
Notice Address and Payment Office:
Mellon Bank, N.A.
551 Madison Avenue
New York, NY 10022
Attention: Diane Durnin
Telephone No.
Telecopy No.
Commitment: $5,701,758
Pro Rata Share: 2.2807%
S-29
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK
By: s/Steven Kenneally
Name: Steven Kenneally
Title: Vice President
Notice Address and Payment Office:
Morgan Guaranty Trust Company
of New York
60 Wall Street
New York, NY 10260
Attention: Martin R. Atkin
Telephone No.
Telecopy No.
Commitment: $13,157,900
Pro Rata Share: 5.2632%
S-30
NATIONSBANK
By: s/Thomas McCaskill
Name: Thomas McCaskill
Title: Senior Vice President
Notice Address and Payment Office:
NationsBank
767 Fifth Avenue - 23rd Floor
New York, NY 10153
Attention: Michael J. Cerminaro
Telephone No.
Telecopy No.
Commitment: $13,815,785
Pro Rata Share: 5.5263%
S-31
NATIONAL WESTMINSTER BANK Plc.
By: s/David Apps
Name: David Apps
Title: Vice President
Notice Address and Payment Office:
National Westminster Bank Plc.
175 Water Street - 29th Floor
New York, NY 10038
Attention: David Apps
Telephone No.
Telecopy No.
Commitment: $2,631,575
Pro Rata Share: 1.0526%
S-32
NBD BANK, N.A.
By: s/Carolyn J. Parks
Name: Carolyn J. Parks
Title: Vice President
Notice Address and Payment Office:
NBD Bank, N.A.
611 Woodward Avenue
Detroit, MI 48226
Attention: Carolyn J. Parks
Telephone No.
Telecopy No.
Commitment: $3,289,475
Pro Rata Share: 1.3158%
S-33
CORESTATES BANK, N.A.
By: s/Donna J. Emhart
Name: Donna J. Emhart
Title: Commercial Officer
Notice Address and Payment Office:
Corestates Bank, N.A.
1345 Chestnut Street
P.O. Box 7618
Philadelphia, PA 19101
Attention: Donna J. Emhart
Telephone No.
Telecopy No.
Commitment: $1,315,785
Pro Rata Share: 0.5263%
S-34
THE ROYAL BANK OF CANADA
By: s/Gary R. Overton
Name: Gary R. Overton
Title: Senior Manager
Notice Address and Payment Office:
Royal Bank of Canada
USA Headquarters Financial Square
New York, NY 10005-3531
Attention: Gary R. Overton
Telephone No.
Telecopy No.
Commitment: $9,868,425
Pro Rata Share: 3.9474%
S-35
SANWA BANK, Ltd.
By: s/Renko Hara
Name: Renko Hara
Title: Vice President
Notice Address and Payment Office:
Sanwa Bank, Ltd.
Boston Branch
One Financial Center
Suite 2812
Boston, MA 02111
Attention: Dale C. Edmunds
Telephone No.
Telecopy No.
Commitment: $3,289,475
Pro Rata Share: 1.3158%
S-36
SHAWMUT BANK
By: s/John B. Desmond
Name: John B. Desmond
Title: Vice President
Notice Address and Payment Office:
Shawmut Bank
777 Main Street
Hartford, CT 06115
Attention: John B. Desmond
Telephone No.
Telecopy No.
Commitment: $4,166,667
Pro Rata Share: 1.6667%
S-37
SUNTRUST
By: s/Peter Gentry
Name: Peter Gentry
Title: Assistant Vice President
Notice Address and Payment Office:
Suntrust
Suntrust Corporate Services
25 Park Place, Center 123
Atlanta, GA 30303
Attention: Christina Ernshaw
Telephone No.
Telecopy No.
Commitment: $1,315,785
Pro Rata Share: 0.5263%
S-38
SWISS BANK CORPORATION
By: s/Stephanie W. Kim
Name: Stephanie W. Kim
Title: Associate Director
Notice Address and Payment Office:
Swiss Bank Corporation
Swiss Bank Tower
10 East 50th Street
SBT-17-A
New York, NY 10022
Attention: Michael Fabiano
Telephone No.
Telecopy No.
Commitment: $9,868,425
Pro Rata Share: 3.9474%
S-39
TORONTO DOMINION BANK
By: s/Lisa Allison
Name: Lisa Allison
Title: Mgr. Cr. Admin.
Notice Address and Payment Office:
Toronto Dominion Bank
31 West 52nd Street
New York, NY 10019
Attention: Katherine Lucey
Telephone No.
Telecopy No.
Commitment: $3,508,766
Pro Rata Share: 1.4035%
EXHIBIT 12.1
TEXTRON PARENT COMPANY BORROWING GROUP
COMPUTATION OF RATIO OF INCOME TO FIXED CHARGES
(Unaudited)
(In millions except ratios)
<TABLE>
<CAPTION>
Year
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
Fixed charges:
Interest expense (1) $ 235.5 $ 253.1 $ 244.0 $ 258.5 $ 263.1
Estimated interest portion of rents 21.2 20.4 18.7 20.5 22.4
Total fixed charges $ 256.7 $ 273.5 $ 262.7 $ 279.0 $ 285.5
Income:
Income before income taxes (2) $ 613.5 $ 527.0 $ 495.0 $ 459.2 $ 410.3
Fixed charges 256.7 273.5 262.7 279.0 285.5
Eliminate equity in undistributed
pre-tax income of finance and
insurance subsidiaries (338.5) (286.4) (245.5) (163.0)(3) (206.2)
Adjusted income $ 531.7 $ 514.1 $ 512.2 $ 575.2 $ 489.6
Ratio of income to fixed charges 2.07 1.88 1.95 2.06 1.71
</TABLE>
____________________
(1) Includes interest unrelated to borrowings of $37.1 million in 1993,
$36.3 million in 1992, $27.0 million in 1991, $25.7 million in 1990
and $24.4 million in 1989 (primarily interest accretion).
(2) Excludes the cumulative effect of changes in accounting principles
in 1992 and extraordinary losses in 1989.
(3) Net of an extraordinary dividend of $50.0 million.
EXHIBIT 12.2
TEXTRON INC. INCLUDING ALL MAJORITY-OWNED SUBSIDIARIES
COMPUTATION OF RATIO OF INCOME TO FIXED CHARGES
(Unaudited)
(In millions except ratios)
<TABLE>
<CAPTION>
Year
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
Fixed charges:
Interest expense (1) $ 667.8 $ 742.0 $ 754.4 $ 774.6 $ 733.1
Estimated interest portion of rents 42.7 41.0 38.5 39.3 38.7
Total fixed charges $ 710.5 $ 783.0 $ 792.9 $ 813.9 $ 771.8
Income:
Income before income taxes (2) $ 613.5 $ 527.0 $ 495.0 $ 459.2 $ 410.3
Fixed charges 710.5 783.0 792.9 813.9 771.8
Adjusted income $1,324.0 $1,310.0 $1,287.9 $1,273.1 $1,182.1
Ratio of income to fixed charges 1.86 1.67 1.62 1.56 1.53
</TABLE>
____________________
(1) Includes interest unrelated to borrowings of $37.1 million in 1993,
$36.3 million in 1992, $27.0 million in 1991, $25.7 million in 1990
and $24.4 million in 1989 (primarily interest accretion).
(2) Excludes the cumulative effect of changes in accounting principles
in 1992 and extraordinary losses in 1989.
Front Cover
Textron Annual Report to Shareholders for the Year 1993
<PAGE>
Inside Front Cover
Contents:
Financial Highlights 1
Organization of Divisions 2
Letter to Shareholders 5
Automotive 8
Bell Helicopter 12
Cessna Aircraft 16
Financial Services 20
Operations Review 24
Board of Directors 28
Financial Section 29
Directory of Divisions 67
Principal Officers 70
<PAGE> 1
FINANCIAL
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
HIGHLIGHTS
(Dollars in millions except per share data) 1993 1992 1991
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues $ 9,078 $ 8,348 $ 7,840
- -------------------------------------------------------------------------------
Income before cumulative effect of changes
in accounting principles $ 379 $ 324* $ 300
Per common share $ 4.21 $ 3.66* $ 3.42
- -------------------------------------------------------------------------------
Average common shares outstanding 90,052,000 88,580,000 87,563,000
- -------------------------------------------------------------------------------
Total assets $ 19,658 $ 18,367 $ 15,737
- -------------------------------------------------------------------------------
Book value per common share $ 31.18 $ 28.11 $ 33.65
Dividends declared per common share $ 1.24 $ 1.12 $ 1.03
- -------------------------------------------------------------------------------
Return on average shareholders' equity 14.4% 13.7% 10.7%
- -------------------------------------------------------------------------------
Employees 56,000 54,000 52,000
- -------------------------------------------------------------------------------
</TABLE>
*Income before cumulative effect of changes in accounting principles in 1992
excludes the one-time charges related to the changes in accounting for retiree
benefits other than pensions and income taxes. Including the effect of these
accounting changes, Textron had a net loss for 1992 of $355 million ($4.01 per
share).
BAR CHARTS:
Income per Common Share
1991 $3.42
1992 $3.66
1993 $4.21
Revenues per Employee
($ in thousands)
1991 $149
1992 $152
1993 $163
<PAGE> 2
Organization of Divisions
MANUFACTURING
AIRCRAFT
Bell Helicopter Textron
Commercial and military helicopters
Tiltrotor aircraft development
The Cessna Aircraft Company
Light and mid-size business jet aircraft
Utility turboprop aircraft
AUTOMOTIVE
CWC Castings Textron
Camshafts and other castings
Davidson Exterior Trim Textron
Molded decorative exterior trim parts
Davidson Interiors Textron
Interior trim
Instrument panels
McCord Winn Textron
Electro-mechanical components
Windshield washer systems
Randall Textron
Decorative trim parts and functional components
Textron Acustar Plastics
Exterior and interior trim parts
Instrument panels
Automotive lighting
INDUSTRIAL
Avdel plc
Fastening and assembly systems
Camcar Textron
Fasteners and components
Cherry Textron
Aerospace and commercial fasteners
Cone Drive Textron
Worm gears and speed reducers
E-Z-GO Textron
Golf cars and utility vehicles
Greenlee Textron
Contractor tools and electrical test equipment
Homelite Textron
Chain saws, generators, trimmers and blowers
Jacobsen Textron
Turf maintenance equipment
Micromatic Textron
Proprietary machine tools and industrial equipment
Speidel Textron
Watch attachments and fashion jewelry
Percent of Textron's Revenues for 1993
Manufacturing: 69%
Aircraft: 22%
Automotive: 13%
Industrial: 14%
Systems and Components: 20%
<PAGE> 3
SYSTEMS & COMPONENTS
Aircraft Engine Components Textron
Gas turbine engine components
Airfoil Textron
Blades, vanes and rotors
Avco Overseas Services Textron
Logistics support
Fuel Systems Textron
Gas turbine engine fuel system components
HR Textron
Aerospace control systems
Textron Aerostructures
Aircraft wings and components
Textron Defense Systems
Sensor-fuzed munitions systems
Aircraft landing systems
Surveillance systems
Textron Lycoming Reciprocating Engine
Piston aviation engines
Textron Lycoming Turbine Engine
Gas turbine engines
Textron Marine and Land Systems
Air cushion landing craft
Surface effect ships
Cadillac Gage armored vehicles
Textron Specialty Materials
Advanced composite and fire protection materials
FINANCIAL SERVICES
FINANCE
Avco Financial Services
Consumer finance and credit insurance
Textron Financial Corporation
Commercial finance
PAUL REVERE
Paul Revere
Individual non-cancellable disability income insurance
Group long-term disability insurance
Group life and dental insurance
Individual life insurance
Annuities
Percent of Textron's Revenues for 1993
Financial Services: 31%
Finance: 18%
Paul Revere: 13%
<PAGE> 4
Textron is a multi-industry company with operations in two business
sectors-Manufacturing and Financial Services. The Manufacturing
sector consists of the Aircraft, Automotive, Industrial, and Systems
and Components segments. The Financial Services sector includes
Finance and Paul Revere.
We have quality products, leading market positions, advanced
technologies, a substantial and growing international presence and,
above all, a highly skilled and motivated work force that owns nearly
20 percent of the company's stock.
Textron is committed to increasing shareholder value through
continuous improvement in its operations, earnings per share and
return on equity, and by maintaining a strong balance sheet with
strong credit ratings.
<PAGE> 5
TO OUR SHAREHOLDERS
Our company performed very well in 1993. We had good financial
results and made significant progress in refining our strategic
direction.
Earnings per share (EPS) increased by 15% to $4.21.
The fourth quarter marked the seventeenth consecutive quarter of
year-to-year EPS improvement.
Strong operating results and continued focus on asset management
resulted in over $200 million of free cash flow.
We are proud of these results because they evidence the effort to
achieve our primary goal - to build shareholder value - to increase
the value of your investment in Textron.
Our focus on shareholder value was further reinforced by an intensive
strategic look at our businesses. During 1993, key employees
contributed to developing a profile of Textron - a vision of what we
should look like for the balance of the nineties.
Long-term success will be based on growing our core businesses,
expanding our presence in international markets and facing head-on
the challenges of underperforming assets.
Core Businesses
We look to three core businesses as the drivers of future growth -
Automotive, Aircraft and Financial Services.
Automotive - In 1993, with the addition of Textron Acustar Plastics,
we strengthened our position as a leading independent supplier of
interior and exterior trim components in North America.
Aircraft - We have two of the world's finest airframe companies in
Bell Helicopter and Cessna Aircraft. They serve a diverse customer
base on a global basis and are committed to superior products and
services.
Financial Services - These businesses have provided steady earnings
growth even when tested by a weak economy. In addition, special
efforts were made in 1993 to strengthen Paul Revere's position in the
rapidly growing disability insurance market.
International
We believe that opportunities for growth in the U.S. will be matched
and, in
<PAGE> 6
many cases, exceeded by opportunities internationally. Bell, Cessna,
Avco Financial Services and Paul Revere have all established
reputations for high quality products and services overseas. We want
the rest of Textron to step up to those levels of performance.
Textron's International Office serves as a catalyst for maximizing
opportunities for our divisions. We also expect Avdel to
significantly contribute to our international expansion.
Underperforming Assets
We have been aggressively managing businesses which we believe will
not, in their present configuration, provide sustainable returns in
the future. Most of these divisions are in the Systems and Components
segment and face the dual challenge of declining defense spending and
a depressed commercial aerospace market. We are challenging our
management to explore additional measures to ensure acceptable
returns.
Our Commitment
We are committed to these key financial targets: achieving steady
growth in EPS; improving return on equity and maintaining a strong
financial position with solid credit ratings. By meeting these
financial goals, we will reach our ultimate objective - to build
long-term value for you, our shareholders.
We are committed to this financial objective. Our management and
56,000 employees are dedicated to increasing the value of Textron.
We welcome new Board members - H. Jesse Arnelle, John D. Macomber and
Thomas B. Wheeler - who provide additional leadership for Textron. We
owe a special debt of gratitude to James R. Martin, who retired from
the Board in 1993, and to Joseph R. Carter, William M. Ellinghaus and
J. Paul Sticht who leave the Board in April after many years of
valued service.
For all of the reasons mentioned above, we expect your company to
reach a new level of performance, not only in 1994, but in the years
beyond.
s/James F. Hardymon
James F. Hardymon
Chairman and
Chief Executive Officer
s/Lewis B. Campbell
Lewis B. Campbell
President and
Chief Operating Officer
<PAGE> 7
At the heart of our commitment to build long-term value for our
shareholders are four Textron businesses which possess especially
strong growth potential for the nineties. Textron's AUTOMOTIVE
divisions design and manufacture interior and exterior trim
components for domestic and foreign vehicle makers. Included in
Textron's Aircraft segment are two of the world's finest airframe
companies. BELL HELICOPTER produces diverse military and commercial
product lines, including the development of tiltrotor technology.
CESSNA AIRCRAFT is the world's leading manufacturer of light and
mid-size business jets and utility turboprop aircraft. And lastly,
Textron's three FINANCIAL SERVICES divisions provide consumer and
commercial finance products and individual, non-cancellable
disability income insurance products.
<PAGE> 8
AUTOMOTIVE
Successful companies grow by increasing the market penetration of
their products, even during sluggish economic conditions. With the
acquisition in May 1993 of certain assets of Chrysler Corporation's
Acustar Plastics, a world-class supplier of automotive plastic
components, Textron strengthened its position in North America as a
leading independent supplier of automotive interior plastic trim.
Textron Acustar Plastics' product lines include instrument panels,
interior trim components, exterior body color painted parts and
center consoles. The division also provides Textron with new
automotive prod-
<PAGE> 9
ucts, including exterior lighting, and gives the company a foothold
in the growing modular assembly business.
Textron currently manages integrated interiors for two major vehicle
platforms - the new Cadillac Seville and Eldorado and Chrysler's LH
series. Almost $750 in Textron-made products are on every Cadillac
Seville and Eldorado and more than $800 of products are on each
Chrysler LH series car.
Textron enhanced both its responsiveness to customers and its ability
to take advantage of the automotive industry's growing outsourcing
trend by realigning
<PAGE> 10
the operations of four of its automotive businesses in 1993. Textron
combined Davidson Instrument Panel and Davidson Interior Trim to
create Davidson Interiors Textron. The company also aligned the
Davidson Exterior Trim division with Textron Acustar Plastics.
The realigned divisions will help foster operating synergies and
optimize investment and program management resources in all of
Textron's automotive plastics products.
Textron has established product niches in other areas. Davidson
Exterior Trim manufactures body color painted front and rear fascia
and exterior body molding and panels, primarily for Chrysler and
General Motors.
Randall Textron is expanding its automotive business with Chrysler,
Ford and General Motors, while McCord Winn Textron is a leader in
lumbar seat support systems and provides the automotive windshield
washer systems for all of Chrysler's vehicles.
Davidson Interiors' revolutionary Flexible Bright (trademark) trim
grille, provided for the Lincoln Mark VIII, combines a chrome-like
look with durability, corrosion resistance, flexibility and
significant weight savings.
Automotive sales amounted to an average of $112 of components for
every automobile and light truck assembled in North America.
The fastest growing automotive product is interior plastic
components.
<PAGE> 11 [PHOTO]
<PAGE> 12
BELL HELICOPTER
Bell Helicopter continues to be a world leader in commercial
helicopter production, both in the number of units and in the dollar
value of units delivered in the non-U.S. Government market.
As pressure continues to reduce domestic defense spending it is
expected that, in some cases, the U.S. Government will lengthen the
lives of existing military programs. Because of this trend, Bell
believes that its current line of military aircraft, which includes
the AH-1W twin-turbine powered SuperCobra for the U.S. Marine Corps
and the OH-58D Kiowa Warrior for the U.S. Army, is well-positioned
for the future.
<PAGE> 13
In March 1993, the U.S. Army awarded Bell a contract to provide 102
training aircraft and nine cockpit procedures trainers for the Army's
New Training Helicopter program, with an option to build 55
additional helicopters and three trainers. Bell delivered the first
two training helicopters - designated the TH-67 Creek by the Army -
in October 1993, several weeks ahead of schedule. All U.S. military
helicopter pilots will now receive their initial training in a Bell
helicopter.
Bell has created an equally impressive array of helicopters for
commercial and civilian use. The fields of
<PAGE> 14
emergency medical service and offshore oil exploration have developed
into important markets for Bell. In 1993, Bell introduced new
commercial helicopters, including the Model 206LT TwinRanger, a
twin-engine version of the 206L-4 LongRanger.
Bell has a program in place to modernize its line of commercial
helicopters by the end of this decade and to guide new product
decisions in the future.
One of Bell's most dynamic projects is the joint development and
production of tiltrotor technology with Boeing Helicopters. The
tiltrotor aircraft takes off and lands vertically like a helicopter.
In flight, its rotors tilt forward to fly like an airplane. Because
of its unique capabilities, the tiltrotor could be an important
source of revenue growth in the late 1990s when the program is
scheduled to go into production.
Bell is also using tiltrotor technology to develop an Unmanned Aerial
Vehicle (UAV), the Bell Eagle Eye, for military use in
over-the-horizon surveillance and target acquisition missions.
Commercial and civilian markets may use the UAV for light cargo
deliveries and oil and gas pipeline inspections in remote locations.
Bell's strategy is to win customers by being responsive to their
needs and to produce the most reliable helicopters in the world.
Bell focuses on specific military and commercial helicopter markets.
<PAGE> 15 [PHOTO]
<PAGE> 16
CESSNA AIRCRAFT
The Cessna Aircraft Company is, by far, the world's largest designer
and manufacturer of light and mid-size business jets. More than
2,000 Citation business jets have been built since 1972.
The benefits from Textron's 1992 acquisition of Cessna are expected
to increase with the anticipated growth of the business jet market
for the remainder of this decade.
To maintain its industry leadership, Cessna adheres to an aggressive
program of product development and improvement. With six models of
business jets, Cessna provides a wider selection to existing and
potential cus-
<PAGE> 17
tomers than any other business jet manufacturer. Cessna Citations are
also backed by the largest single-product service network of any
business jet in the world.
The CitationJet, Cessna's newest aircraft, helped boost revenues with
34 deliveries from March to December.
Cessna's most exciting development project is the Citation X. This
aircraft is expected to compete for sales in both the mid-size and
large business jet markets. The Citation X is designed to operate at
speeds of up to Mach .9 - almost 600 miles-per-hour - making it
capable of flying from Los Angeles to New York in four hours.
<PAGE> 18
The prototype of the Citation X was rolled out in September and
performed flawlessly during its first flight in December. FAA
certification of the Citation X is expected in August 1995 with first
deliveries of the aircraft scheduled to begin in late 1995. By the
end of 1993, Cessna had already sold a significant portion of the
production of the Citation X through mid-1997.
For the fourth consecutive year, Cessna's Citation V was the world's
best selling light business jet. Cessna plans to accelerate sales of
this model with the introduction of the Citation V Ultra. The first
delivery of the Ultra is scheduled for September 1994. The Ultra can
<PAGE> 19
climb more quickly, fly faster and carry a greater payload than the
current Citation V. The aircraft also features the most comprehensive
and advanced avionics package offered as standard equipment in this
class of business jet.
In the single-engine utility turboprop market, Cessna has no
competition. Cessna designs and manufactures a line of single-engine
utility turboprop aircraft known as the Caravan. These rugged,
reliable cargo haulers operate worldwide, frequently under difficult
conditions.
Cessna is developing the only all-American entry in the competition
for the U.S. Government's JPATS (Joint Primary Aircraft Training
System) program. The JPATS program calls for the delivery of 764 jet
trainer aircraft to the U.S. Air Force and the U.S. Navy, beginning
in 1996, and a ground-based training system with long-term logistical
support. With the potential for foreign sales, JPATS would be worth
more than $4 billion to the winning entry over the life of the
program. The JPATS CitationJet performed a successful first flight in
December 1993 and certification is expected by mid-1994. Cessna
produced the only primary jet trainer ever used by the U.S. Air
Force.
Cessna has built more than 2,000 Citation business jets since 1972.
Every 20 seconds, a Citation takes off or lands somewhere in the
world.
Cessna operates the largest network of company-owned business jet
service centers in the U.S. and has authorized service centers around
the world.
<PAGE> 20
FINANCIAL SERVICES
Avco Financial Services (AFS) provides consumer financing, both
unsecured and secured by personal property and real estate mortgages,
as well as credit life, accident and health insurance for loan
customers through Avco Insurance Services/Balboa Life and Casualty.
With receivables of more than $5 billion, approximately 1,200 offices
in Australia, Canada, New Zealand, Spain, the United Kingdom and the
United States, and more than 1.8 million customers around the world,
AFS accounts for approximately half of the Financial Services
sector's revenues.
AFS reported its sixth consecutive year of receivables
<PAGE> 21
and earnings growth in 1993, despite weak consumer loan demand and
high unemployment in the six countries in which it operates.
Textron Financial Corporation (TFC) achieved its fifteenth
consecutive year of record earnings and increased receivables in
1993. TFC had total receivables of over $2.5 billion at the end of
1993.
For more than 30 years, TFC has provided financing to a variety of
customers, including customers for such Textron-made products as Bell
helicopters, E-Z-GO golf cars and Homelite and Jacobsen outdoor
equipment.
<PAGE> 22
The key strategic elements of TFC's business are excellent customer
service, low cost of operations and a diversified loan portfolio.
Paul Revere's revenues surpassed $1.1 billion for the second
consecutive year in 1993. Paul Revere's performance was enhanced by
expanding markets, improved margins, a solid investment portfolio and
excellent claims paying ratios.
In 1993, Paul Revere became the first company in its industry's
history to produce more than $100 million in new individual
disability premiums in a 12 month period. This milestone was fueled
largely by its innovative National Accounts Program.
During the year, Paul Revere also increased the number of agreements
it has with financial institutions to sell Paul Revere annuities
directly to the public.
In October 1993, Paul Revere made its successful debut on the New
York Stock Exchange under the ticker symbol PRL. Textron sold 7.5
million shares, or 17 percent, of Paul Revere's common stock. Textron
contributed $100 million to the capital of Paul Revere prior to the
stock sale.
Financial Services' strong asset quality, strict underwriting
standards and credit evaluation policies helped improve operating
margins.
Financial Services has provided steady annual earnings growth.
<PAGE> 23 [PHOTO]
<PAGE> 24
OPERATIONS REVIEW
CONTINUOUS IMPROVEMENT
Textron is committed to continuous improvement and the implementation
of world class manufacturing techniques at all of its operations.
Businesses utilize work place concepts such as Total Cost Management
to improve productivity, reduce operating costs and effectively
manage assets; Total Quality Management to encourage and empower
employees at all levels to recognize and maintain high quality
standards; and Just-In-Time manufacturing techniques to reduce
inventories and eliminate activities that do not add value to Textron
products.
At Textron Aerostructures, employees participated on strategic
planning teams which evaluated and established plans to enhance
customer responsiveness; reduce development and production cycle
times; achieve perfect quality; and address employee-related issues.
Among the results, Aerostructures reduced average cycle time in 1993
by more than 30 percent.
Dedication to quality manufacturing is one of the reasons CWC
Castings received the Ford Motor Company's "Q-1" Award for
successfully achieving Ford's high standards of performance.
At Textron Lycoming Reciprocating Engine, major components are built
as a specified subassembly until final assembly configuration is
determined. This change provides made-to-order finished components to
the assembly line only as needed, reducing finished parts
inventories.
Speidel improved operating efficiencies and achieved cost reductions
through faster order turnaround time, better accuracy and the
expanded use of bar coding, telemarketing and environmentally
friendly packaging. As a result, Speidel exceeded its 1993 cost
reduction goal.
INTERNATIONAL GROWTH
Textron is committed to substantially increasing its international
business by the year 2000.
Textron International was created in 1993 to help coordinate and
direct the company's marketing program. Textron International
established six regional marketing teams - Western Europe; Southeast
Asia; Northeast Asia;
BAR CHART:
Cessna Business Jet Sales
($ in millions)
1991 $542
1992 $537
1993 $579
<PAGE> 25
Mexico and Latin America; Eastern Europe and the Commonwealth of
Independent States; and the Middle East and Africa. Five of the six
teams held organizational meetings in 1993.
Management and manufacturing personnel in Textron received
considerable instruction on how to achieve International Organization
of Standards' ISO-9000 and ISO-9001 quality certification,
prerequisites to worldwide credibility in manufacturing.
Certification is awarded through an independent auditor's endorsement
that a manufacturer has conformed to certain quality management and
process requirements. Greenlee Textron received its ISO-9001
certification in 1993.
Speidel significantly increased its international business with Swiss
watchmaker Swatch in 1993. Swatch nearly tripled its orders of
Speidel's high-quality original equipment and replacement watchbands.
Speidel also established a new subsidiary in Canada.
An intense effort by Textron Marine and Land Systems paid off in 1993
when the Japanese Defense Agency agreed to order at least one
air-cushion landing craft (LCAC), with an option to buy five more.
The division also delivered an air-cushion fire and rescue craft to
the Civil Aviation Authority of Singapore in 1993.
Davidson Interiors' facility in Europe continued to manufacture
instrument panels for the Ford Mondeo and the Chrysler Eurostar
minivan as part of its joint venture, Davidson/Marley B.V., in the
Netherlands.
Textron Lycoming Turbine Engine is working aggressively to expand its
market in Western Europe with Avro International to ensure commercial
success of Avro's regional jetliner.
The division is also positioned to capture new European applications
in the regional turboprop/turbofan market with its new Common Core
500 series of engines.
PEOPLE DEVELOPMENT
In order to prosper in the future, Textron must continue to develop a
solid foundation of trained and productive employees through internal
and off-site
<PAGE> 26
education and training programs.
The Cessna Aircraft Company's 21st Street training program was
applauded by U.S. Secretary of Labor Robert Reich during a visit in
1993. The training facility, opened in 1991, helps area residents
learn work and literacy skills to become economically
self-sufficient. By hiring the people who graduate from the program,
Cessna is a major catalyst in the revitalization of the 21st Street
neighborhood in Wichita, Kansas.
Textron Financial Corporation's Gold Key College offers TFC employees
80 different courses, ranging from investment control policies and
procedures to tax and accounting issues. The courses are taught by
TFC employees who are knowledgeable in those fields.
The Textron Advanced Management Program and the Executive Development
Program provide selected Textron employees with an opportunity to
broaden their business knowledge and management skills through
courses on topics such as human resources, labor relations and
ethics.
Textron also helps employees take care of their own families.
Davidson Interiors supports day care through a matching-pay policy,
while Bell Helicopter has a Dependent Care Tax Savings Plan that
provides qualified employees with the opportunity to set aside
pre-tax earnings for dependent care.
Textron Specialty Materials is one of many Textron divisions which
offers employees assistance programs and referrals on matters of
substance abuse, marital difficulties, financial problems and
psychological counseling.
COMMUNITY ACTIVITIES
Textron and its employees have a long history of award-winning
community service participation.
In 1993, Textron divisions pitched in for flood victims of the
Midwest who lost their homes and belongings to rising waters. Money,
food, bottled water, clothing and other survival supplies were
donated and distributed to emergency relief agencies throughout the
region.
Avco Financial Services volunteers filled sandbags in several
communities and coordinated relief efforts with other Textron
divisions. Bell Helicopter
BAR CHART:
Textron sales per North American assembled automobile and light truck
1991 $74
1992 $80
1993 $112
<PAGE> 27
employees donated more than $30,000, while the division offered
trailer trucks and drivers to deliver food, bottled water and other
essential supplies to the St. Louis, Missouri area.
Many Textron divisions have developed relationships with area schools
through Adopt-A-School programs in inner cities across the country.
Volunteers from Paul Revere computerized the library at the Chandler
Magnet Elementary School in Worcester, Massachusetts making it the
only elementary school in the city to have an automated library.
The Textron Charitable Trust awards scholarships to college-bound
children of employees who qualify through the Textron Merit
Scholarship Program. Textron annually awards grants of $500 to
$2,000, based on need, to help pay for student tuition costs, general
fees and living expenses. The Trust's Matching Gift Program matches
employee contributions on a 2-for-1 basis to qualified cultural,
educational and environmental institutions and hospitals.
For the second year in a row, Cessna Aircraft was the top contributor
to the Kansas Foodbank. The division donated more than 300,000 pounds
of food for the needy, nearly triple its 1992 donation.
ENVIRONMENTAL, HEALTH AND SAFETY
Textron is continually improving and expanding its waste minimization
and recycling programs to reduce toxic emissions and hazardous waste
and to make better use of recyclable materials.
Textron has decreased its dependence on chemicals which are harmful
to the environment, such as trichloroethane, and employees are
instructed on the proper way to handle hazardous materials.
Computer paper is being recycled by the ton, as are mixed paper,
corrugated cardboard, food containers, newspapers, coolant and toner
cartridges.
Many Textron divisions have smoke-free facilities and offer in-house
wellness programs to employees. Those include glaucoma tests and
screenings for blood pressure, cholesterol and other common health
conditions.
Employees are offered instructional classes in cardiopulmonary
resuscitation (CPR), as well as referrals for counseling for
substance and alcohol abuse and other problems.
One of Textron's goals is to increase international business for its
divisions with the marketing assistance of Textron International.
Textron employees volunteer considerable time and resources to local
United Way agencies, Special Olympics and youth development programs.
<PAGE> 28
TEXTRON BOARD OF DIRECTORS
James F. Hardymon (1)
Chairman and
Chief Executive Officer
Textron Inc.
Providence, RI
Lewis B. Campbell (1)
President and
Chief Operating Officer
Textron Inc.
Providence, RI
H. Jesse Arnelle (4,5)
Senior Partner
Arnelle & Hastie (law firm)
San Francisco, CA
Joseph R. Carter (4,5)
Chairman
Massachusetts Biotechnology
Research Institute
Worcester, MA
R. Stuart Dickson (2,5)
Chairman
Ruddick Corporation
(diversified holding
company)
Charlotte, NC
B.F. Dolan (1,3)
Retired Chairman
Textron Inc.
Charlotte, NC
William M. Ellinghaus (2,4)
Retired President
AT&T
New York, NY
Webb C. Hayes, III (1,3)
Partner
Baker & Hostetler (law firm)
Washington, DC
John D. Macomber (2,3)
Principal
JDM Investment Group
(private investment firm)
Washington, DC
Barbara Scott Preiskel (3,5)
Formerly Senior Vice
President and General Counsel
Motion Picture Association
New York, NY
Sam F. Segnar (1,3)
Retired Chairman and
Chief Executive Officer
Enron Corporation
(diversified natural gas
company)
Houston, TX
Jean Head Sisco (2,4)
Partner
Sisco Associates
(international trade
consulting firm)
Washington, DC
John W. Snow (1,4)
Chairman, President and
Chief Executive Officer
CSX Corporation
(diversified transportation
company)
Richmond, VA
J. Paul Sticht (2,3)
Retired Chairman
RJR Nabisco, Inc.
(international consumer
products company)
Winston-Salem, NC
Martin D. Walker (4,5)
Chairman and
Chief Executive Officer
M.A. Hanna Company
(an international specialty
chemicals company)
Cleveland, OH
Thomas B. Wheeler (2,5)
President and
Chief Executive Officer
Massachusetts Mutual Life
Insurance Company
Springfield, MA
Numbers indicate
committee
memberships
(1) Executive Committee:
Chairman,
James F. Hardymon
(2) Audit Committee:
Chairman,
William M. Ellinghaus
(3) Nominating Committee:
Chairwoman,
Barbara Scott Preiskel
(4) Organization and
Compensation
Committee:
Chairman,
Joseph R. Carter
(5) Pension Committee:
Chairman,
Martin D. Walker
<PAGE> 29
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FINANCIAL SECTION
- -------------------------------------------------------------------------------
29 Financial Review
38 Report of Management
38 Report of Independent Auditors
39 Consolidated Financial Statements
60 Financial Information by Borrowing Group
65 Quarterly Financial Information
66 Five-Year Summary
- -------------------------------------------------------------------------------
FINANCIAL REVIEW
- -------------------------------------------------------------------------------
LIQUIDITY AND CAPITAL RESOURCES
Financing for Textron is conducted through two separate borrowing groups: the
Textron Parent Company Borrowing Group (consisting of all entities of Textron
other than its finance and insurance subsidiaries) and Textron's finance and
insurance subsidiaries. This framework allows the finance and insurance
subsidiaries, with specialized needs related to their portfolios of receivables
and investments, to finance their respective operations, each through its own
external group of creditors without guarantee from the Textron Parent Company
Borrowing Group. Accordingly, the liquidity and capital resources of Textron's
operations are best understood by separately considering its independent
borrowing groups.
TEXTRON PARENT COMPANY BORROWING GROUP
Sources of cash to the Textron Parent Company Borrowing Group include cash
generated by the operations comprising this group and dividends received from
the finance and insurance subsidiaries, supplemented with borrowings.
Information about the cash flows of this group for each of the three years in
the period ended January 1, 1994 is set forth in the Group's statement of cash
flows included in Note 18 (page 62) to the consolidated financial statements.
The Group's operating activities provided cash flows of $584.3 million in
1993, up from $403.1 million in 1992. The increase reflected (a) a higher
reduction in inventories, due principally to an increase in deliveries and
resumption of progress payments on certain long-term contracts and programs
and improvements in inventory management, (b) a higher level of trade payables,
due primarily to increased production at Bell Helicopter and Cessna, and
(c) higher income from operations. The Group's debt decreased by $258.0 million
in 1993 as operating cash flows and the proceeds from the sale of a minority
interest in The Paul Revere Corporation (PRC) exceeded capital asset additions,
payments of dividends, the acquisition of Textron Acustar Plastics and a $100
million contribution to the capital of PRC. Textron's ratio of debt to total
capital
<PAGE> 30
- -------------------------------------------------------------------------------
improved to 42% at January 1, 1994, down from 48% at January 2, 1993.
Cash flows from operating activities in 1992 of $403.1 million were higher
than the 1991 level due principally to a decrease in inventories in 1992
versus an increase in 1991. The Group's debt increased by $463.1 million in
1992 due to financing the $605.0 million acquisition of Cessna.
Cash flows from operating activities in 1991 of $272.8 million were lower
than the 1990 level due primarily to one-time extraordinary dividends of $50.0
million received from Textron's finance and insurance operations in 1990. The
Group's debt decreased in 1991 by $105.1 million as operating cash flows
exceeded capital asset additions and payments of dividends.
Capital asset additions during 1993, 1992 and 1991 of $225.6 million,
$197.9 million and $133.6 million, respectively, were primarily for (a) the
replacement of machinery and equipment, (b) machinery and equipment required
for increased capacity at existing facilities, and (c) in 1993 and 1992, for
production tooling for new aircraft at Cessna. Capital asset additions during
1994 are not expected to differ substantially from the level of such additions
in 1993.
Textron is involved in a number of remedial actions under various federal
and state laws and regulations relating to the environment which impose
liability on companies to clean up, or contribute to the cost of cleaning up,
sites on which their hazardous wastes or materials were disposed or released.
Expenditures to evaluate and remediate contaminated sites approximated $18
million, $25 million and $10 million in 1993, 1992 and 1991, respectively.
Textron currently projects that expenditures for remediation will range
between $20 million and $30 million for each of the years 1994 and 1995.
Textron cannot reasonably estimate at this time expenditures for remediation
by year beyond 1995 due to various factors and uncertainties inherent in the
estimation of such expenditures. (See Textron's Summary of Significant
Accounting Policies and Note 16 to the consolidated financial statements for
further information about environmental matters.)
Based upon the information currently available, Textron believes it has
made adequate provision for costs associated with known remediation efforts.
Despite the uncertainty concerning the overall costs of additional remedial
actions that might be identified in the future, it is not currently anticipated
that such costs will have a material adverse effect on Textron's liquidity,
net income or financial condition.
In 1990, PRC purchased in the open market (on behalf of Textron) 1,696,500
shares of Textron common stock at a total cost of approximately $40 million.
Such purchase was accounted for in the Textron Parent Company Borrowing
Group's balance sheet as a purchase of stock for the Textron Parent Company
Borrowing Group's treasury and as a dividend (special distribution) from PRC.
In July 1993, Textron's Board of Directors approved Textron's purchase of all
of the shares of Textron common stock owned by PRC in four annual installments
of 424,125 shares each, beginning on April 10, 1994, at a share price to be
equal to the average closing price of Textron's stock over the fiscal quarter
preceding each such purchase. This commitment ($98.8 million, based on the
closing price of Textron's common stock on December 31, 1993) has been
recorded in the Textron Parent Company Borrowing Group's balance sheet as an
accrued liability and an additional investment in PRC.
Textron, which had been the sole shareholder of PRC, sold 7.5 million shares
of PRC, representing 16.7% of the outstanding shares of PRC, on October 26,
1993, for $174.5 million (net of related expenses) in an underwritten public
offering registered under the Securities Act of 1933. Textron contributed $100
million to the capital of PRC prior to the sale. The proceeds from the sale
were used to reduce debt.
On May 3, 1993, Textron acquired the plastics operations of the Acustar
division of Chrysler Corporation at a cost of $139.2 million, financed by
variable rate short-term borrowings. Textron has the ability to refinance
these borrowings under existing long-term credit agreements. On February 28,
1992, Textron purchased all of the outstanding common stock of Cessna at a
cost of $605.0 million, financed through a combination of borrowings under
Textron's existing credit agreements (short-term, variable rate financing) and
medium- and long-term (fixed rate) debt issuances.
During 1993, Textron redeemed an aggregate principal amount of $221.2
million of its 10-3/4%, 9-1/2% and 9-1/4% Senior and Subordinated Notes, due
through 2017, for $231.6 million, resulting in a pretax charge to income of
$13.6 million. The redemptions, which are expected to result in lower interest
costs in the future, were financed primarily with the proceeds from the sale
of PRC stock.
<PAGE> 31
- -------------------------------------------------------------------------------
Textron had $236 million available at January 1, 1994 for the issuance of
unsecured debt securities under its shelf registration statement with the
Securities and Exchange Commission. Also at January 1, 1994, Textron had
credit facilities aggregating $1.5 billion. The portion of the credit
facilities not used or reserved as support for commercial paper or bank
borrowings was $878 million at January 1, 1994.
Management believes that the Textron Parent Company Borrowing Group will
continue to have adequate access to credit markets and that its credit
facilities and cash flows from operations -- including dividends received from
Textron's finance and insurance operations -- will continue to be more than
sufficient to meet its operating needs and to finance growth.
FINANCE AND INSURANCE SUBSIDIARIES
This group includes Avco Financial Services (AFS), Textron Financial
Corporation (TFC) and PRC. The insurance operations have historically
generated positive cash flows sufficient to preclude the need for borrowings.
Information about the cash flows of this group for each of the three years in
the period ended December 31, 1993 is set forth in the Group's statement of
cash flows included in Note 18 (page 64) to the consolidated financial
statements.
The amount of the net assets of Textron's finance and insurance subsidiaries
available for cash dividends and other payments to the Textron Parent Company
Borrowing Group is restricted by the terms of lending agreements and insurance
statutory requirements. The finance and insurance subsidiaries paid dividends
to the Textron Parent Company Borrowing Group of $93.5 million, $78.4 million
and $78.2 million in 1993, 1992 and 1991, respectively.
AFS and TFC each utilize a broad base of financial sources for their
respective liquidity and capital requirements. Cash is provided from both
operations and several different sources of borrowings, including unsecured
borrowings under bank lines of credit, the issuance of commercial paper and
short-term bank debt, and sales of medium- and long-term debt in the U.S. and
foreign financial markets. During 1993, the net proceeds from medium- and
long-term financing sources, including the issuances described below, totalled
$1.3 billion. Debt increased by $407.0 million in 1993, due principally to
receivable growth.
During 1993, AFS filed a shelf registration statement with the Securities
and Exchange Commission, increasing its shelf by $1.5 billion. Also during
1993, AFS' Canadian shelf registration statement expired and a new Canadian
shelf registration statement was filed, increasing its shelf to cover up to an
aggregate of $313 million of unsecured debt securities. AFS issued $1.0
billion of unsecured debt securities, including $947.0 million under its shelf
registration statements, in 1993. AFS had $1.6 billion and $160.9 million
available at December 31, 1993 for the issuance of unsecured debt securities
under its shelf registration statements with the Securities and Exchange
Commission and Canadian provincial security exchanges, respectively. AFS
redeemed $97 million of its 8-7/8% Senior Subordinated Notes, due 1996, in
1993 at 100% of the principal amount.
During 1993, TFC issued $227 million of medium-term notes under a $350
million medium-term notes facility under Rule 144A of the Securities Act of
1933, as amended. TFC had $123 million available under this facility at
December 31, 1993.
By utilizing medium- and long-term fixed rate financing, as well as interest
rate exchange agreements, Textron's finance subsidiaries effectively had a
ratio of variable rate debt to total debt of 52% at December 31, 1993.
For liquidity purposes, AFS and TFC have a policy of maintaining sufficient
unused bank lines of credit to support their outstanding commercial paper and
short-term bank borrowings. The subsidiaries' combined commercial paper and
short-term bank borrowings coverage ratio at December 31, 1993 was 103%. PRC
maintains lines of credit of $30 million for short-term funding of investment
purchases and other short-term cash requirements. Such lines were fully
available at December 31, 1993.
Textron's finance and insurance subsidiaries have substantial amounts of
investments and finance receivables backed up or secured by real estate. AFS
had residential real estate loans outstanding of $2.3 billion at December 31,
1993, which were secured primarily by first and second mortgages on single
family homes, and averaged $25 thousand in outstanding principal balance per
loan. Residential real estate loans are geographically dispersed
<PAGE> 32
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among many customers and the loan amounts are limited to a maximum of 85% of
the appraised market value at the date of the loans, although most loans are
made at significantly lower loan to value ratios.
TFC had commercial real estate loans and leveraged leases of real estate
aggregating $513.8 million and $154.3 million, respectively, at December 31,
1993. The real estate portfolio consists principally of first mortgages on
income producing properties and is diversified both geographically and by
type of property financed. The portfolio was underwritten at loan origination
so that historic cash flows exceeded debt service and so that loans were
generally for less than 80% of the value of the property. Loans were
originally written with scheduled maturities of generally between three and
five years. However, a substantial number of loans have been refinanced at
contractual maturity. At December 31, 1993, TFC had suspended the accrual of
interest on $77.2 million of real estate loans, down from $88.8 million at
December 31, 1992.
In addition, at December 31, 1993, Textron's insurance subsidiaries held
$179.4 million of first mortgages on real estate. At that date, the insurance
subsidiaries had suspended the accrual of interest on $4.7 million of first
mortgages, down from $16.8 million at December 31, 1992. The real estate
portfolio is well diversified geographically and by type of property financed.
Loans are generally limited to 75% of the appraised value of established
properties at the date of the loans with sufficient cash flows to meet debt
service requirements.
Foreclosed real estate loans of Textron's finance and insurance subsidiaries
are transferred out of finance receivables or investments in mortgages into
other assets or other investments at the lower of fair value (less estimated
costs to sell) or the outstanding loan balance. The carrying value of real
estate is periodically reevaluated and, where appropriate, adjustments are
made through a valuation allowance to reflect subsequent changes in fair
value, but carrying value is never increased above the amount originally
transferred. At December 31, 1993, real estate classified in other assets or
other investments aggregated $74.0 million, down from $106.5 million at
December 31, 1992.
Although Textron believes it has made adequate provision for its
nonperforming real estate assets, realization of these assets remains subject
to uncertainties. Subsequent evaluations of nonperforming assets, in light of
factors then prevailing, including economic conditions, may require additional
increases in the allowance for losses for such assets.
Textron's insurance subsidiaries' investments also included mortgage-backed
securities at an amortized cost of $1.1 billion at December 31, 1993, a
substantial portion of which is guaranteed by the U.S. Government or U.S.
Government agencies. Future investment income from mortgage-backed securities
may be affected by the timing of principal payments and the yields on
reinvestment alternatives available at the time of such payments. In 1993,
accelerated prepayments on mortgage-backed securities generated an increase in
funds available for investment at a time when interest rates were lower than
the current portfolio yield.
Textron also has significant investments in other debt securities. A
substantial portion of these investments is in high quality, investment grade
assets. Textron's investment strategies place an emphasis on matching
investment maturities with the timing of amounts estimated to be payable under
insurance contracts. Textron will adopt Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities" (FAS 115), as of the beginning of 1994. Upon adopting FAS 115,
Textron will record net unrealized gains of approximately $95 million, net of
applicable income taxes, relating to debt securities classified in the
available for sale portfolio, which will be carried at fair value. The net
unrealized gains will be recorded as an increase to shareholders' equity. The
adoption of FAS 115 will have no cash flow impact on Textron. (See Textron's
Summary of Significant Accounting Policies for further information about FAS
115.)
- -------------------------------------------------------------------------------
Textron has recognized net deferred tax assets of $250.7 million at
January 1, 1994, attributable to temporary differences between the financial
reporting basis and income tax basis of certain assets and liabilities.
Management believes that such net deferred tax assets will be realized based
on Textron's history of earnings and its expectations for the future. (See
Note 14 to the consolidated financial statements for further information.)
For further information about investments and collateral for finance
receivables, see Note 2, "Investments," and Note 3, "Finance Receivables," to
the consolidated financial statements.
For further information about the debt and credit facilities of the Textron
Parent Company Borrowing Group and the finance subsidiaries, see Note 8, "Debt
and Credit Facilities," to the consolidated financial statements.
<PAGE> 33
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
REVENUES AND INCOME BY BUSINESS SEGMENT
- -----------------------------------------------------------------------------------------------------------------------------------
For a description of the businesses comprising each segment, see pages 67 to 70 of this report.
For additional financial information by business segment, see Note 17.
- -----------------------------------------------------------------------------------------------------------------------------------
REVENUES INCOME
BUSINESS SEGMENTS ------------------------------ ----------------------------
(In millions) 1993 1992 1991 1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MANUFACTURING:
Aircraft $1,987.2 $1,520.6 $1,255.3 $171.4 $128.0 $112.7
Automotive 1,167.9 778.8 668.5 87.4 65.3 49.7
Industrial 1,277.5 1,195.4 1,118.1 114.2 105.6 88.2
Systems and Components 1,838.7 2,121.9 2,168.6 124.7 181.8 222.8
- -----------------------------------------------------------------------------------------------------------------------------------
6,271.3 5,616.7 5,210.5 497.7 480.7 473.4
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES:
Finance 1,610.5 1,621.7 1,547.6 288.9 249.8 226.2
Paul Revere 1,192.8 1,105.8 1,064.4 145.9 115.0 97.5
- -----------------------------------------------------------------------------------------------------------------------------------
2,803.3 2,727.5 2,612.0 434.8 364.8 323.7
- -----------------------------------------------------------------------------------------------------------------------------------
$9,074.6 $8,344.2 $7,822.5 932.5 845.5 797.1
======== ======== ========
- -----------------------------------------------------------------------------------------------------------------------------------
Corporate expenses and other -- net (87.2) (68.7) (75.7)
Interest expense -- net (231.8) (249.8) (226.4)
- -----------------------------------------------------------------------------------------------------------------------------------
Income before income taxes $613.5 $527.0 $495.0
====== ====== ======
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Notes:
(i) Prior year amounts have been reclassified to
conform to the current year's segment presentation.
(ii) The results of operations of Textron Acustar Plastics are included from
May 4, 1993. The results of operations of Cessna are included from February 29,
1992.
(iii) Revenues by business segment exclude interest income of the Textron
Parent Company Borrowing Group of $3.7 million, $3.3 million and $17.6 million
in 1993, 1992 and 1991, respectively.
(iv) Income of the Finance segment is net of interest expense.
(v) Corporate expenses and other-net for 1993 include a pretax charge of $13.6
million related to the early redemption of debt and a charge of $2.6 million to
eliminate the minority interest in the net income of Paul Revere subsequent to
October 26, 1993.
(vi) Revenues between segments were insignificant in each year.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
BACKLOG
- -------------------------------------------------------------------------------
(Unaudited) JANUARY 1, January 2,
(In billions) 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C>
U.S. GOVERNMENT:
Aircraft $1.0 $1.1
Systems and Components 1.2 1.6
- -------------------------------------------------------------------------------
2.2 2.7
- -------------------------------------------------------------------------------
COMMERCIAL:
Aircraft 1.6 1.7
Industrial .2 .2
Systems and Components 1.2 1.0
- -------------------------------------------------------------------------------
3.0 2.9
- -------------------------------------------------------------------------------
$5.2 $5.6
==== ====
- -------------------------------------------------------------------------------
</TABLE>
Notes:
(i) Prior year amounts have been reclassified to conform to the current year's
segment presentation.
(ii) The decrease in Textron's U.S. Government backlog was due primarily to
deliveries on a Lycoming Turbine Engine contract for the AGT 1500 engine for
the U.S. Army's Abrams main battle tank (scheduled to be completed in 1994)
and deliveries of Textron Marine and Land Systems' LCAC landing craft.
<PAGE> 34
- -------------------------------------------------------------------------------
RESULTS OF OPERATIONS
1993 VS. 1992
Textron's net income in 1993 was $379.1 million ($4.21 per share), up 17% from
income of $324.1 million ($3.66 per share) before the one-time cumulative
effect of accounting changes in 1992. Revenues increased to $9.1 billion in
1993 from $8.3 billion in 1992.
Operating income of Textron's six business segments aggregated $932.5
million in 1993, up 10% from $845.5 million in 1992. The drivers of the
increase in income were the Aircraft and Automotive segments, both of which
increased by 34%, and the Financial Services segments, which reported a 19%
overall growth in income. See the table under the caption "Revenues and Income
by Business Segment"and the discussion of the results of each segment below.
Textron's business segments have been realigned due to the significant
growth of the automotive business and the contraction of the defense and the
commercial aerospace markets. Prior year amounts have been reclassified to
conform to the current year's segment presentation.
Corporate expenses and other - net in 1993 were higher by $18.5 million
than their corresponding level in 1992, principally as a result of a $13.6
million pretax charge related to the early redemption of high coupon debt, the
elimination of the minority interest in the net income of Paul Revere
subsequent to October 26, 1993 and foreign exchange gains in 1992. The lower
interest expense of the Textron Parent Company Borrowing Group -- $231.8
million in 1993 vs. $249.8 million in 1992 -- reflected both a lower level of
average borrowing and a decreased average cost of borrowing. Textron's
effective income tax rate of 38.2% in 1993 was lower than the 1992 rate of
38.5%, due to the new tax legislation, as the one-time benefit from increasing
net deferred tax assets more than offset the effect of the increase in the
federal statutory tax rate from 34% to 35%.
1992 VS. 1991
Textron's income in 1992 before the one-time cumulative effect of accounting
changes was $324.1 million ($3.66 per share), up 8% from $299.5 million ($3.42
per share) in 1991. Revenues increased to $8.3 billion in 1992 from $7.8
billion in 1991, due principally to the acquisition of Cessna. Operating
income aggregated $845.5 million in 1992, compared with $797.1 million in 1991.
The accounting changes, which related to the accounting for postretirement
benefits other than pensions and income taxes (see Notes 13 and 14 to the
consolidated financial statements for further information), resulted in
one-time non-cash charges to 1992 income aggregating $679.5 million ($7.67 per
share) and, thus, a net loss of $355.4 million ($4.01 per share).
Corporate expenses and other - net in 1992 were lower than their 1991 level,
reflecting the effect of foreign exchange gains in 1992. The higher net
interest expense of the Textron Parent Company Borrowing Group -- $249.8
million in 1992 vs. $226.4 million in 1991 -- was due to an increased level of
borrowings (attributable to the acquisition of Cessna), increased interest
accretion and interest income on tax refunds in 1991, partially offset by a
decreased average cost of borrowing in 1992. Textron's effective income tax
rate in 1992 of 38.5% was lower than the 1991 rate of 39.5%, with no single
item accounting for the decrease.
AIRCRAFT
1993 VS. 1992
The Aircraft segment's revenues and income increased in 1993 by $466.6 million
(31%) and $43.4 million (34%), respectively, due to higher results at both
Bell Helicopter and Cessna. Bell Helicopter's income increased as a result of
higher revenues in both its U.S. Government and non-U.S. Government businesses
and the effect in 1992 of a $10 million loss provision on the V-22 full scale
development (FSD) contract. Cessna's income increased as a result of (a) higher
sales, due to the inclusion of Cessna's manufacturing operations for 12 months
in 1993 compared with 10 months in 1992, and (b) an $18 million gain from an
insurance settlement, which were partially offset by a higher level of expenses
in 1993, primarily related to higher product development expenses for the
CitationX aircraft and bid and proposal expenses for the Joint Primary Aircraft
Training System (JPATS) competition for a new U.S. military trainer.
In October 1992, the U.S. Government terminated substantially all of the
fixed price FSD contract on the V-22 program and issued the Bell-Boeing team a
new cost-type letter contract, providing initial funding in the amount of $550
million for the engineering and manufacturing development (EMD) phase of the
V-22 program. The final definitized EMD contract, with a proposed value of
approximately $2.5 billion, is expected to be negotiated in 1994. Under the
proposed terms of the EMD contract, Bell-Boeing will build four production-
representative V-22 aircraft and modify two existing aircraft to meet the
requirements of the U.S. Marine Corps' medium lift replacement aircraft.
<PAGE> 35
- -------------------------------------------------------------------------------
While settlement of the terminated portions of the FSD contract has not
been finalized with the U.S. Government, Textron believes that its share of
cumulative losses on the FSD contract is not likely to exceed the amounts
previously recorded.
1992 VS. 1991
The Aircraft segment's revenues and income increased in 1992 by $265.3 million
(21%) and $15.3 million (14%), respectively, due to the inclusion of the
operating results of Cessna's manufacturing operations for 10 months in 1992,
partially offset by lower revenues and income at Bell Helicopter.
Bell Helicopter's revenues decreased significantly in its non-U.S.
Government business due to market softness and decreased to a lesser degree in
its U.S. Government business. Bell's income decreased primarily as a result of
the lower revenues, the effect in 1991 of a favorable LIFO inventory reserve
adjustment (resulting from a reduction in LIFO inventories) and the effect of
the new accounting method relative to postretirement benefits other than
pensions, partially offset by the benefit of a lower provision in 1992 ($10
million vs. $45 million in 1991) for cost increases on the V-22 FSD contract
and other loss provisions in 1991.
AUTOMOTIVE
1993 VS. 1992
The Automotive segment's revenues increased $389.1 million (50%) in 1993
primarily as a result of the inclusion of the operating results of Textron
Acustar Plastics for eight months, higher automotive production and a broader
market penetration of automotive interior products. Income increased $22.1
million (34%), due to the higher revenues, partially offset by a special
warranty provision and provisions for restructuring costs of $7 million.
1992 VS.1991
The Automotive segment's revenues increased $110.3 million (16%) over the 1991
level primarily as a result of broader market penetration of automotive
interior products. Income increased $15.6 million (31%), due to the higher
revenues, partially offset by higher start-up costs on new programs and plants.
INDUSTRIAL
1993 VS. 1992
The Industrial segment's revenues increased $82.1 million (7%) and income
increased $8.6 million (8%). Revenues increased due to growth in the outdoor
products and fasteners businesses. Income increased as a result of the higher
volume, partially offset by provisions for restructuring costs of $9 million.
1992 VS. 1991
The Industrial segment's revenues increased $77.3 million (7%) and income
increased $17.4 million (20%). Revenues increased in all businesses -- outdoor
products, fasteners and diversified products. Income increased primarily as a
result of the higher volume, improved manufacturing performance and a gain on
the sale of the Forest City Tool woodworking tool business, partially offset
by an increase in 1992 in the provision for environmental remediation costs.
SYSTEMS AND COMPONENTS
1993 VS. 1992
The Systems and Components segment's revenues decreased $283.2 million (13%)
and income decreased $57.1 million (31%), reflecting the weakness in the
commercial aerospace industry, reduction in defense spending and the wind down
of certain U.S. Government contracts. Income decreased, due primarily to the
reduction in volume, provisions for legal matters and a gain in 1992 on the
sale of the Textron Filtration Systems division. Provisions for restructuring
costs were at approximately the same level in each year.
Textron Lycoming Turbine Engine, the major line of business in this segment,
reported higher income, despite lower revenues. Its income increased as a
result of (a) a cumulative adjustment recorded in 1993 to reflect an increase
in the estimated profit margin (reflecting the benefit of reductions in
overhead, including a reduction in costs relative to postretirement benefits)
on a long-term contract for turbine engines used on the Abrams main battle
tank compared with a cumulative adjustment recorded in 1992 to reflect a
decrease in the estimated profit margin on that contract and (b) a higher
level of commercial engine and overhaul sales. Revenues decreased at this
division due to reduced shipments of turbine engines for the Abrams tank and
lower sales of other military engines.
Excluding the effects of provisions for legal matters and restructuring
costs in 1993 (which aggregated $31 million) and provisions for restructuring
costs in 1992 ($14 million), revenues and income at the other divisions in
this segment decreased principally at Textron Defense Systems, Airfoil Textron,
Textron Lycoming Reciprocating Engine and Textron Specialty Materials. At
Textron Defense Systems, revenues and income decreased due to the benefit in
1992 of an equi-
<PAGE> 36
- -------------------------------------------------------------------------------
table price adjustment on a long-term contract and the wind down in 1993 of
several U.S. Government contracts. The lower results at Airfoil Textron and
Textron Lycoming Reciprocating Engine were attributable to further softness in
the commercial aerospace and general aviation industries, respectively, while
the lower results at Textron Specialty Materials were attributable to lower
sales of its fire protection materials.
Textron's Systems and Components segment will be impacted in 1994 by a
further decline in revenues, reflecting a wind down of certain U.S. Government
contracts, a decline in U.S. Government spending for the defense products of
this segment and the current depressed business conditions in the commercial
airline industry. While operating results will be impacted by the lower
revenues, reported income is not expected to differ significantly in 1994 from
1993 as a result of significant provisions in 1993 for restructuring costs and
legal matters.
In response to this adverse business environment, Textron has taken and will
continue to take aggressive cost reduction and other actions, such as long-term
agreements with its customers, further restructurings of its businesses,
outsourcing and the pursuit of other business opportunities that may arise,
including joint ventures and divestitures. Textron will also continue to focus
its resources where it has technological or other competitive advantages, so
as to minimize the effects of these difficult business conditions. However,
the outlook for this segment's businesses contains uncertainties relative to
(a) the programs and funding levels in future defense budgets as a result of
continuing pressures to reduce federal outlays and (b) the length and severity
of the commercial airline industry downturn.
1992 VS. 1991
The Systems and Components segment's revenues decreased $46.7 million (2%)
and income decreased $41.0 million (18%), reflecting the weakness in the
commercial aerospace industry, reduction in defense spending and the wind down
of certain U.S. Government contracts. Income decreased, due primarily to the
reduction in volume, the effect of the new accounting method relative to
postretirement benefits other than pensions and a provision for restructuring
costs, partially offset by a gain on the sale of the Textron Filtration Systems
division. Income decreased at Textron Lycoming Turbine Engine and Airfoil
Textron, partially offset by higher income at Textron Defense Systems and
Textron Aerostructures. Revenues and income decreased significantly at Textron
Lycoming Turbine Engine due to lower results in both the U.S. Government and
commercial aerospace businesses. In its military business, income decreased
principally as a result of a cumulative adjustment recorded in 1992 to reflect
a reduction in the estimated profit margin on a long-term contract for turbine
engines used on the Abrams main battle tank and reduced shipments on that
contract in 1992 compared to the prior year. Revenues and income decreased on
its commercial aerospace programs as a result of a significantly lower level
of engines and spare parts sales, partially offset by lower product development
costs and significantly lower losses in the LT101 turbine engine business,
attributable to lower engineering costs. Income declined at Airfoil Textron
due to a provision for restructuring costs and lower revenues, attributable to
further softness in the commercial aerospace industry and reduced defense
spending. Income increased at Textron Defense Systems primarily as a result of
a higher benefit in 1992 than in 1991 of an equitable price adjustment under
a long-term contract and a decrease in required provisions for cost increases
on certain fixed price development contracts. Revenues also increased at
Textron Defense Systems due primarily to increased deliveries on a military
satellite communications system components contract, partially offset by
reduced deliveries on missile components contracts as these contracts near
completion. At Textron Aerostructures, revenues and income increased as a
result of the benefit of the nonrecurring portion of an equitable price
adjustment on a long-term aircraft wing components contract and increased
deliveries under the same program, partially offset by the benefit in 1991
of a cumulative adjustment to increase the estimated profit margin on the
Gulfstream IV wing program.
FINANCE
1993 VS. 1992
The Finance segment's revenues decreased $11.2 million while income increased
$39.1 million (16%). Income at AFS increased, due principally to (a) a
decrease in the cost of borrowed funds, (b) a higher level of finance
receivables outstanding and (c) a decrease in insurance losses, as 1992
included losses related to Hurricane Andrew, partially offset by (d) a
decrease in yields on finance receivables and (e) higher insurance commissions
resulting from improved loss experience on nonfinance-
<PAGE> 37
- -------------------------------------------------------------------------------
related insurance business. Revenues decreased, due to the decline in yields
on finance receivables and a decline in foreign exchange translation rates,
partially offset by a higher level of finance receivables outstanding. The
ratio of net credit losses to average net receivables decreased to 2.14% in
1993 from 2.20% in 1992. In TFC's commercial finance business, revenues
increased as a result of (a) an increased level of receivables, (b) the
inclusion of the operating results of Cessna's finance operations for 12
months in 1993 compared with 10 months in 1992 and (c) a lower level of
accounts on which the accrual of interest income has been suspended, partially
offset by a decrease in yields and lower gains on the sales of finance
receivables portfolios. Its income increased due to those factors, a decrease
in the cost of borrowed funds and a decrease in loan loss provisions,
primarily related to reductions in equipment loan losses and, to a lesser
extent, losses on real estate loans.
1992 VS. 1991
The Finance segment's revenues increased $74.1 million (5%) and income
increased $23.6 million (10%). Income at AFS increased due principally to
(a) a decrease in the cost of borrowed funds, (b) higher revenues attributable
to a higher level of finance receivables outstanding (due in part to portfolio
acquisitions during 1992) and (c) lower net credit loss ratios on finance
receivables, partially offset by (d) a decrease in yields on finance
receivables (relating in part to a change in the receivables portfolio mix
toward lower yielding residential real estate loans), (e) higher insurance
losses, including losses incurred as a result of Hurricane Andrew, and (f)
lower investment income as yields on investments declined. The ratio of net
credit losses to average net receivables decreased to 2.20% in 1992 from 2.39%
in 1991. In TFC's commercial finance business, revenues increased principally
as a result of (a) the inclusion of the operating results of Cessna's finance
operations for 10 months, (b) an increased level of receivables and (c) gains
on the sales of finance receivables portfolios, partially offset by (d) a
decrease in yields on receivables and (e) a higher level of accounts on which
the accrual of interest income has been suspended. TFC's income increased due
to those factors and a decrease in the cost of borrowed funds, partially
offset by an increase in loan loss provisions, principally attributable to its
real estate portfolio.
PAUL REVERE
1993 VS. 1992
Paul Revere's revenues increased $87.0 million (8%) and income increased $30.9
million (27%). Revenues increased primarily in its individual disability
insurance line, principally through marketing arrangements with other
companies. Its income increased as a result of higher income in its individual
disability insurance line (due to the higher revenues and lower operating
expense and benefit ratios, which reflect the benefit of recapture gains on
terminating reinsurance agreements), partially offset by lower income in
group insurance, due to an increase in long-term disability benefit ratios.
Paul Revere's investment income increased as a result of (a) a higher level
of invested assets, offset in part by lower investment yields, and (b)
significantly higher net realized investment gains ($14.7 million in 1993 vs.
$2.2 million in 1992). Realized investment gains in 1993 ($36.6 million) were
partially offset by an increased provision for other than temporary declines
in values of investments ($21.9 million).
1992 VS. 1991
Paul Revere's revenues increased $41.4 million (4%) in 1992 and income
increased $17.5 million (18%). Revenues increased primarily in its individual
disability insurance line, partially offset by lower revenues in group
insurance as a result of discontinuing its U.S. group medical insurance line.
Its income increased due to higher income in its individual disability
insurance line (due to higher revenues and a lower benefit ratio), offset in
part by lower investment yields. Realized investment gains in 1992 ($44.9
million) were offset by an increased provision for other than temporary
declines in values of investments ($42.7 million).
<PAGE> 38
- -------------------------------------------------------------------------------
REPORT OF MANAGEMENT
- -------------------------------------------------------------------------------
The consolidated financial statements of Textron Inc. have been prepared by
management and have been audited by Textron's independent auditors, Ernst &
Young, whose report appears below. Management is responsible for the
consolidated financial statements, which have been prepared in conformity
with generally accepted accounting principles and include amounts based on
management's judgments.
Management is also responsible for maintaining internal accounting control
systems designed to provide reasonable assurance, at appropriate cost, that
assets are safeguarded and that transactions are executed and recorded in
accordance with established policies and procedures. Textron's systems are
under continuing review and are supported by, among other things, business
conduct and other written guidelines, an internal audit function and the
selection and training of qualified personnel.
The Board of Directors, through its Audit Committee, oversees management's
financial reporting responsibilities. The Audit Committee, comprised of
five outside directors, meets regularly with the independent auditors,
representatives of management and the internal auditors to discuss and make
inquiries into their activities. Both the independent auditors and the internal
auditors have free access to the Audit Committee, with and without management
representatives in attendance.
s/James F. Hardymon s/Richard A. McWhirter
James F. Hardymon Richard A. McWhirter
Chairman and Executive Vice President
Chief Executive Officer and Chief Financial Officer
February 3, 1994
- -------------------------------------------------------------------------------
REPORT OF INDEPENDENT AUDITORS
- -------------------------------------------------------------------------------
To the Board of Directors and Shareholders
Textron Inc.
We have audited the accompanying consolidated balance sheet of Textron Inc. as
of January 1, 1994 and January 2, 1993, and the related consolidated statements
of income, cash flows and changes in shareholders' equity for each of the three
years in the period ended January 1, 1994. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Textron Inc.
at January 1, 1994 and January 2, 1993 and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
January 1, 1994 in conformity with generally accepted accounting principles.
As discussed in Notes 13 and 14 to the consolidated financial statements, in
fiscal 1992 the Company changed its methods of accounting for postretirement
benefits other than pensions and income taxes.
s/Ernst & Young
New York, New York
February 3, 1994
<PAGE> 39
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
TEXTRON INC. CONSOLIDATED STATEMENT OF INCOME
- -------------------------------------------------------------------------------
For each of the three years in the period
ended January 1, 1994
(In millions except per share amounts) 1993 1992 1991
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
Sales $6,271.3 $5,616.7 $5,210.5
Interest, discount and service charges 1,260.2 1,273.2 1,183.9
Insurance premiums 1,137.0 1,093.5 1,073.3
Investment income (including net realized
investment gains) 409.8 364.1 372.4
- -------------------------------------------------------------------------------
Total revenues 9,078.3 8,347.5 7,840.1
- -------------------------------------------------------------------------------
COSTS AND EXPENSES
Cost of sales 5,210.6 4,560.7 4,185.4
Selling and administrative 1,441.2 1,401.8 1,329.8
Interest expense 667.8 742.0 754.4
Provision for losses on collection of
finance receivables, less recoveries 152.6 160.4 134.8
Insurance benefits and increase in policy
liabilities 849.1 823.8 812.2
Amortization of insurance policy acquisition
costs 143.5 131.8 128.5
- -------------------------------------------------------------------------------
Total costs and expenses 8,464.8 7,820.5 7,345.1
- -------------------------------------------------------------------------------
Income before income taxes 613.5 527.0 495.0
Income taxes 234.4 202.9 195.5
- -------------------------------------------------------------------------------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGES IN
ACCOUNTING PRINCIPLES 379.1 324.1 299.5
Cumulative effect of changes in accounting
principles:
Postretirement benefits other than pensions,
net of income taxes - (570.5) -
Income taxes - (109.0) -
- -------------------------------------------------------------------------------
NET INCOME (LOSS) $ 379.1 $ (355.4) $ 299.5
======== ======== ========
- -------------------------------------------------------------------------------
INCOME (LOSS) PER COMMON SHARE:
INCOME BEFORE CUMULATIVE EFFECT OF CHANGES
IN ACCOUNTING PRINCIPLES $ 4.21 $ 3.66 $ 3.42
Cumulative effect of changes in accounting
principles:
Postretirement benefits other than
pensions - (6.44) -
Income taxes - (1.23) -
- -------------------------------------------------------------------------------
NET INCOME (LOSS) $ 4.21 $ (4.01) $ 3.42
======== ======== ========
- -------------------------------------------------------------------------------
</TABLE>
See summary of significant accounting policies and notes to consolidated
financial statements.
<PAGE> 40
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
TEXTRON INC. CONSOLIDATED BALANCE SHEET
- -------------------------------------------------------------------------------
JANUARY 1, January 2,
(Dollars in millions) 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash $ 26.2 $ 31.1
Investments 4,764.2 4,152.1
Receivables -- net:
Finance 7,562.5 7,027.4
Commercial and U.S. Government 678.3 702.9
- -------------------------------------------------------------------------------
8,240.8 7,730.3
Inventories 1,487.7 1,648.1
Property, plant and equipment -- net 1,269.0 1,183.8
Unamortized insurance policy acquisition costs 783.5 696.3
Goodwill, less accumulated amortization of $343.3
and $290.3 1,437.4 1,365.8
Other assets (including net prepaid income taxes) 1,649.6 1,559.3
- -------------------------------------------------------------------------------
TOTAL ASSETS $19,658.4 $18,366.8
========= =========
- -------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Accounts payable $ 614.1 $ 488.5
Accrued postretirement benefits other than pensions 1,032.7 980.6
Other accrued liabilities (including income taxes) 2,267.8 2,072.3
Insurance reserves and claims 4,091.5 3,614.5
Debt:
Textron Parent Company Borrowing Group 2,025.4 2,283.4
Finance and insurance subsidiaries 6,846.7 6,439.7
- -------------------------------------------------------------------------------
8,872.1 8,723.1
- -------------------------------------------------------------------------------
TOTAL LIABILITIES 16,878.2 15,879.0
- -------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Capital stock:
Preferred stock (15,000,000 shares authorized):
$2.08 Cumulative Convertible Preferred Stock,
Series A (liquidation value -- $19.5) 9.2 10.5
$1.40 Convertible Preferred Dividend Stock,
Series B (preferred only as to dividends) 7.4 7.6
Common stock, 12.5 cents par value (250,000,000
shares authorized; 91,859,000 and 91,007,000
shares issued) 11.5 11.4
Capital surplus 686.6 660.8
Retained earnings 2,209.4 1,940.4
Other (52.3) (51.5)
- -------------------------------------------------------------------------------
2,871.8 2,579.2
Less cost of treasury shares 91.6 91.4
- -------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 2,780.2 2,487.8
- -------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $19,658.4 $18,366.8
========= =========
- -------------------------------------------------------------------------------
</TABLE>
See summary of significant accounting policies and notes to consolidated
financial statements.
<PAGE> 41
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
TEXTRON INC. CONSOLIDATED STATEMENT OF CASH FLOWS
- -------------------------------------------------------------------------------
For each of the three years in the period ended
January 1, 1994
(In millions) 1993 1992 1991
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 379.1 $ (355.4) $ 299.5
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Cumulative effect of changes in
accounting principles - 679.5 -
Depreciation and amortization 280.8 264.4 222.8
Provision for losses on receivables 194.7 196.0 183.4
Increase in insurance policy liabilities 341.7 308.9 335.6
Amortization of insurance policy acquisition costs 143.5 131.8 128.5
Changes in assets and liabilities excluding those
related to acquisitions and divestitures:
Decrease (increase) in commercial and
U.S. Government receivables (26.7) (1.6) 76.9
Decrease (increase) in inventories 175.9 54.8 (64.6)
Additions to insurance policy acquisition costs (235.2) (204.7) (227.2)
Increase in other assets (79.4) (22.2) (113.5)
Increase (decrease) in accounts payable 108.2 (50.4) (33.2)
Increase (decrease) in accrued liabilities (11.6) 20.4 29.1
Other -- net 28.4 20.0 1.0
- -------------------------------------------------------------------------------------------
Net cash provided by operating activities 1,299.4 1,041.5 838.3
- -------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investments (1,744.5) (1,863.4) (1,489.5)
Proceeds from investments 1,188.4 1,507.2 1,070.1
Finance receivables originated or purchased (5,010.8) (4,852.6) (3,827.9)
Finance receivables repaid or sold 4,253.4 4,212.0 3,177.9
Net proceeds from sale of minority interest in subsidiary 174.5 - -
Capital expenditures (251.8) (217.1) (155.6)
Cash used in acquisitions of businesses
(net of cash acquired) (139.2) (904.4) -
Other investing activities -- net 27.5 (15.0) 13.9
- -------------------------------------------------------------------------------------------
Net cash used by investing activities (1,502.5) (2,133.3) (1,211.1)
- -------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in short-term debt 484.8 (50.4) 74.1
Proceeds from issuance of long-term debt 1,668.9 2,913.9 2,033.5
Principal payments on long-term debt (1,954.5) (1,780.1) (1,729.7)
Receipts from interest-sensitive insurance products 193.3 142.0 130.9
Return of account balances on interest-sensitive
insurance products (104.9) (87.7) (88.2)
Proceeds from exercise of stock options 19.5 33.7 26.4
Dividends paid (110.1) (98.1) (89.4)
- -------------------------------------------------------------------------------------------
Net cash provided by financing activities 197.0 1,073.3 357.6
Effect of foreign exchange rate changes on cash 1.2 (.5) (1.1)
- -------------------------------------------------------------------------------------------
NET DECREASE IN CASH (4.9) (19.0) (16.3)
Cash at beginning of year 31.1 50.1 66.4
- -------------------------------------------------------------------------------------------
Cash at end of year $ 26.2 $ 31.1 $ 50.1
======== ======== ========
- -------------------------------------------------------------------------------------------
</TABLE>
See summary of significant accounting policies and notes to consolidated
financial statements.
<PAGE> 42
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
TEXTRON INC. CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
- -------------------------------------------------------------------------------
For each of the three years in the SHARES OUTSTANDING*
period ended January 1, 1994 ------------------------
(Dollars in millions; shares in thousands) 1993 1992 1991 1993 1992 1991
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$2.08 PREFERRED STOCK
Beginning balance 377 421 462 $ 10.5 $ 11.6 $ 12.5
Conversion to common stock (56) (44) (41) (1.3) (1.1) (.9)
- ----------------------------------------------------------------------------------------------------------
Ending balance 321 377 421 $ 9.2 $ 10.5 $ 11.6
====== ====== ====== ======== ======== ========
- ----------------------------------------------------------------------------------------------------------
$1.40 PREFERRED STOCK
Beginning balance 153 163 194 $ 7.6 $ 7.7 $ 8.1
Conversion to common stock (15) (10) (31) (.2) (.1) (.4)
- ----------------------------------------------------------------------------------------------------------
Ending balance 138 153 163 $ 7.4 $ 7.6 $ 7.7
====== ====== ====== ======== ======== ========
- ----------------------------------------------------------------------------------------------------------
COMMON STOCK
Beginning balance 87,563 86,088 84,777 $ 11.4 $ 11.3 $ 11.3
Conversion of preferred stock to common stock 151 114 146 .1 - -
Exercise of stock options 695 1,334 1,165 - .1 -
Issuance of common stock 4 27 - - - -
- ----------------------------------------------------------------------------------------------------------
Ending balance 88,413 87,563 86,088 $ 11.5 $ 11.4 $ 11.3
====== ====== ====== ======== ======== ========
- ----------------------------------------------------------------------------------------------------------
CAPITAL SURPLUS
Beginning balance $ 660.8 $ 646.6 $ 644.6
Conversion of preferred stock to common stock 1.4 1.2 1.3
Exercise of stock options 24.7 12.6 .7
Issuance of common stock .1 .4 -
Other (.4) - -
- ----------------------------------------------------------------------------------------------------------
Ending balance $ 686.6 $ 660.8 $ 646.6
======== ======== ========
- ----------------------------------------------------------------------------------------------------------
RETAINED EARNINGS
Beginning balance $1,940.4 $2,393.9 $2,183.8
Net income (loss) 379.1 (355.4) 299.5
Dividends declared:
Preferred stock (.9) (1.0) (1.1)
Common stock (per share: $1.24 in 1993;
$1.12 in 1992 and $1.03 in 1991) (109.2) (97.1) (88.3)
- ----------------------------------------------------------------------------------------------------------
Ending balance $2,209.4 $1,940.4 $2,393.9
======== ======== ========
- ----------------------------------------------------------------------------------------------------------
TREASURY STOCK
Beginning balance $ 91.4 $ 119.0 $ 144.7
Exercise of stock options .3 (27.0) (25.7)
Issuance of common stock (.1) (.6) -
- ----------------------------------------------------------------------------------------------------------
Ending balance $ 91.6 $ 91.4 $ 119.0
======== ======== ========
- ----------------------------------------------------------------------------------------------------------
OTHER
Beginning balance $ (51.5) $ (24.4) $ (53.2)
Currency translation adjustment (22.5) (48.9) (1.5)
Marketable equity securities valuation adjustment 10.6 5.7 3.8
Pension liability adjustment (3.5) .7 10.4
Shares allocated to ESOP participants 14.6 15.4 16.1
- ----------------------------------------------------------------------------------------------------------
Ending balance $ (52.3) $ (51.5) $ (24.4)
======== ======== ========
- ----------------------------------------------------------------------------------------------------------
</TABLE>
*Shares issued at the end of 1993, 1992, 1991 and 1990 were as follows (in
thousands): $2.08 Preferred - 390; 446; 490 and 531 shares, respectively;
$1.40 Preferred - 625; 640; 650 and 681 shares, respectively; Common - 91,859;
91,007; 90,767 and 90,621 shares, respectively.
See summary of significant accounting policies and notes to consolidated
financial statements.
<PAGE> 43
- -------------------------------------------------------------------------------
TEXTRON INC. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- -------------------------------------------------------------------------------
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Textron Inc. and
all of its majority- and wholly-owned subsidiaries other than Avdel plc (see
Note 1). All significant intercompany transactions are eliminated.
Textron consists of two borrowing groups -- the Textron Parent Company
Borrowing Group (comprised of all entities of Textron other than its finance
and insurance subsidiaries) and Textron's finance and insurance subsidiaries.
To enhance the reader's understanding of Textron's operations, Textron has
presented in Note 18 separate financial information for each of its two
borrowing groups.
FINANCE RECEIVABLES
For finance receivables, interest income is recognized in revenues using the
interest method so as to produce a constant rate of return over the terms of
the receivables. Accrual of interest income is suspended for accounts which are
contractually delinquent by more than three months unless collection is not
doubtful in the case of commercial finance receivables or three payments in
the case of consumer finance receivables. In addition, detailed reviews of
commercial loans may result in earlier suspension if collection is doubtful.
Accrual of interest on commercial loans is resumed when the loan becomes
contractually current, and suspended interest income is recognized at that
time. Subsequent interest income on consumer loans is recognized when
collected. Fees received and direct loan origination costs are deferred and
amortized to revenues over the contractual lives of the respective loans using
the interest method. Unamortized amounts are recognized in revenues when loans
are sold or paid in full.
Finance receivables are written off when they are deemed uncollectible, but
in any event all consumer loan accounts for which an amount aggregating a full
contractual payment has not been received for six consecutive months are
written off. Commercial loans are written down to the fair value (less
estimated costs to sell) of the related collateral when the collateral is
repossessed or when no payment has been received for six months, unless
management deems the loans collectible. Foreclosed real estate loans are
transferred out of finance receivables into other assets at the lower of fair
value (less estimated costs to sell) or the outstanding loan balance. The
difference between the amount transferred and the outstanding loan balance is
written off. The carrying value of real estate owned is periodically
reevaluated and, where appropriate, adjustments are made through a valuation
allowance to reflect subsequent changes in fair value, but the carrying value
is never increased above the amount originally transferred.
Provisions for losses on finance receivables are charged to income in
amounts sufficient to maintain the allowance at a level considered adequate to
cover the losses in the existing receivable portfolio.
INSURANCE OPERATIONS
RECOGNITION OF REVENUES AND EXPENSES
Premiums from individual disability insurance and traditional life insurance
products are recognized in revenues when due. Group insurance premiums are
recognized as income over the period to which the premiums relate. Benefits
and expenses relating to those businesses are recognized over the life of the
contracts through the establishment of reserves for future policy benefits
and the amortization of deferred policy acquisition costs. Benefits to
policyholders include benefits paid or accrued, changes in reserves for future
policy benefits and surrenders.
For investment and interest-sensitive life products, revenues consist of
policy and surrender charges assessed during the year. Benefits and expenses
for these products include amounts incurred during the year for benefit claims
in excess of related account balances, policy maintenance expenses, interest
credited and amortization of deferred policy acquisition costs.
Unearned insurance premiums are deferred and subsequently recognized in
revenues over the lives of the policies (a) on the interest method for
decreasing term credit life insurance coverage and on the pro rata method for
level term credit life coverage, (b) in relation to anticipated claims for
credit disability insurance and (c) on the pro rata method for casualty
insurance.
DEFERRED POLICY ACQUISITION COSTS
Costs, which vary with, and are related primarily to, the production of new
business, have been deferred to the extent such costs are deemed recoverable
from future profits. Such costs primarily include commissions, selling,
selection and policy issue expenses. For disability insurance, traditional
life insurance and casualty insurance products, these costs are amortized in
proportion to premiums over the estimated lives of the policies. Anticipated
investment income is considered in determining if a premium deficiency relating
to short-term contracts exists. For investment and interest-sensitive life
products, these costs are amortized in proportion to estimated gross profits
from interest, mortality and other margins under the contracts.
INSURANCE RESERVES AND CLAIMS
Reserves for future policy benefits and unpaid claims and claim expenses
include policy reserves, claim reserves and claim liabilities established for
Textron's
<PAGE> 44
- -------------------------------------------------------------------------------
individual disability, group and individual life insurance products.
Policy reserves represent the portion of premiums received, accumulated
with interest, to provide for future claims. Policy reserves for individual
disability insurance and traditional life insurance products are based on
Textron's withdrawal, morbidity and mortality experience. Policy reserves for
group insurance consist primarily of group life waiver of premium reserves.
Policy reserves for interest-sensitive life insurance products are determined
based on the accumulated policy account value.
Claim reserves are established for future payments not yet due on claims
already incurred, primarily relating to individual disability insurance and
group long-term disability insurance products. These reserves are established
based on past experience and are continuously reviewed and updated. Any
resulting adjustments are reflected in current operations. Claim liabilities
represent policy benefits currently due but unpaid at year end.
Other policyholder funds represent amounts accumulated under deferred
contracts to provide annuities in the future.
INVESTMENTS
Investments in marketable equity securities are carried at market value.
Unrealized gains and losses, net of applicable income taxes, resulting from
fluctuations in the aggregate market value of marketable equity securities are
reflected as an adjustment to shareholders' equity.
Investments in most debt securities and all mortgage loans are carried at
amortized cost (less adjustments for other than temporary declines in value).
In 1992, Textron determined that a portion of its debt security portfolio
should be considered available for sale and carried at the lower of aggregate
amortized cost or market. At January 1, 1994 and January 2, 1993, the aggregate
market value of the securities available for sale exceeded their amortized
cost.
Textron will adopt Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities" (FAS 115)
as of the beginning of 1994. FAS 115 establishes new, more restrictive
criteria to be used in determining which debt securities can be carried in the
financial statements at amortized cost. Securities which will be carried at
amortized cost and classified in Textron's held for investment category will
be those which Textron has both the ability and positive intent to hold to
maturity. Securities classified in the available for sale category will be
carried at fair value and will consist of those securities which Textron
intends to hold for an indefinite period of time but not necessarily to
maturity. Unrealized gains and losses related to securities available for sale
will be reported as a separate component of shareholders' equity. Upon
adopting FAS 115, Textron will transfer certain debt securities, with an
amortized cost of approximately $2,546 million, from the held for investment
category to the available for sale category of its investment portfolio. The
net unrealized gains of approximately $95 million, net of applicable income
taxes, relating to the debt securities classified in the available for sale
portfolio at the date of adoption, will be recorded as an increase to
shareholders' equity.
Net realized gains or losses resulting from sales or calls of investments
and losses resulting from declines in fair values of investments that are
other than temporary declines are included in revenues. The cost of securities
sold is determined primarily on the specific identification method. See Note 2
for further information about investments.
INVENTORIES
Inventories are carried at the lower of cost or market. See Note 5 for further
information about inventories.
LONG-TERM CONTRACTS AND PROGRAMS
Sales under fixed-price contracts and programs are generally recorded as
deliveries are made. Sales under cost reimbursement-type contracts are
recorded as costs are incurred and fees are earned. Certain contracts are
awarded on a fixed-price incentive fee basis. Incentive fees on such contracts
are considered when estimating revenues and profit rates and are recorded when
the amounts can reasonably be determined. Costs attributed to units delivered
under fixed-price contracts are based generally on the estimated average cost
per unit at contract completion and under programs are based on the average
remaining cost per unit. Profits expected to be realized on long-term
contracts and programs are based on estimates of total sales value and costs
at completion. Such estimates are reviewed and revised periodically throughout
the lives of the contracts and programs. Revisions to contract profits are
recorded in the accounting period in which the revisions are made. Revisions
to program profits are recorded over the balance of the programs. Estimated
losses on contracts and programs are recorded when identified. See Notes 4 and
5 for further information about receivables and inventories related to long-
term contracts and programs.
PROPERTY, PLANT AND EQUIPMENT
The cost of property, plant and equipment is being depreciated based on the
estimated useful lives of the assets. See Note 6 for further information about
property, plant and equipment.
GOODWILL
Goodwill related to Textron's manufacturing operations is being amortized on
the straight-line method over periods ranging from 20 to 40 years. Goodwill
related to Textron's finance and insurance subsidiaries is being amortized on
the straight-line method over 25 years.
<PAGE> 45
- -------------------------------------------------------------------------------
INCOME PER COMMON SHARE
Income per common share is based on average common shares outstanding during
each year assuming full conversion of outstanding preferred stock and exercise
of stock options. Such average shares were 90,052,000 in 1993; 88,580,000 in
1992 and 87,563,000 in 1991.
TRANSLATION OF FOREIGN CURRENCIES AND FOREIGN EXCHANGE TRANSACTIONS
Adjustments resulting from the translation of the financial statements of most
of Textron's foreign operations are excluded from the determination of its
income and accumulated in a separate component of shareholders' equity until
the entity is sold or substantially liquidated.
Foreign exchange gains and losses included in income (which relate
principally to transactions denominated in foreign currencies) in 1993, 1992
and 1991 were not material.
RESEARCH AND DEVELOPMENT
Company funded research and development expenditures are charged to expense as
incurred. See Note 11 for further information about research and development.
PENSION BENEFITS
See Note 12 for information about Textron's accounting policies for pension
benefits.
EMPLOYEE BENEFITS OTHER THAN PENSIONS
See Note 13 for information about Textron's accounting policies for employee
benefits other than pensions.
INTEREST RATE EXCHANGE AGREEMENTS
As part of managing its interest rate exposure on its variable interest rate
borrowings, Textron is a party to various interest rate exchange agreements.
While Textron is exposed to credit loss for the periodic settlement of amounts
due under such agreements in the event of nonperformance by the counterparties,
Textron does not anticipate nonperformance by any of those parties. The risk
of loss in the event of nonperformance by the counterparties was insignificant
at January 1, 1994.
Interest differentials to be paid or received are accrued and recognized in
interest expense over the lives of the agreements.
INCOME TAXES
Deferred income taxes for years prior to 1992 were recognized for income and
expense items that were reported in different periods for financial reporting
and income tax purposes based on the tax rates applicable in the years such
timing differences arose. Deferred income taxes for 1993 and 1992 have been
recognized for temporary differences between the financial reporting basis and
income tax basis of assets and liabilities based on enacted tax rates expected
to be in effect when such amounts are expected to be realized or settled. See
Note 14 for further information about income taxes.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair values presented in Note 15 are estimates of the fair values of the
financial instruments at a specific point in time using available market
information and appropriate valuation methodologies. These estimates are
subjective in nature and involve uncertainties and significant judgement in
the interpretation of current market data. Therefore, the fair values presented
are not necessarily indicative of amounts Textron could realize or settle
currently. Textron does not necessarily intend to dispose of or liquidate such
instruments prior to maturity. See Note 15 for further information about fair
values of financial instruments.
ENVIRONMENTAL REMEDIATION
Environmental liabilities are recorded based on the most probable cost if
known or on the estimated minimum cost, determined on a site by site basis.
Textron's environmental liabilities are undiscounted and do not take into
consideration any possible recoveries of future insurance proceeds or
significant claims against other third parties. See Note 16 for further
information about environmental remediation.
- -------------------------------------------------------------------------------
TEXTRON INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
- ----------------------------------------
1 ACQUISITIONS
- ----------------------------------------
AVDEL PLC
In early 1989, Textron acquired Avdel plc, a fastening systems manufacturing
business based in England, the total cost of which approximated $250 million.
Avdel had net assets with an historical book value of approximately $85 million
at December 31, 1993. In February 1989, the U.S. Federal Trade Commission
(FTC) challenged the acquisition under antitrust law. On October 28, 1993, the
FTC conditionally approved Textron's offer to settle the matter by licensing
a new competitor for Avdel's Monobolt non-aerospace blind rivet and selling
the licensee certain manufacturing equipment of Avdel's U.S. operation. The
settlement and approval of the license/divestiture are expected to become
effective in 1994. Until the settlement becomes effective, Textron is precluded
from consolidating in its financial statements the results of operations of
Avdel and is therefore carrying its investment in Avdel at cost.
<PAGE> 46
- -------------------------------------------------------------------------------
Avdel's sales and earnings before income taxes in 1993 (unaudited), 1992 and
1991 were $153 million and $17 million, respectively, $163 million and $16
million, respectively, and $162 million and $17 million, respectively. Such
results do not reflect any purchase price adjustments which would be required
as a result of Textron's acquisition of Avdel, principally amortization of
goodwill.
TEXTRON ACUSTAR PLASTICS
On May 3, 1993, Textron acquired the plastics operations of the Acustar
division of Chrysler Corporation at a cost of $139.2 million in cash. Total
sales for the Acustar plastics operations in 1992 were approximately $220
million (unaudited), substantially all of which were to Chrysler.
In conjunction with the acquisition, Textron assumed liabilities as follows:
<TABLE>
- -------------------------------------------------------------------------------
(In millions)
- -------------------------------------------------------------------------------
<S> <C>
Fair value of assets acquired $ 197.3
Cash paid 139.2
- -------------------------------------------------------------------------------
Fair value of liabilities assumed $ 58.1
========
- -------------------------------------------------------------------------------
</TABLE>
THE CESSNA AIRCRAFT COMPANY
On February 28, 1992, Textron purchased the outstanding common stock of The
Cessna Aircraft Company (Cessna) at a cost of $605.0 million in cash. Textron
has accounted for the acquisition of Cessna as a purchase and, accordingly,
Cessna's results of operations are included in Textron's financial statements
from February 29, 1992. Textron has allocated its purchase price to the
underlying assets and liabilities of Cessna based on their respective fair
values. The excess (approximately $406 million) of Textron's purchase price
over the fair value of Cessna's net assets is being amortized over 40 years.
The pro forma revenues, net income and net income per common share for 1991,
combining the results of Cessna with those of Textron as if the purchase of
Cessna had occurred at the beginning of 1991, would have been $8.7 billion,
$312 million and $3.56, respectively. The corresponding pro forma amounts for
1992, as if the purchase of Cessna had occurred at the beginning of 1992, would
not have differed significantly from the actual historical amounts.
The pro forma results are not necessarily indicative of what would have
occurred had the acquisition been consummated as of the beginning of the
respective years or of future operations of the combined company.
In conjunction with the acquisition, Textron assumed liabilities as follows:
<TABLE>
- -------------------------------------------------------------------------------
(In millions)
- -------------------------------------------------------------------------------
<S> <C>
Fair value of assets acquired $1,535.4
Cash paid 605.0
- -------------------------------------------------------------------------------
Fair value of liabilities assumed $ 930.4
========
- -------------------------------------------------------------------------------
</TABLE>
USA FINANCIAL SERVICES, INC.
On February 4, 1992, Textron's wholly-owned subsidiary Avco Financial Services
(AFS) purchased substantially all of the assets of USA Financial Services,
Inc., consisting principally of $340 million of finance receivables, for
$287.8 million in cash.
In conjunction with the acquisition, AFS assumed liabilities as follows:
<TABLE>
- -------------------------------------------------------------------------------
(In millions)
- -------------------------------------------------------------------------------
<S> <C>
Fair value of assets acquired $ 428.0
Cash paid 287.8
- -------------------------------------------------------------------------------
Fair value of liabilities assumed $ 140.2
========
- -------------------------------------------------------------------------------
</TABLE>
- ----------------------------------------
2 INVESTMENTS
- ----------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
JANUARY 1, January 2,
(In millions) 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C>
Debt securities:
Commercial paper, at cost (approximates fair value) $ 89.7 $ 185.5
Bonds held for investment, at amortized cost
(estimated fair value: $3,924.6 and $3,373.2) 3,688.8 3,240.0
Bonds available for sale (estimated fair value:
$610.6 and $356.6) 574.1 336.1
- -------------------------------------------------------------------------------
4,352.6 3,761.6
Marketable equity securities, at market
(cost: $39.5 and $32.1) 73.7 45.1
First mortgages on real estate, at cost
(estimated fair value: $199.1 and $202.4) 179.4 185.0
Insurance policy loans and other investments,
at cost (estimated fair value: $164.4 and $168.7) 158.5 160.4
- -------------------------------------------------------------------------------
$4,764.2 $4,152.1
======== ========
- -------------------------------------------------------------------------------
</TABLE>
<PAGE> 47
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
The amortized cost and estimated fair value of debt securities at January 1,
1994 and January 2, 1993 were as follows:
- -----------------------------------------------------------------------------------------------------------------
JANUARY 1, 1994
- -----------------------------------------------------------------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
(In millions) COST GAINS LOSSES FAIR VALUE
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury securities and obligations of other U.S.
Government agencies and authorities $ 31.4 $ 5.3 $ - $ 36.7
Obligations of states, municipalities and political subdivisions 147.8 10.4 .2 158.0
Obligations of foreign governments and agencies 243.8 27.6 .3 271.1
Public utility securities 743.5 51.5 .8 794.2
Corporate securities 1,738.4 101.6 11.9 1,828.1
Mortgage-backed securities* 873.6 54.4 1.8 926.2
- -----------------------------------------------------------------------------------------------------------------
Debt securities held for investment 3,778.5 250.8 15.0 4,014.3
- -----------------------------------------------------------------------------------------------------------------
Debt securities available for sale (principally corporate
and mortgage-backed securities) 574.1 38.9 2.4 610.6
- -----------------------------------------------------------------------------------------------------------------
$4,352.6 $289.7 $ 17.4 $4,624.9
======== ====== ====== ========
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
January 2, 1993
- -----------------------------------------------------------------------------------------------------------------
Gross Gross
Amortized unrealized unrealized Estimated
(In millions) cost gains losses fair value
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury securities and obligations of other U.S.
Government agencies and authorities $ 32.0 $ 3.9 $ - $ 35.9
Obligations of states, municipalities and political subdivisions 220.7 8.7 10.4 219.0
Obligations of foreign governments and agencies 210.2 12.2 .1 222.3
Public utility securities 520.5 11.6 3.3 528.8
Corporate securities 1,241.4 51.7 14.0 1,279.1
Mortgage-backed securities* 1,200.7 77.4 4.5 1,273.6
- -----------------------------------------------------------------------------------------------------------------
Debt securities held for investment 3,425.5 165.5 32.3 3,558.7
- -----------------------------------------------------------------------------------------------------------------
Debt securities available for sale (principally
corporate securities) 336.1 28.1 7.6 356.6
- -----------------------------------------------------------------------------------------------------------------
$3,761.6 $193.6 $ 39.9 $3,915.3
======== ====== ====== ========
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
*A substantial portion of these securities is guaranteed by the U.S.
Government or U.S. Government agencies.
The amortized cost and estimated fair value of debt securities at January 1,
1994, by contractual maturity, are presented below. Expected maturities will
differ from contractual maturities because borrowers may have the right to
call or prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Amortized Estimated
(In millions) cost fair value
- -------------------------------------------------------------------------------
<S> <C> <C>
Due in 1994 $ 148.9 $ 153.6
Due 1995 to 1998 527.4 564.7
Due 1999 to 2003 972.0 1,032.2
Due after 2003 1,641.1 1,744.1
- -------------------------------------------------------------------------------
3,289.4 3,494.6
- -------------------------------------------------------------------------------
Mortgage-backed securities 1,063.2 1,130.3
- -------------------------------------------------------------------------------
$4,352.6 $4,624.9
======== ========
- -------------------------------------------------------------------------------
</TABLE>
<PAGE> 48
- -------------------------------------------------------------------------------
Proceeds from sales of debt securities (excluding commercial paper) during
1993, 1992 and 1991 were $241.4 million, $535.6 million and $426.7 million,
respectively. Gross gains and losses realized on those sales were $13.5 million
and $3.2 million, respectively, in 1993, $33.4 million and $20.9 million,
respectively, in 1992 and $20.9 million and $1.8 million, respectively, in
1991. Net realized gains resulting from sales of marketable equity securities
were $9.4 million in 1993.
- -------------------------------------------------------------------------------
- ----------------------------------------
3 FINANCE RECEIVABLES
- ----------------------------------------
Contractual maturities of finance receivables outstanding at January 1, 1994
and total finance receivables outstanding at that date and at January 2, 1993
were as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
FINANCE RECEIVABLES
CONTRACTUAL MATURITIES LESS OUTSTANDING
------------------------------- FINANCE -------------------
(In millions) 1994 1995 After 1995 CHARGES 1993 1992
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CONSUMER:
Consumer loans $1,485.0 $1,014.0 $ 919.2 $1,028.2 $2,390.0 $2,275.0
Real estate loans 567.2 489.5 3,328.8 2,124.7 2,260.8 2,141.9
Retail installment contracts 558.3 304.3 193.1 313.7 742.0 656.7
Other 39.9 29.0 25.8 17.9 76.8 84.7
- -----------------------------------------------------------------------------------------------------------------
2,650.4 1,836.8 4,466.9 3,484.5 5,469.6 5,158.3
- -----------------------------------------------------------------------------------------------------------------
COMMERCIAL:
Installment contracts 297.6 218.2 446.9 156.0 806.7 693.2
Real estate loans 96.4 78.7 348.3 9.6 513.8 497.7
Finance leases 134.3 124.5 347.2 135.7 470.3 426.8
Leveraged leases 7.0 6.1 589.5 307.0 295.6 284.0
Floorplan and other receivables 329.0 55.2 89.7 11.2 462.7 394.8
- -----------------------------------------------------------------------------------------------------------------
864.3 482.7 1,821.6 619.5 2,549.1 2,296.5
- -----------------------------------------------------------------------------------------------------------------
$3,514.7 $2,319.5 $6,288.5 $4,104.0 8,018.7 7,454.8
======== ======== ======== ========
- -----------------------------------------------------------------------------------------------------------------
Less allowance for credit losses 224.6 212.4
Less finance-related insurance
reserves and claims 231.6 215.0
- -----------------------------------------------------------------------------------------------------------------
$7,562.5 $7,027.4
======== ========
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
The maximum term over which consumer loans and retail installment contracts
are written is 10 years, but approximately 90% of these loans are written with
terms of four years or less. Consumer real estate loans are written with a
maximum term of 15 years. Consumer loans are unsecured or secured by personal
property and are in relatively small amounts. Retail installment contracts are
secured by personal property. Consumer real estate loans are secured by real
property and are limited to a maximum of 85% of the property's appraised market
value at the date of the loans.
Commercial installment contracts have initial terms generally ranging from
one to 10 years. Commercial real estate loans have initial terms generally
ranging from three to five years. Finance leases have initial terms written
generally up to 12 years. Leveraged leases have initial terms written up to
approximately 30 years. Finance leases and commercial installment contracts are
secured by the financed equipment and, in some instances, by the personal
guarantee of the principals or recourse arrangements with the originating
vendor. Commercial real estate loans are secured by real property and are
generally limited to a maximum of 80% of the property's appraised market value
at the date of the loans. Leveraged leases are secured by the ownership of the
leased asset.
Accounts are often repaid or refinanced prior to contractual maturity.
Accordingly, the foregoing tabulation should not be regarded as a forecast of
future cash collections. During 1993 and 1992, cash collections of receivables
(excluding finance charges) were $4.2 billion and $4.1 billion, respectively.
The ratio of cash collections to average net receivables was approximately 57%
and 59%, respectively. Nonearning finance receivables were $181.9 million at
January 1, 1994.
<PAGE> 49
- -------------------------------------------------------------------------------
- ----------------------------------------
4 LONG-TERM CONTRACT
- ----------------------------------------
- ----------------------------------------
AND PROGRAM RECEIVABLES
- ----------------------------------------
Long-term contract and program receivables at January 1, 1994 and January 2,
1993 aggregated $251 million and $219 million, respectively, including $114
million and $81 million, respectively, of unbilled costs and accrued profits
on long-term contracts for which the contractual criteria for billing had not
yet been met. An estimated $65 million and $47 million, respectively, of the
unbilled amounts are not expected to be collected within one year. There are
no significant amounts included in receivables which represent balances billed
but unpaid under contractual retainage provisions or significant long-term
contract receivables subject to uncertainty as to collection.
- ----------------------------------------
5 INVENTORIES
- ----------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
JANUARY 1, January 2,
(In millions) 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C>
Finished goods $ 394.6 $ 395.6
Work in process 1,119.9 1,297.1
Raw materials 241.3 232.1
- -------------------------------------------------------------------------------
1,755.8 1,924.8
Less progress and advance payments 268.1 276.7
- -------------------------------------------------------------------------------
$1,487.7 $1,648.1
======== ========
- -------------------------------------------------------------------------------
</TABLE>
Inventories aggregating $734 million at January 1, 1994 and $786 million at
January 2, 1993 were valued by the last-in, first-out (LIFO) method. (Had
such LIFO inventories been valued at current costs, their carrying values
would have been approximately $148 million and $135 million higher at those
respective dates.) The remaining inventories, other than those related to
certain long-term contracts and programs, are valued generally by the first-in,
first-out method.
Inventories related to long-term contracts and programs, net of progress
and advance payments, were $553 million at January 1, 1994 and $577 million at
January 2, 1993. Such inventories include unamortized tooling, deferred
learning costs and costs related to unnegotiated, customer-directed changes of
approximately $235 million at January 1, 1994 and $211 million at January 2,
1993. Textron expects to recover all such amounts over the related contracts
and programs. As to government contracts, inventory costs also generally
include general and administrative expenses ($40 million at January 1, 1994;
$53 million at January 2, 1993).
- ----------------------------------------
6 PROPERTY, PLANT AND EQUIPMENT
- ----------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
JANUARY 1, January 2,
(In millions) 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C>
At cost:
Land and buildings $ 727.9 $ 684.4
Machinery and equipment 2,069.2 1,883.4
- -------------------------------------------------------------------------------
2,797.1 2,567.8
Less accumulated depreciation 1,528.1 1,384.0
- -------------------------------------------------------------------------------
$1,269.0 $1,183.8
======== ========
- -------------------------------------------------------------------------------
</TABLE>
Depreciation of property, plant and equipment was $206 million in 1993, $199
million in 1992 and $182 million in 1991, including depreciation using
accelerated methods of $48 million, $50 million and $60 million, respectively.
- ----------------------------------------
7 INSURANCE RESERVES AND CLAIMS
- ----------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
JANUARY 1, January 2,
(In millions) 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C>
Paul Revere:
Future policy benefits $1,090.3 $ 992.0
Unpaid claims and claim expenses 1,358.2 1,159.1
Other policyholder funds 1,462.1 1,295.3
Other 180.9 168.1
- -------------------------------------------------------------------------------
$4,091.5 $3,614.5
======== ========
- -------------------------------------------------------------------------------
</TABLE>
The laws of many states in which Textron's insurance subsidiaries are admitted
to do business require as a condition of admission that all insurance companies
so admitted collectively guarantee to policyholders the solvency of other
insurance companies admitted in the particular state. Textron's insurance
subsidiaries have not been required to date to make any significant payments
pursuant to such guarantees. While the amount of any assessments which may be
made in the future cannot be predicted, Textron does not believe the total
assessments, if any, would be material to its net income or financial
condition.
<PAGE> 50
- -------------------------------------------------------------------------------
- ----------------------------------------
8 DEBT AND CREDIT FACILITIES
- ----------------------------------------
The Textron Parent Company Borrowing Group (comprised of all entities of
Textron other than its finance and insurance subsidiaries) and Textron's
finance subsidiaries are independent borrowers, and, accordingly, their debt
is supported by their own respective assets and cash flows.
At January 1, 1994 and January 2, 1993, consolidated debt consisted of the
following:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
JANUARY 1, January 2,
(In millions) 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C>
TEXTRON PARENT COMPANY BORROWING GROUP:
SENIOR:
Borrowings under or supported by long-term
credit facilities* $ 638.3 $ 659.6
8.75% - 9.25%; due 2016 to 2022 278.8 278.8
Medium-term notes; due 1994 to 2011
(average rate - 8.8%) 429.6 454.6
Variable rate notes due 1994 to 2000
(average rate - 3.9%) 390.0 390.0
Other notes (average rate - 4.6%) 178.4 227.4
- -------------------------------------------------------------------------------
Total senior 1,915.1 2,010.4
- -------------------------------------------------------------------------------
SUBORDINATED:
8.86% - 9.5%; due 1998 to 2017 110.3 273.0
- -------------------------------------------------------------------------------
Total Textron Parent Company Borrowing Group 2,025.4 2,283.4
- -------------------------------------------------------------------------------
FINANCE SUBSIDIARIES:
SENIOR:
Borrowings under or supported by credit facilities** 2,860.1 2,414.9
3.20% - 5.98%; due 1994 to 2000 1,543.8 984.2
6.01% - 7.91%; due 1994 to 2000 689.0 656.3
8.08% - 9.91%; due 1994 to 2000 757.5 1,040.7
10% - 11.85%; due 1994 to 1998 298.8 491.7
12.25% - 15.38%; due 1994 to 1995 112.2 161.0
Variable rate notes due 1994 to 1996
(average rate - 4.0%) 534.0 529.0
- -------------------------------------------------------------------------------
Total senior 6,795.4 6,277.8
- -------------------------------------------------------------------------------
SENIOR SUBORDINATED:
8.75% - 15%; due 1994 to 1998 51.3 161.9
- -------------------------------------------------------------------------------
Total finance subsidiaries 6,846.7 6,439.7
- -------------------------------------------------------------------------------
Total debt $8,872.1 $8,723.1
======== ========
- -------------------------------------------------------------------------------
</TABLE>
*The weighted average interest rates on these borrowings, before consideration
of the effect of interest rate exchange agreements, at January 1, 1994,
January 2, 1993 and December 28, 1991 were 3.6%, 3.9% and 5.4%, respectively,
and the weighted average interest rates for the years 1993, 1992 and 1991 were
3.4%, 4.1% and 6.7%, respectively.
**The weighted average interest rates on these borrowings, before consideration
of the effect of interest rate exchange agreements, at January 1, 1994,
January 2, 1993 and December 28, 1991 were 3.7%, 4.5% and 5.6%, respectively,
and the weighted average interest rates for the years 1993, 1992 and 1991 were
3.7%, 4.4% and 6.9%, respectively.
- -------------------------------------------------------------------------------
Required payments and sinking fund requirements during the next five years
on debt outstanding at January 1, 1994 (excluding amounts that might become
payable under credit facilities and revolving credit agreements) are as
follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
(In millions) 1994 1995 1996 1997 1998
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Textron Parent Company Borrowing Group $ 171.9 $ 126.0 $ 181.6 $ 162.8 $ 14.9
Finance subsidiaries 911.7 1,009.6 787.0 352.4 471.2
-------------------------------------------------------------------------------------------------
$1,083.6 $1,135.6 $ 968.6 $ 515.2 $ 486.1
======== ======== ======== ======== ========
- --------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 51
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Cash payments for interest were as follows:
- -------------------------------------------------------------------------------
(In millions) 1993 1992 1991
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Textron Parent Company Borrowing Group $205.5 $215.6 $203.4
Finance subsidiaries 439.8 477.0 492.9
- -------------------------------------------------------------------------------
$645.3 $692.6 $696.3
====== ====== ======
- -------------------------------------------------------------------------------
</TABLE>
The Textron Parent Company Borrowing Group maintains credit facilities with
various banks for borrowing funds on both a short- and a long-term basis.
During 1993, Textron replaced its $1.5 billion credit agreement with two
separate credit agreements with 38 banks aggregating $1.5 billion. Of the
total credit facility, $1.25 billion is available on a fully revolving basis
until November 1, 1996, with the remainder available on a fully revolving
basis until November 1, 1994. Textron pays fees in support of those facilities.
The credit agreements contain provisions requiring Textron to maintain a
minimum level of shareholders' equity and a minimum interest coverage ratio.
The portion of the credit facilities not used or reserved as support for
commercial paper or bank borrowings at January 1, 1994 was $878 million.
Textron's finance subsidiaries -- AFS and Textron Financial Corporation
(TFC) -- have lines of credit with various banks aggregating $3.2 billion at
January 1, 1994, of which $2.3 billion relates to long-term loans. The
subsidiaries' lines of credit not used or reserved as support for commercial
paper or short-term bank borrowings at January 1, 1994 were $100 million, all
of which related to long-term loans. AFS and TFC generally pay fees in support
of these lines.
The amount of the net assets of Textron's finance and insurance subsidiaries
available for cash dividends and other payments to the Textron Parent Company
Borrowing Group is restricted by the terms of lending agreements and insurance
statutory requirements. As of January 1, 1994, approximately $311 million of
their net assets of $2.2 billion was available to be transferred to the Textron
Parent Company Borrowing Group pursuant to these restrictions. AFS' and TFC's
loan agreements also contain various restrictive provisions regarding
additional debt, the creation of liens or guarantees and the making of
investments.
- -------------------------------------------------------------------------------
Under interest rate exchange agreements, Textron and its finance
subsidiaries make periodic fixed payments in exchange for periodic variable
payments. Textron and its finance subsidiaries have entered into such
agreements to mitigate their exposure to increases in interest rates on a
portion of their variable rate debt. The agreements, which had weighted
average original terms of 7.9 years for the Textron Parent Company Borrowing
Group and 4.4 years and 3.7 years for the finance subsidiaries, at January 1,
1994 and January 2, 1993, respectively, had the effect of fixing the rate of
interest on variable interest rate borrowings as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
JANUARY 1, 1994 January 2, 1993
INTEREST RATE EXCHANGE AGREEMENTS WEIGHTED Weighted
NOTIONAL AVERAGE Notional average
(Dollars in millions) AMOUNT INTEREST RATE amount interest rate
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Textron Parent Company Borrowing Group
(expire through 2004) $ 621.4 9.05% $ 621.4 9.05%
Finance subsidiaries (expire through 2000) 446.6 9.46% 751.2 10.21%
- ----------------------------------------------------------------------------------------------------
$1,068.0 9.22% $1,372.6 9.69%
======== ==== ======== =====
- ----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 52
- ------------------------------------------------------------------------
- ----------------------------------------
9 SHAREHOLDERS' EQUITY
- ----------------------------------------
PREFERRED STOCK
Each share of $2.08 Preferred Stock ($23.63 approximate stated value) is
convertible into 2.2 shares of common stock and is redeemable by Textron at
$50 per share. In the event of involuntary liquidation, preferred shareholders
would be entitled to $50 per share and accrued dividends. In the event of
voluntary liquidation, shareholders would be entitled to $50 per share.
Each share of $1.40 Preferred Dividend Stock ($11.82 approximate stated
value) is convertible into 1.8 shares of common stock and is redeemable by
Textron at $45 per share. In the event of liquidation, holders of each share
of such stock would be entitled to receive accrued dividends and thereafter
share ratably on a converted basis with holders of common stock, subject to
the prior rights of the $2.08 Preferred Stock.
PREFERRED STOCK PURCHASE RIGHTS
One-half of a Preferred Stock Purchase Right (Right) is attached to each
outstanding share of common stock. Each whole Right entitles the holder to buy
one unit of Series C Junior Participating Preferred Stock at an exercise price
of $175. The Rights will become exercisable only under certain circumstances
related to a person or group acquiring or offering to acquire a substantial
block of Textron's common stock. If certain additional events then occur, each
whole Right will allow holders of units to acquire common stock of Textron,
or in some cases of an acquiring entity, having a value equal to twice the
exercise price. The Rights expire in March 1996, but may be redeemed earlier
at a price of $.05 per whole Right.
STOCK OPTIONS AND PERFORMANCE AWARDS
Textron's 1990 Long-Term Incentive Plan authorizes the granting of awards to
key employees through December 31, 1994 in either or both of the following
forms: (a) performance share units (or performance units prior to 1992) and
(b) options to purchase Textron common stock.
Performance awards entitle recipients to payments in cash upon the
attainment of performance targets established at the time such awards are
granted or if otherwise approved by a committee of the Board of Directors.
Amounts paid under performance share unit awards are based on the fair market
value of Textron's common stock when the performance targets are attained.
The Plan provides for both incentive stock options and non-qualified stock
options and requires that such options be exercisable at a purchase price per
share not less than the fair market value of Textron common stock at the date
of grant and in the case of incentive stock options within ten years. The
total number of shares of common stock for which options may be granted under
the Plan is 5,000,000.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
OPTION ACTIVITY
Stock option transactions in 1993, 1992 and 1991 are summarized as follows:
- ---------------------------------------------------------------------------------------------------
1993 1992 1991
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Shares under option at beginning of year (at average prices
of $34.07 in 1993; $28.12 in 1992 and $24.53 in 1991) 3,457,447 3,672,547 4,009,709
Options granted (at average prices of $55.83 in 1993;
$41.89 in 1992 and $36.81 in 1991) 1,275,500 1,225,400 953,400
Options exercised (at average prices of $28.25 in 1993;
$25.29 in 1992 and $22.91 in 1991) (701,305) (1,348,356) (1,212,418)
Options canceled (at average prices of $35.45 in 1993;
$29.56 in 1992 and $26.13 in 1991) (34,148) (92,144) (78,144)
- ---------------------------------------------------------------------------------------------------
Shares under option at end of year (at average prices of
$42.02 in 1993; $34.07 in 1992 and $28.12 in 1991) 3,997,494 3,457,447 3,672,547
========= ========= =========
- ---------------------------------------------------------------------------------------------------
Shares exercisable at end of year (at average prices of
$33.74 in 1993; $27.97 in 1992 and $24.92 in 1991) 2,119,377 1,778,078 2,257,372
========= ========= =========
- ---------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 53
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
RESERVED SHARES
Shares of common stock reserved at January 1, 1994 for the conversion of
preferred stock and the exercise of stock options were as follows:
- -------------------------------------------------------------------------------
<C> <C>
$2.08 Cumulative Convertible Preferred Stock, Series A* 858,064
$1.40 Convertible Preferred Dividend Stock, Series B* 1,123,978
Options granted to employees 3,997,494
- -------------------------------------------------------------------------------
5,979,536
=========
- -------------------------------------------------------------------------------
</TABLE>
*Includes shares issuable upon conversion of shares of preferred stock held as
treasury shares.
- ----------------------------------------
10 LEASES
- ----------------------------------------
Rental expense for leased real estate, office locations, and machinery and
equipment was approximately $128 million, $123 million and $116 million in
1993, 1992 and 1991, respectively. Future minimum rental commitments for all
noncancellable operating leases in effect at January 1, 1994 approximated $72
million for 1994, $52 million for 1995, $33 million for 1996, $21 million for
1997, $15 million for 1998 and $81 million thereafter.
- ----------------------------------------
11 RESEARCH AND DEVELOPMENT
- ----------------------------------------
Textron performs research and development under both company initiated
programs and contracts with others, primarily the U.S. Government. Company
initiated programs include research and development for commercial products
and independent research and development related to government products and
services. A significant portion of the cost incurred for independent research
and development is recoverable from the U.S. Government through overhead cost
allowances.
Company funded research and development, as indicated below, includes
amounts charged to income with respect to (a) company initiated programs and
(b) cost sharing portions of, and any losses incurred on, customer initiated
programs.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
(In millions) 1993 1992 1991
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Company funded $195 $172 $192
Customer funded 319 258 265
- -------------------------------------------------------------------------------
Total research and development $514 $430 $457
==== ==== ====
- -------------------------------------------------------------------------------
</TABLE>
- ----------------------------------------
12 PENSION BENEFITS
- ----------------------------------------
Textron and certain of its subsidiaries have a number of defined benefit
pension plans covering substantially all of their employees. Benefits under
salaried plans are based on salary and years of service, while benefits under
hourly plans generally are based on negotiated amounts and years of service.
Textron's funding policy is consistent with the funding requirements of
federal law and regulations. Plan assets consist principally of corporate and
government bonds and common stocks.
Pension cost in 1993, 1992 and 1991 included the following components:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
(In millions) 1993 1992 1991
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost - benefits earned during the year $ 67.0 $ 67.4 $ 60.2
Interest cost on projected benefit obligation 187.8 183.3 160.2
Actual return on plan assets (369.5) (282.3) (454.0)
Amortization of unrecognized transition net asset (15.8) (15.8) (15.8)
Net amortization and deferral of actuarial gains 133.7 59.3 262.6
- -------------------------------------------------------------------------------
Net pension cost $ 3.2 $ 11.9 $ 13.2
======= ======= =======
- -------------------------------------------------------------------------------
</TABLE>
<PAGE> 54
- -------------------------------------------------------------------------------
The following table sets forth the funded status of Textron's pension plans at
January 1, 1994 and January 2, 1993.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
JANUARY 1, 1994 January 2, 1993
- ----------------------------------------------------------------------------------------------------
ASSETS ACCUMULATED Assets Accumulated
EXCEED BENEFITS exceed benefits
ACCUMULATED EXCEED accumulated exceed
(In millions) BENEFITS ASSETS benefits assets
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Actuarial present value of:
Vested benefit obligation $1,717.1 $ 730.9 $1,913.6 $305.7
Nonvested benefit obligation 86.2 51.2 65.6 31.2
- ----------------------------------------------------------------------------------------------------
Accumulated benefit obligation 1,803.3 782.1 1,979.2 336.9
Additional amounts related to projected
pay increases 219.5 14.8 261.7 8.2
- ----------------------------------------------------------------------------------------------------
Projected benefit obligation 2,022.8 796.9 2,240.9 345.1
Plan assets at fair value 2,653.3 663.6 2,826.5 251.2
- ----------------------------------------------------------------------------------------------------
Plan assets in excess of (less than)
projected benefit obligation 630.5 (133.3) 585.6 (93.9)
Unrecognized net actuarial gains (236.9) (4.9) (228.7) (8.8)
Unrecognized prior service cost 15.2 61.5 45.9 30.2
Unrecognized transition net obligation
(net asset) (171.1) 1.9 (206.7) 18.2
Adjustment required to recognize
minimum liability - (55.8) - (40.4)
- ----------------------------------------------------------------------------------------------------
Net pension asset (liability) recognized
on the consolidated balance sheet $ 237.7 $(130.6) $ 196.1 $(94.7)
======== ======= ======== ======
- ----------------------------------------------------------------------------------------------------
</TABLE>
Major assumptions used in the accounting for the defined benefit pension
plans are shown in the following table. Net pension cost is determined using
these factors as of the end of the prior year; the funded status of the plans
is determined using the discount rate and rate of compensation increase as of
the end of the current year.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
JANUARY 1, January 2, December 28, December 29,
1994 1993 1991 1990
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Discount rate 7.25% 8.00% 8.00% 8.25%
Weighted average long-term rate of
compensation increase 5.00% 5.50% 6.00% 6.00%
Long-term rate of return on plan assets 9.00% 9.00% 9.00% 9.00%
- ----------------------------------------------------------------------------------------------------
</TABLE>
- ----------------------------------------
13 EMPLOYEE BENEFITS
- ----------------------------------------
- ----------------------------------------
OTHER THAN PENSIONS
- ----------------------------------------
Textron and certain of its subsidiaries have a number of defined contribution
savings and other retirement plans, including Textron's employee stock
ownership plan, covering both salaried and hourly employees. Eligible
employees who participate in certain of these plans receive, within certain
limits, matching Textron contributions. Costs relating to these plans, which
are generally funded as accrued, amounted to approximately $33 million, $35
million and $34 million for 1993, 1992 and 1991, respectively, of which $17
million, $20 million and $21 million related to the employee stock ownership
plan for 1993, 1992 and 1991, respectively.
Textron provides certain health care and life insurance benefits for certain
retired employees. Eligibility for these benefits is restricted to the
particular benefit plans at the particular locations offering postretirement
benefits. These benefits and similar benefits for active employees are
administered by insurance companies or other carriers who determine premiums
for insured plans and expected costs to be paid during the year under
self-insured plans. Prior to 1992, Textron recognized the cost of providing
these benefits by expensing the annual insurance premiums and costs under
self-insured plans on a pay-as-you-go basis.
In 1992, Textron adopted Statement of Financial Accounting Standards No.
106, "Employers' Accounting for Postretirement Benefits Other Than Pensions"
(FAS 106), with respect to its retiree health care and life insurance
benefits. FAS 106 requires Textron to recognize the cost of such benefits
using the accrual method of accounting over the employees' years of service.
<PAGE> 55
- -------------------------------------------------------------------------------
The FAS 106 transition obligation -- representing the accumulated
postretirement benefit obligation for Textron's retiree health care and life
insurance benefit plans at December 29, 1991 -- of $570 million ($6.44 per
share), net of related income tax benefit, was recorded as the cumulative
effect of a change in accounting principle. The respective amounts of such
retiree costs deductible for tax purposes, allocable to government contracts
and allowable in contract price determinations are not affected by FAS 106.
The adoption of FAS 106 had no cash flow impact on Textron.
Postretirement benefit costs other than those related to pensions in 1993
and 1992 included the following components:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
(In millions) 1993 1992
- -------------------------------------------------------------------------------
<S> <C> <C>
Service cost -- benefits earned during the year $ 9.0 $14.3
Interest cost on accumulated postretirement
benefit obligation 68.4 75.1
Net amortization (6.4) -
- -------------------------------------------------------------------------------
Postretirement benefit costs $71.0* $89.4
===== =====
- -------------------------------------------------------------------------------
</TABLE>
*The decrease in postretirement benefit costs is primarily the result of
benefit changes.
Textron's postretirement benefit plans other than pensions currently are not
funded. The following table sets forth the status of Textron's retiree health
care and life insurance plans at January 1, 1994 and January 2, 1993:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
JANUARY 1, January 2,
(In millions) 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of benefits attributed to:
Retirees $ 677.1 $627.8
Fully eligible active plan participants 153.0 150.4
Other active plan participants 146.4 175.9
- -------------------------------------------------------------------------------
Accumulated postretirement benefit obligation 976.5 954.1
Unrecognized net actuarial gains 29.9 9.8
Unrecognized prior service cost benefit 26.3 16.7
- -------------------------------------------------------------------------------
Postretirement benefit liability recognized
on the consolidated balance sheet $1,032.7 $980.6
======== ======
- -------------------------------------------------------------------------------
</TABLE>
An assumed discount rate of 8% was used to determine postretirement benefit
costs other than pensions for 1993 and 1992. An assumed discount rate of 7.25%
and 8% was used to determine the status of Textron's plans at January 1, 1994
and January 2, 1993, respectively. The weighted average annual assumed rate of
increase in the per capita cost of covered benefits (that is, the health care
cost trend rate) is 12% for retirees age 65 and over and 16% for retirees
under age 65 in 1994, and both rates are assumed to decrease gradually to
5.5% until 2002 and 2004, respectively, and remain at that rate thereafter.
Increasing these rates by one percentage point in each year would have
increased the accumulated postretirement benefit obligation as of January 1,
1994 by $83 million and increased the aggregate of the service and interest
cost components of postretirement benefit costs for 1993 by $7 million.
- ----------------------------------------
14 INCOME TAXES
- ----------------------------------------
Textron files a consolidated federal income tax return which includes all U.S.
subsidiaries. Separate returns are filed for Textron's foreign subsidiaries.
In 1992, Textron adopted Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes" (FAS 109). FAS 109 requires Textron to
modify its income tax accounting so that deferred taxes are stated at
prevailing income tax rates and to modify the accounting for income taxes in
purchase business combinations. Textron's adoption of FAS 109 was made by a
cumulative effect charge to income of $109 million ($1.23 per share). Prior
year financial statements have not been restated. The adoption of FAS 109 had
no cash flow impact on Textron.
For years beginning on or after January 1, 1993, the Revenue Reconciliation
Act of 1993 increased the maximum corporate tax rate from 34% to 35%. In
accordance with FAS 109, the change in the tax rate resulted in a revaluation
of Textron's net deferred tax assets which were in existence at the beginning
of 1993, decreasing Textron's 1993 effective tax rate.
Income before income taxes is summarized as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
(In millions) 1993 1992 1991
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
United States $466.5 $402.6 $357.6
Foreign 147.0 124.4 137.4
- -------------------------------------------------------------------------------
Total $613.5 $527.0 $495.0
====== ====== ======
- -------------------------------------------------------------------------------
</TABLE>
<PAGE> 56
- -------------------------------------------------------------------------------
Income taxes (benefit) before the cumulative effect of changes in accounting
principles are summarized as follows*:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
(In millions) 1993 1992 1991
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
CURRENT:
Federal $129.6 $101.0 $127.3
State 29.7 27.1 23.9
Foreign 46.7 38.1 40.6
- -------------------------------------------------------------------------------
206.0 166.2 191.8
- -------------------------------------------------------------------------------
DEFERRED:
Federal 27.3 30.7 (4.0)
State 1.2 2.4 3.3
Foreign (.1) 3.6 4.4
- -------------------------------------------------------------------------------
28.4 36.7 3.7
- -------------------------------------------------------------------------------
Total $234.4 $202.9 $195.5
====== ====== ======
- -------------------------------------------------------------------------------
</TABLE>
*Income taxes related to the cumulative effect of changes in accounting
principles in 1992 consist of a $335 million deferred tax benefit related to
the adoption of FAS 106 (see Note 13) and a $109 million deferred tax
provision related to the adoption of FAS 109. Federal and state income taxes
related to the cumulative effect of changes in accounting principles were
$189 million and $37 million, respectively.
Following is a reconciliation of the federal statutory income tax rate to
the effective income tax rate applicable to pretax income before the
cumulative effect of changes in accounting principles, as reflected in the
consolidated statement of income:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
1993 1992 1991
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
FEDERAL STATUTORY INCOME TAX RATE 35.0% 34.0% 34.0%
Increase (decrease) in taxes resulting from:
State income taxes 3.3 3.7 3.6
Amortization of goodwill 3.0 3.0 2.6
Effect of tax rate change on net
deferred tax asset (1.4) - -
Foreign Sales Corporation benefit (.8) (1.2) (1.0)
Other - net (.9) (1.0) .3
- -------------------------------------------------------------------------------
Effective income tax rate 38.2% 38.5% 39.5%
==== ==== ====
- -------------------------------------------------------------------------------
</TABLE>
Textron's net deferred tax asset consisted of gross deferred tax assets and
gross deferred tax liabilities of $1,002.2 million and $751.5 million,
respectively, at January 1, 1994 and $1,105.3 million and $817.6 million,
respectively, at January 2, 1993.
The components of Textron's net deferred tax asset as of January 1, 1994
and January 2, 1993 were as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
JANUARY 1, January 2,
(In millions) 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C>
DEFERRED TAX (ASSETS) LIABILITIES:
Obligation for postretirement benefits
other than pensions $(394.4) $(362.8)
Finance subsidiary transactions, principally leasing 309.2 268.5
Insurance policy acquisition costs 222.7 222.7
Other insurance liabilities (154.6) (163.1)
Fixed assets, principally depreciation 110.4 98.4
Allowance for bad debts (84.8) (73.6)
Liabilities for future policy benefits (72.5) (58.2)
Deferred compensation and vacation pay (64.6) (55.2)
Other, principally timing of other expense deductions (122.1) (164.4)
- -------------------------------------------------------------------------------
Total net deferred tax asset $(250.7) $(287.7)
======= =======
- -------------------------------------------------------------------------------
</TABLE>
Textron's 1991 deferred income tax provision of $3.7 million consisted
principally of insurance policy acquisition costs, depreciation and allowance
for bad debts.
Cash payments for income taxes were $189 million, $147 million and $176
million in 1993, 1992 and 1991, respectively.
Deferred income taxes have not been provided for the undistributed earnings
of foreign subsidiaries which aggregated approximately $350 million at
January 1, 1994. Management's intention is to reinvest such undistributed
earnings for an indefinite period, except for distributions upon which
incremental taxes would not be material. If such earnings were distributed,
taxes (net of foreign tax credits) would have increased by approximately $28
million, principally due to foreign withholding taxes.
<PAGE> 57
- -------------------------------------------------------------------------------
At January 1, 1994, consolidated shareholders' equity included $84 million
of U.S. life insurance subsidiaries' policyholders' surplus on which no income
taxes have been provided. The amount of taxes which would become due if the
surplus were distributed to the life insurance subsidiaries' shareholders is
approximately $29 million. Under present circumstances, it is not anticipated
that any of these earnings will become taxable.
- ----------------------------------------
15 FAIR VALUE OF
- ----------------------------------------
- ----------------------------------------
FINANCIAL INSTRUMENTS
- ----------------------------------------
Statement of Financial Accounting Standards No. 107, "Disclosures about Fair
Value of Financial Instruments" (FAS 107), requires disclosure of fair value
information about all financial instruments held or owed by a company except
for certain excluded instruments and instruments for which it is not
practicable to estimate fair value.
The following methods and assumptions were used in estimating the fair
value of Textron's financial instruments:
INVESTMENTS
The estimated fair values of investment securities, except for insurance
policy loans to policyholders, were based on quoted market prices where
available. If quoted market prices were not available, the estimated fair
values were based on independent appraisals, prices from independent brokers
or discounted cash flow analyses using interest rates currently being offered
for similar loans to borrowers of similar credit quality. The estimated fair
value of insurance policy loans to policyholders approximated the carrying
value of such loans.
FINANCE RECEIVABLES
The estimated fair values of fixed rate consumer loans, real estate loans and
commercial installment contracts were estimated based on discounted cash flow
analyses using interest rates currently being offered for similar loans to
borrowers of similar credit quality. Estimated future cash flows were adjusted
for Textron's estimates of prepayments, refinances and loan losses based on
internal historical data. The estimated fair value of all variable rate
receivables and fixed rate retail installment contracts approximated the net
carrying value of such receivables. The estimated fair values of nonperforming
loans were based on independent appraisals, discounted cash flow analyses,
using risk adjusted interest rates, or Textron valuations based upon the
fair value of the related collateral. The fair values of Textron's lease
receivables and finance-related insurance reserves and claims ($826.4 million
and $231.6 million, net carrying value, respectively, at January 1, 1994 and
$763.3 million and $215.0 million, net carrying value, respectively, at
January 2, 1993) are not required to be disclosed under generally accepted
accounting principles.
INSURANCE RESERVES AND CLAIMS
The estimated fair value of other policyholder funds was based on the cash
surrender value of Paul Revere's financial products portfolio. The fair
value of reserves or liabilities relating to Textron's other insurance
products is not required to be disclosed under generally accepted accounting
principles.
DEBT AND INTEREST RATE EXCHANGE AGREEMENTS
The estimated fair value of fixed rate debt was determined by either
independent investment bankers or discounted cash flow analyses using interest
rates for similar debt with maturities similar to the remaining terms of the
existing debt. The fair values of variable rate debt and borrowings under or
supported by long-term credit facilities approximated their carrying values.
The estimated fair values of interest rate exchange agreements were determined
by independent investment bankers and represent the estimated amounts that
Textron would be required to pay to a third party to assume Textron's
obligations under the agreements.
<PAGE> 58
- -------------------------------------------------------------------------------
The carrying values and estimated fair values of Textron's financial
instruments for which it is practicable to calculate a fair value are as
follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
JANUARY 1, 1994 January 2, 1993
- -----------------------------------------------------------------------------------------------
ESTIMATED Estimated
CARRYING FAIR Carrying fair
(In millions) VALUE VALUE value value
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS:
INVESTMENTS $4,764.2 $5,062.1 $4,152.1 $4,331.5
FINANCE RECEIVABLES:
Consumer loans $5,239.1 $5,266.1 $4,943.6 $4,975.6
Commercial loans 1,728.6 1,762.3 1,535.5 1,574.5
- -----------------------------------------------------------------------------------------------
$6,967.7 $7,028.4 $6,479.1 $6,550.1
- -----------------------------------------------------------------------------------------------
LIABILITIES:
OTHER POLICYHOLDER FUNDS $1,462.1 $1,447.1 $1,295.3 $1,282.7
DEBT:
Textron Parent Company Borrowing Group:
Variable rate debt fixed by interest
rate exchange agreements $ 621.4 $ 709.6 $ 621.4 $ 694.4
Other variable rate debt 613.5 613.5 622.5 622.5
Fixed rate debt 790.5 884.7 1,039.5 1,108.7
- -----------------------------------------------------------------------------------------------
Total Textron Parent Company Borrowing
Group 2,025.4 2,207.8 2,283.4 2,425.6
- -----------------------------------------------------------------------------------------------
Finance subsidiaries:
Variable rate debt fixed by interest
rate exchange agreements 446.6 479.6 751.2 805.2
Other variable rate debt 3,574.6 3,574.6 3,063.5 3,063.5
Fixed rate debt 2,825.5 2,940.1 2,625.0 2,717.9
- -----------------------------------------------------------------------------------------------
Total finance subsidiaries 6,846.7 6,994.3 6,439.7 6,586.6
- -----------------------------------------------------------------------------------------------
Total debt $8,872.1 $9,202.1 $8,723.1 $9,012.2
======== ======== ======== ========
- -----------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 59
- --------------------------------------------------------------------------------
- ----------------------------------------
16 CONTINGENCIES
- ----------------------------------------
There are pending or threatened against Textron and its subsidiaries lawsuits
and other proceedings, including the proceeding described in Note 1, some of
which allege violations of federal government procurement regulations, involve
environmental matters, or are or purport to be class actions. Among these
suits and proceedings are some which seek compensatory, treble or punitive
damages in substantial amounts; fines, penalties or restitution; the cleanup
of allegedly hazardous wastes; or, under federal government procurement
regulations, could result in suspension or debarment of Textron or its
subsidiaries from U.S. Government contracting for a period of time. These
suits and proceedings are being defended or contested on behalf of Textron and
its subsidiaries. On the basis of information presently available, Textron
believes that any such liability or the impact of the application of relevant
government regulations would not have a material effect on Textron's net
income or financial condition.
With respect to environmental matters, Textron's accrued estimated
environmental liabilities are based on assumptions which are subject to a
number of factors and uncertainties which can affect the reliability and
precision of such accruals, including (a) the unavailability of information
about the number of additional sites at which Textron may be identified
as a potentially responsible party by both federal and state governments,
(b) uncertainties about the nature and application of environmental regulations
being promulgated, (c) the level of cleanup that may be required at specific
sites and choices concerning the technologies to be applied in corrective
actions, (d) the number of contributors to the costs of remediation at specific
sites and the financial condition of the contributors, and (e) the time periods
over which remediation may occur. It is estimated that Textron's accrued
environmental remediation liabilities will be paid primarily over the
next five to ten years.
- ----------------------------------------
17 SELECTED FINANCIAL INFORMATION BY
- ----------------------------------------
- ----------------------------------------
BUSINESS SEGMENT AND GEOGRAPHIC AREA
- ----------------------------------------
Presented below and on page 33 of this report is selected financial
information by business segment and geographic area for Textron.
The 1993 data include the operations of Textron Acustar Plastics from May 4,
1993. The 1992 data include the operations of Cessna from February 29, 1992.
Textron's business segments have been realigned and prior year amounts have
been reclassified to conform to the current year's segment presentation.
- -------------------------------------------------------------------------------
SELECTED FINANCIAL INFORMATION BY BUSINESS SEGMENT
- -------------------------------------------------------------------------------
For a description of the businesses comprising each segment,
see pages 67 to 70 of this report.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
BUSINESS SEGMENTS IDENTIFIABLE ASSETS CAPITAL EXPENDITURES DEPRECIATION
------------------------------- ---------------------- ----------------------
(In millions) 1993 1992 1991 1993 1992 1991 1993 1992 1991
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MANUFACTURING:
Aircraft $ 1,658 $ 1,676 $ 583 $ 67 $ 56 $ 22 $ 46 $ 36 $ 23
Automotive 655 394 395 54 29 21 32 25 23
Industrial 616 612 597 64 52 44 34 38 34
Systems and Components 1,832 2,011 2,158 32 39 44 67 74 78
- -------------------------------------------------------------------------------------------------------------------
4,761 4,693 3,733 217 176 131 179 173 158
- -------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES:
Finance 8,801 8,267 7,324 20 17 18 18 17 16
Paul Revere 5,377 4,561 4,169 6 2 4 5 5 5
- -------------------------------------------------------------------------------------------------------------------
14,178 12,828 11,493 26 19 22 23 22 21
- -------------------------------------------------------------------------------------------------------------------
Corporate 834 857 524 9 22 3 4 4 3
Eliminations (115) (11) (13) - - - - - -
- -------------------------------------------------------------------------------------------------------------------
$19,658 $18,367 $15,737 $252 $217 $156 $206 $199 $182
======= ======= ======= ==== ==== ==== ==== ==== ====
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 60
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
SELECTED FINANCIAL INFORMATION BY GEOGRAPHIC AREA
- -------------------------------------------------------------------------------
GEOGRAPHIC AREAS
REVENUES
----------------------------
(In millions) 1993 1992 1991
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues by origin:
United States $7,957 $7,246 $6,660
Canada 773 707 736
Asia/Pacific 167 206 248
Western Europe 178 185 179
- -------------------------------------------------------------------------------
$9,075 $8,344 $7,823
====== ====== ======
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
INCOME
----------------------------
(In millions) 1993 1992 1991
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Income by origin:
United States $ 788 $ 723 $ 673
Canada 87 65 67
Asia/Pacific 35 34 36
Western Europe 23 24 21
- -------------------------------------------------------------------------------
933 846 797
- -------------------------------------------------------------------------------
Corporate expenses and other - net (87) (69) (76)
Interest expense - net (232) (250) (226)
- -------------------------------------------------------------------------------
Income before income taxes $ 614 $ 527 $ 495
====== ====== ======
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
EXPORT SALES
----------------------------
(In millions) 1993 1992 1991
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Destination of U.S. exports:
Western Europe $ 616 $ 511 $ 410
Canada 345 229 221
Asia/Pacific 258 205 365
Mexico 114 102 44
Middle East 113 73 80
Other locations 143 124 51
- -------------------------------------------------------------------------------
$1,589 $1,244 $1,171
====== ====== ======
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
IDENTIFIABLE ASSETS
-----------------------------
(In millions) 1993 1992 1991
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Identifiable assets by location:
United States $16,155 $15,044 $12,570
Canada 1,674 1,570 1,712
Asia/Pacific 546 481 515
Western Europe 501 474 467
Corporate 834 857 524
Eliminations (52) (59) (51)
- -------------------------------------------------------------------------------
$19,658 $18,367 $15,737
======= ======= =======
- -------------------------------------------------------------------------------
</TABLE>
Notes:
(i) Corporate assets include Textron's investment in Avdel plc (see Note 1)
and its net deferred tax asset.
(ii) Revenues by geographic area exclude interest income of the Textron Parent
Company Borrowing Group of $3.7 million, $3.3 million and $17.6 million in
1993, 1992 and 1991, respectively.
(iii) Revenues include sales to the U.S. Government of $1.6 billion, $1.7
billion and $1.8 billion in 1993, 1992 and 1991, respectively.
(iv) Revenues between geographic areas, predominantly revenues of U.S.
divisions, were approximately 4%, 3% and 4% of total revenues in 1993, 1992
and 1991, respectively.
(v) Assets in foreign locations relate principally to the Financial Services
segments.
- ----------------------------------------
18 FINANCIAL INFORMATION
- ----------------------------------------
- ----------------------------------------
BY BORROWING GROUP
- ----------------------------------------
Textron consists of two borrowing groups -- the Textron Parent Company
Borrowing Group and Textron's finance and insurance subsidiaries.
This framework is designed to enhance the borrowing power of the total
company by separating borrowing oriented units of a specialized business
nature such as financial services.
The Textron Parent Company Borrowing Group is comprised of all entities of
Textron other than its finance and insurance subsidiaries. The financial
statements of this group as set forth below reflect Textron's investments in
its finance and insurance subsidiaries on the equity basis. Its sources of
cash flow include dividends paid by the finance and insurance subsidiaries, as
well as cash generated by other operating units.
The finance and insurance subsidiaries finance their respective operations
by borrowing from their own group of external creditors.
<PAGE> 61
- -------------------------------------------------------------------------------
Textron, which had been the sole shareholder of The Paul Revere Corporation
(PRC), sold 7.5 million shares of PRC, representing 16.7% of the outstanding
shares of PRC, on October 26, 1993, for $174.5 million (net of related
expenses) in an underwritten public offering registered under the Securities
Act of 1933. Textron contributed $100 million to the capital of PRC prior to
the sale. The proceeds from the sale were used to reduce debt.
- -------------------------------------------------------------------------------
FINANCIAL INFORMATION FOR THE TEXTRON PARENT COMPANY BORROWING GROUP
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STATEMENT OF INCOME
For each of the three years in the period ended January 1,1994
(In millions) 1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES $6,275.0 $5,620.0 $5,228.1
- -----------------------------------------------------------------------------------------------------------------
COSTS AND EXPENSES
Cost of sales 5,210.6 4,560.7 4,185.4
Selling and administrative 651.5 644.0 627.4
Interest expense 235.5 253.1 244.0
- -----------------------------------------------------------------------------------------------------------------
Total costs and expenses 6,097.6 5,457.8 5,056.8
- -----------------------------------------------------------------------------------------------------------------
177.4 162.2 171.3
Pretax income of finance and insurance subsidiaries 436.1 364.8 323.7
- -----------------------------------------------------------------------------------------------------------------
Income before income taxes 613.5 527.0 495.0
Income taxes 234.4 202.9 195.5
- -----------------------------------------------------------------------------------------------------------------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES 379.1 324.1 299.5
Cumulative effect of changes in accounting principles, net of income taxes - (679.5) -
- -----------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) $ 379.1 $ (355.4) $ 299.5
======== ======== ========
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
BALANCE SHEET JANUARY 1, January 2,
(In millions) 1994 1993
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash $ 12.1 $ 28.2
Receivables - net 695.4 709.4
Inventories 1,487.7 1,648.1
Investments in finance and insurance subsidiaries 2,160.8 1,998.6
Property, plant and equipment - net 1,150.3 1,068.8
Goodwill, less accumulated amortization of $173.7 and $139.3 1,138.3 1,048.1
Other assets (including net prepaid income taxes) 1,432.9 1,329.0
- ---------------------------------------------------------------------------------------------------
Total assets $8,077.5 $7,830.2
======== ========
- ---------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued liabilities (including income taxes) $3,271.9 $3,059.0
Debt 2,025.4 2,283.4
Shareholders' equity 2,780.2 2,487.8
- ---------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $8,077.5 $7,830.2
======== ========
- ---------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 62
- --------------------------------------------------------------------------------
FINANCIAL INFORMATION FOR THE TEXTRON PARENT COMPANY BORROWING GROUP (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STATEMENT OF CASH FLOWS
For each of the three years in the period ended January 1, 1994
(In millions) 1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 379.1 $ (355.4) $ 299.5
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Cumulative effect of changes in accounting principles - 679.5 -
Undistributed earnings of finance and insurance subsidiaries (165.4) (147.5) (127.4)
Depreciation and amortization 228.6 215.5 183.4
Provision for losses on receivables 13.2 7.4 23.2
Interest accretion 37.1 36.3 27.0
Changes in assets and liabilities excluding those related to acquisitions
and divestitures:
Decrease (increase) in receivables (37.2) - 61.0
Decrease (increase) in inventories 175.9 54.8 (64.6)
Increase in other assets (82.6) (29.2) (73.2)
Increase (decrease) in accounts payable and accrued liabilities 29.6 (67.9) (46.1)
Other - net 6.0 9.6 (10.0)
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 584.3 403.1 272.8
- -----------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash used in acquisitions of businesses (net of cash acquired) (139.2) (620.1) -
Net proceeds from sale of minority interest in subsidiary 174.5 - -
Capital expenditures (225.6) (197.9) (133.6)
Other investing activities - net 22.1 28.1 18.6
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities (168.2) (789.9) (115.0)
- -----------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in short-term debt 26.6 19.5 1.9
Proceeds from issuance of long-term debt 402.3 1,348.4 655.0
Principal payments on long-term debt (670.4) (923.3) (749.4)
Capital contribution to subsidiary (100.0) - -
Proceeds from exercise of stock options 19.5 33.7 26.4
Dividends paid (110.1) (98.1) (89.4)
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by financing activities (432.1) 380.2 (155.5)
Effect of foreign exchange rate changes on cash (.1) (.1) .1
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH (16.1) (6.7) 2.4
Cash at beginning of year 28.2 34.9 32.5
- -----------------------------------------------------------------------------------------------------------------------------------
Cash at end of year $ 12.1 $ 28.2 $ 34.9
======= ======== =======
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 63
- --------------------------------------------------------------------------------
FINANCIAL INFORMATION FOR TEXTRON'S FINANCE AND INSURANCE SUBSIDIARIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STATEMENT OF INCOME
For each of the three years ended December 31,
(In millions) 1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
Interest, discount and service charges $1,260.2 $1,273.2 $1,183.9
Credit life, credit disability and casualty insurance premiums 300.8 298.5 308.7
Non-cancellable disability income, life and group insurance premiums 836.2 795.0 764.6
Investment income (including net realized investment gains) 406.1 360.8 354.8
- -----------------------------------------------------------------------------------------------------------------------------------
Total revenues 2,803.3 2,727.5 2,612.0
- -----------------------------------------------------------------------------------------------------------------------------------
COSTS AND EXPENSES
Selling and administrative 789.7 757.8 702.4
Interest expense 432.3 488.9 510.4
Provision for losses on collection of finance receivables, less recoveries 152.6 160.4 134.8
Credit life, credit disability and casualty insurance losses and adjustment expenses,
less recoveries 132.1 137.2 130.1
Death and other insurance benefits 392.9 369.9 362.3
Increase in insurance policy liabilities 324.1 316.7 319.8
Amortization of insurance policy acquisition costs 143.5 131.8 128.5
- -----------------------------------------------------------------------------------------------------------------------------------
Total costs and expenses 2,367.2 2,362.7 2,288.3
- -----------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 436.1 364.8 323.7
Income taxes 174.6 138.9 118.1
- -----------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES 261.5 225.9 205.6
Cumulative effect of changes in accounting principles, net of income taxes - (44.7) -
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCOME 261.5 181.2 205.6
Minority interest in net income 2.6 - -
- -----------------------------------------------------------------------------------------------------------------------------------
TEXTRON'S EQUITY IN NET INCOME $ 258.9 $ 181.2 $ 205.6
======== ======== ========
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
BALANCE SHEET DECEMBER 31, December 31,
(In millions) 1993 1992
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash $ 14.1 $ 2.9
Investments 4,759.9 4,144.8
Finance receivables - net 7,605.4 7,069.5
Property, plant and equipment - net 99.0 98.3
Unamortized insurance policy acquisition costs 783.5 696.3
Goodwill, less accumulated amortization of $169.6 and $151.0 299.1 317.7
Other assets 660.1 541.1
- --------------------------------------------------------------------------------------------------------------------
Total assets $14,221.1 $12,870.6
========= =========
- --------------------------------------------------------------------------------------------------------------------
LIABILITIES AND EQUITY
Accounts payable and accrued liabilities (including income taxes) $ 938.7 $ 817.8
Insurance reserves and claims 4,091.5 3,614.5
Debt 6,846.7 6,439.7
Equity:
Textron 2,160.8 1,998.6
Minority interest 183.4 -
- --------------------------------------------------------------------------------------------------------------------
Total liabilities and equity $14,221.1 $12,870.6
========= =========
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 64
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
FINANCIAL INFORMATION FOR TEXTRON'S FINANCE AND INSURANCE SUBSIDIARIES (CONTINUED)
- ----------------------------------------------------------------------------------
STATEMENT OF CASH FLOWS
For each of the three years ended December 31,
(In millions) 1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Textron's equity in net income $ 258.9 $ 181.2 $ 205.6
Adjustments to reconcile net income to net cash provided by operating activities:
Cumulative effect of changes in accounting principles - 44.7 -
Depreciation and amortization 52.2 48.9 39.4
Provision for losses on finance receivables 181.5 188.6 160.2
Increase in insurance policy liabilities 341.7 308.9 335.6
Amortization of insurance policy acquisition costs 143.5 131.8 128.5
Changes in assets and liabilities excluding those related to the acquisition
of USA Financial Services:
Additions to insurance policy acquisition costs (235.2) (204.7) (227.2)
Decrease (increase) in other assets 3.2 7.0 (40.3)
Increase in accounts payable and accrued liabilities 75.3 35.3 53.3
Other - net (11.7) (40.8) (12.6)
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 809.4 700.9 642.5
- -----------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investments (1,744.5) (1,863.4) (1,487.2)
Proceeds from investments 1,188.4 1,507.2 1,063.1
Finance receivables originated or purchased (5,010.8) (4,852.6) (3,827.9)
Finance receivables repaid or sold 4,252.6 4,219.9 3,196.8
Capital expenditures (26.2) (19.2) (22.0)
Cash used in acquisition of USA Financial Services (net of cash acquired) - (285.3) -
Other investing activities - net 5.4 (43.1) (17.7)
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities (1,335.1) (1,336.5) (1,094.9)
- -----------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in short-term debt 458.2 (69.9) 72.2
Proceeds from issuance of long-term debt 1,266.6 1,565.5 1,378.5
Principal payments on long-term debt (1,284.1) (856.8) (980.3)
Receipts from interest-sensitive insurance products 193.3 142.0 130.9
Return of account balances on interest-sensitive insurance products (104.9) (87.7) (88.2)
Capital contributions from Textron 100.0 9.0 -
Dividends paid to Textron (93.5) (78.4) (78.2)
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 535.6 623.7 434.9
Effect of foreign exchange rate changes on cash 1.3 (.4) (1.2)
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH 11.2 (12.3) (18.7)
Cash at beginning of year 2.9 15.2 33.9
- -----------------------------------------------------------------------------------------------------------------------------------
Cash at end of year $ 14.1 $ 2.9 $ 15.2
========= ========= =========
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Notes:
(i) TFC derives a substantial portion of its business from financing the sale
and lease of products manufactured and sold by Textron. In 1993, 1992 and
1991, TFC paid Textron $617.1 million, $575.8 million and $363.9 million,
respectively, for the purchase of receivables and operating lease equipment.
Under operating agreements with Textron, TFC generally has recourse to Textron
with respect to finance receivables and leases of products manufactured and
sold by Textron. At December 31, 1993, finance receivables and operating lease
equipment of $771.0 million ($623.7 million at December 31, 1992) were due from
Textron or subject to recourse to Textron.
(ii) Textron has agreed to cause TFC's pretax income available for fixed
charges to be not less than 125% of its fixed charges and its consolidated
shareholder's equity to be not less than $200 million. No related payments
were required for 1993, 1992 or 1991.
(iii) Approximately 73%, 73% and 75% of the credit life and credit disability
insurance premiums earned and 22%, 20% and 19% of the casualty insurance
premiums earned in 1993, 1992 and 1991, respectively, were related directly to
AFS' consumer loan activities.
<PAGE> 65
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
QUARTERLY FINANCIAL INFORMATION FOR 1993 AND 1992
- -------------------------------------------------------------------------------
1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER
(Unaudited) ------------------ ------------------ ------------------ ------------------
(In millions except per share amounts) 1993 1992 1993 1992 1993 1992 1993 1992
- -----------------------------------------------------------------------------------------------------------------------------------
INCOME STATEMENT DATA:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Manufacturing $1,478.0 $1,324.8 $1,565.8 $1,486.4 $1,520.4 $1,342.8 $1,707.1 $1,462.7
Financial Services 685.9 669.7 686.4 674.2 711.9 687.2 719.1 696.4
- -----------------------------------------------------------------------------------------------------------------------------------
Total revenues $2,163.9 $1,994.5 $2,252.2 $2,160.6 $2,232.3 $2,030.0 $2,426.2 $2,159.1
======== ======== ======== ======== ======== ======== ======== ========
- -----------------------------------------------------------------------------------------------------------------------------------
INCOME
Manufacturing $ 110.3 $ 107.8 $ 125.2 $ 130.9 $ 117.5 $ 115.7 $ 144.7 $ 126.3
Financial Services 101.4 88.2 104.5 84.6 114.0 95.5 114.9 96.5
- -----------------------------------------------------------------------------------------------------------------------------------
Operating income 211.7 196.0 229.7 215.5 231.5 211.2 259.6 222.8
Corporate expenses and other - net (17.5) (17.3) (18.3) (18.5) (15.2) (12.3) (36.2) (20.6)
Interest expense - net (59.6) (63.4) (58.0) (64.8) (58.2) (63.2) (56.0) (58.4)
- -----------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 134.6 115.3 153.4 132.2 158.1 135.7 167.4 143.8
Income taxes 51.8 45.9 59.1 51.4 58.6 52.2 64.9 53.4
- -----------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGES IN
ACCOUNTING PRINCIPLES 82.8 69.4 94.3 80.8 99.5 83.5 102.5 90.4
Cumulative effect of changes in accounting
principles, net of income taxes - (679.5) - - - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) $ 82.8 $ (610.1) $ 94.3 $ 80.8 $ 99.5 $ 83.5 $ 102.5 $ 90.4
======== ======== ======== ======== ======== ======== ======== ========
- -----------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) PER COMMON SHARE:
INCOME BEFORE CUMULATIVE EFFECT OF CHANGES IN
ACCOUNTING PRINCIPLES $ .92 $ .79 $ 1.05 $ .91 $ 1.10 $ .94 $ 1.13 $ 1.02
Cumulative effect of changes in accounting
principles - (7.69) - - - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) $ .92 $ (6.90) $ 1.05 $ .91 $ 1.10 $ .94 $ 1.13 $ 1.02
======== ======== ======== ======== ======== ======== ======== ========
- -----------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK INFORMATION
Price Range: High $ 48 $ 39-5/8 $ 56-1/2 $ 38-1/8 $ 58-7/8 $ 39-1/8 $ 58-3/4 $ 44-3/4
Low $ 40-3/8 $ 35 $ 45-7/8 $ 33-3/4 $ 51 $ 35-1/8 $ 52 $ 34-7/8
Dividend per share $ .31 $ .28 $ .31 $ .28 $ .31 $ .28 $ .31 $ .28
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 66
- --------------------------------------------------------------------------------
FIVE-YEAR SUMMARY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(Dollars in millions except per share amounts) 1993* 1992** 1991 1990 1989
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
REVENUES
Sales $ 6,271.3 $ 5,616.7 $ 5,210.5 $ 5,470.6 $ 5,272.5
Interest, discount and service charges 1,260.2 1,273.2 1,183.9 1,139.3 1,007.8
Insurance premiums 1,137.0 1,093.5 1,073.3 974.7 836.3
Investment income (including net realized investment gains) 409.8 364.1 372.4 333.0 323.5
- -----------------------------------------------------------------------------------------------------------------------------------
Total revenues 9,078.3 8,347.5 7,840.1 7,917.6 7,440.1
- -----------------------------------------------------------------------------------------------------------------------------------
COSTS AND EXPENSES
Cost of sales 5,210.6 4,560.7 4,185.4 4,424.6 4,202.8
Selling and administrative 1,441.2 1,401.8 1,329.8 1,289.1 1,252.5
Interest expense 667.8 742.0 754.4 774.6 733.1
Provision for losses on collection of finance receivables,
less recoveries 152.6 160.4 134.8 123.5 89.6
Insurance benefits and increase in policy liabilities 849.1 823.8 812.2 720.5 636.0
Amortization of insurance policy acquisition costs 143.5 131.8 128.5 126.1 115.8
- -----------------------------------------------------------------------------------------------------------------------------------
Total costs and expenses 8,464.8 7,820.5 7,345.1 7,458.4 7,029.8
- -----------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 613.5 527.0 495.0 459.2 410.3
Income taxes 234.4 202.9 195.5 176.2 141.6
- -----------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE EXTRAORDINARY LOSS AND CUMULATIVE EFFECT OF
CHANGES IN ACCOUNTING PRINCIPLES 379.1 324.1 299.5 283.0 268.7
Extraordinary loss, net of income taxes*** - - - - (9.5)
Cumulative effect of changes in accounting principles,
net of income taxes - (679.5) - - -
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) $ 379.1 $ (355.4) $ 299.5 $ 283.0 $ 259.2
========== ========== ========== ========== ==========
- -----------------------------------------------------------------------------------------------------------------------------------
PER COMMON SHARE:
INCOME BEFORE EXTRAORDINARY LOSS AND CUMULATIVE EFFECT OF
CHANGES IN ACCOUNTING PRINCIPLES $ 4.21 $ 3.66 $ 3.42 $ 3.18 $ 3.02
Extraordinary loss*** - - - - (.11)
Cumulative effect of changes in accounting principles - (7.67) - - -
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) $ 4.21 $ (4.01) $ 3.42 $ 3.18 $ 2.91
========== ========== ========== ========== ==========
- -----------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS DECLARED $ 1.24 $ 1.12 $ 1.03 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
- -----------------------------------------------------------------------------------------------------------------------------------
AVERAGE COMMON SHARES OUTSTANDING 90,052,000 88,580,000 87,563,000 89,014,000 88,999,000
========== ========== ========== ========== ==========
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL POSITION AT YEAR-END
Total assets $ 19,658.4 $ 18,366.8 $ 15,737.3 $ 14,891.5 $ 13,790.4
Debt:
Textron Parent Company Borrowing Group $ 2,025.4 $ 2,283.4 $ 1,820.3 $ 1,925.4 $ 1,956.0
Finance and insurance subsidiaries $ 6,846.7 $ 6,439.7 $ 5,663.5 $ 5,318.9 $ 4,661.3
Shareholders' equity $ 2,780.2 $ 2,487.8 $ 2,927.7 $ 2,662.4 $ 2,547.1
Book value per common share $ 31.18 $ 28.11 $ 33.65 $ 31.00 $ 28.24
- -----------------------------------------------------------------------------------------------------------------------------------
OTHER DATA
Capital expenditures $ 251.8 $ 217.1 $ 155.6 $ 191.2 $ 240.2
Depreciation $ 205.8 $ 199.2 $ 182.1 $ 179.3 $ 173.6
Number of common shareholders 28,000 30,000 31,000 33,000 35,000
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*The results of operations of Textron Acustar Plastics are included from
May 4, 1993.
**The results of operations of Cessna are included from February 29, 1992.
***The extraordinary loss in 1989 resulted from arbitration concerning a
terminated coproduction agreement.
<PAGE> 67
DIRECTORY OF DIVISIONS
MANUFACTURING
AIRCRAFT
Bell Helicopter Textron Webb F. Joiner, President
P.O. Box 482
Fort Worth, TX 76101
(817) 280-2011
Helicopters and spare parts for the U.S. Government, foreign
governments and commercial markets; tiltrotor aircraft development;
aftermarket sales of technical, training and logistics support
services.
The Cessna Aircraft Company Russell W. Meyer, Jr., Chairman and
Chief Executive Officer
P.O. Box 7706
Wichita, KS 67277-7706
(316) 941-6000
Light and mid-size business jets and utility turboprop aircraft
supported worldwide through a network of company-owned Citation
service centers and authorized representatives.
AUTOMOTIVE
CWC Castings Textron John L. Kelly, President
1085 W. Sherman Blvd.
Muskegon, MI 49441
(616) 733-1331
Gray iron and chilled iron castings, primarily camshafts, marketed
directly to automobile and engine manufacturers in the U.S. and
Europe.
Davidson Exterior Trim Textron D. Michael Weston, President
100 Brady Road
Americus, GA 31709
(912) 924-6111
Molded and painted reaction injection molded and thermoplastic
exterior ornamentation such as bumper covers, body side moldings,
grilles and spoilers for the automotive industry; structural
composite bumper beams; styling, design, engineering support and
production.
Davidson Interiors Textron Frank J. Preston, President
875 Greenland Road
Orchard Park, Bldg. C
Portsmouth, NH 03801
(603) 433-4142
Automotive instrument panels, door panels, armrests, airbag doors,
center consoles and headliners for totally integrated vehicle
interiors; Flexible Bright (trademark) grilles and wheels.
McCord Winn Textron William H. Walsh, President
620 Washington Street
Winchester, MA 01890
(617) 729-4400
Seating comfort systems, plastic products, precision motors and
components marketed directly to automotive original equipment
manufacturers in North America and Western Europe.
Randall Textron Jane L. Warner, President
P.O. Box 46334
Cincinnati, OH 45246
(513) 896-9400
Functional and decorative metal parts in roll sections, stampings,
and tubular steel; bright metal and painted moldings; decorative and
functional plastic painted and chrome-plate components; wheel
ornamentation, fuel fillers and window channels.
Textron Acustar Plastics Fred L. Hubacker, President
1850 Research Drive
Troy, MI 48083
(810) 528-6595
Plastic injection molded and painted automotive interior and exterior
body parts, including instrument panels, decorative trim and modular
assembled lighting components.
INDUSTRIAL
Avdel plc (pending regulatory approval) John C. Marley, Chairman
and Chief Executive
Welwyn Garden City
Hertz AL7 1QB England
44-707-372-624
Specialized engineered fastening and assembly systems, including
innovative hand-held and automatic assembly systems for global
markets.
Camcar Textron James R. MacGilvray, President
600-18th Avenue
Rockford, IL 61104-5181
(815) 961-5000
Cold-formed threaded and non-threaded metal fasteners and components,
as well as synergistic assemblies which combine fasteners, stampings
and molded plastics. Sold to automotive, appliance, business
equipment, construction and other OEM and distributor markets.
<PAGE> 68
INDUSTRIAL
(continued)
Cherry Textron George A. Andrews, President
P.O. Box 2157
Santa Ana, CA 92707-0157
(714) 545-5511
Proprietary blind rivet fastening systems, including hand-held and
fully automated installation systems for aerospace, automotive,
transportation and other industrial markets. Supported by worldwide,
engineering-oriented distribution system.
Cone Drive Textron John G. Melvin, President
240 East Twelfth Street
Traverse City,
MI 49685-0272
(616) 946-8410
Double enveloping worm gear speed reducers, gear motors and gearsets
sold directly from Cone Drive's manufacturing locations to the
mining, steel, aerospace, automotive, printing, packaging and brewing
industries.
E-Z-GO Textron L.T. Walden, Jr., President
P.O. Box 388
Augusta, GA 30903-0388
(706) 798-4311
Electric- and gasoline-powered golf cars for fleet and individual
markets; multi-purpose utility vehicles for the turf, industrial and
commercial markets.
Greenlee Textron Carl D. Burtner, President
4455 Boeing Drive
Rockford, IL 61109
(815) 397-7070
Powered equipment, electrical test instruments and hand tools such as
conduit benders, cable pullers and punch and die metal hole-making
systems. Distributed to power utilities, infrastructure, and security
and alarm markets.
Homelite Textron Robert W. Reid, President
P.O. Box 7047
Charlotte, NC 28241
(704) 588-3200
Consumer and professional gasoline-powered string trimmers, blowers,
hedge trimmers, brushcutters, edgers and chain saws; gasoline-powered
generators, pumps, heaters, pressure washers and compressors; lawn
mowers sold under the Homelite brand name.
Jacobsen Textron Richard D. Miller, President
1721 Packard Avenue
Racine, WI 53403-2564
(414) 637-6711
Professional mowing and turf maintenance equipment for golf course
and commercial use including greens and fairway mowers, trim and
rotary mowers, aerators, work trucks and other powered turf
maintenance equipment.
Micromatic Textron Michael J. Brennan, President
345 East 48th Street
Holland, MI 49423
(616) 392-1461
Proprietary machine tools, components and systems designed and
manufactured for automotive, transportation and other commercial
markets worldwide.
Speidel Textron Alfred M. Massotti, President
70 Ship Street
Providence, RI 02903
(401) 421-8600
Watch attachments made from metal, leather and plastic materials;
fashion jewelry products including identification bracelets,
neckchains and watches; British Sterling and Silver toiletries. Sold
primarily by Speidel's direct sales force to retail jewelers,
department and drug stores and select mass merchandisers.
SYSTEMS
AND COMPONENTS
Aircraft Engine Components Textron Daniel L. Shaffer, President
P.O. Box 11906
Newington, CT 06131
(203) 666-4601
Gas turbine engine components such as disks, hubs, cases and frames
made to customer design for engine manufacturers and the spare parts
market.
Airfoil Textron G.L. (Topper) Long, President
P.O. Box 4427
Lima, OH 45802
(419) 226-2900
Fan blades, compressor blades, vanes, impellers and integrally bladed
rotors for commercial and military aircraft turbine engine producers
worldwide.
Avco Overseas Services Textron Dieter F. Wolter, President
10801 Kempwood-Suite 1
Houston, TX 77043
(713) 895-3400
Logistics support to clients overseas, principally in the procurement
of spare parts and equipment, and in the recruiting, screening and
testing of qualified professionals.
<PAGE> 69
SYSTEMS
AND COMPONENTS
(continued)
Fuel Systems Textron Michael Boston, President
700 N. Centennial
Zeeland, MI 49464
(616) 772-9171
Fuel systems components for aircraft and industrial gas turbine
engines (original equipment manufacture and aftermarket service),
including main engine fuel injection devices, fuel metering and
distribution valves, and augmentor fuel systems. Sold to the world's
major engine builders, the U.S. Government and commercial airlines.
HR Textron Richard J. Millman, President
25200 W. Rye Canyon Rd.
Valencia, CA 91355
(805) 259-4030
Sophisticated control systems for prime contractors and the U.S.
Government for use in high-performance aircraft, helicopters,
missiles, space launch vehicles and turbine engines; servovalves;
fuel and pneumatic systems components; and automatic test equipment.
Textron Aerostructures Fred N. Hubbard, President
P.O. Box 210
Nashville, TN 37202
(615) 361-2000
Aircraft wings and components for the business jet and regional
commuter markets as well as for the commercial and military transport
markets; design assistance to customers.
Textron Defense Systems Harold K. McCard, President
201 Lowell Street
Wilmington, MA 01887
(508) 657-5111
"Smart" weapons development and production based on sensor-fuzed
weapons technology; aircraft landing systems; surveillance systems;
inertial systems; energy technology; and special material process.
Textron Lycoming Reciprocating Engine Philip R. Boob, President
652 Oliver Street
Williamsport, PA 17701
(717) 323-6181
Piston engine manufacture of new engines for both fixed wing aircraft
and helicopters as well as remanufacturing and overhaul.
Textron Lycoming Turbine Engine David G. Assard, President
550 Main Street
Stratford, CT 06497-7593
(203) 385-2000
Gas turbine engine manufacture, repair and overhaul; related products
and services for military and commercial customers worldwide.
Textron Marine and Land Systems John J. Kelly, President
6600 Plaza Drive
New Orleans, LA 70127
(504) 245-6600
Air cushion amphibious landing craft for the U.S. Navy; a new class
of motor lifeboats for the Coast Guard; Surface Effect Ships and
commercial air cushion vehicles; Cadillac Gage armored combat
vehicles, turrets, and advanced suspension systems for U.S. and
foreign customers.
Textron Specialty Materials Paul R. Hoffman, President
Two Industrial Avenue
Lowell, MA 01851
(508) 452-8961
High-performance composite materials such as boron and carbon fibers;
metal, ceramic and carbon composites; and fire protection materials.
Sold to sporting goods and automobile manufacturers, major oil
companies and government agencies worldwide.
<PAGE> 70
FINANCIAL SERVICES
FINANCE
Avco Financial Services Warren R. Lyons, President
P.O. Box 19701
Irvine, CA 92713-9701
(714) 553-1200
Consumer financing, both unsecured and secured by personal property,
through nearly 1,200 AFS loan offices in the United States,
Australia, Canada, New Zealand, Spain and the United Kingdom; credit
life and disability insurance, collateral protection, involuntary
unemployment insurance, and credit property and property/casualty
insurance.
Textron Financial Corporation Stephen J. Davis, President
P.O. Box 6687
Providence, RI 02940-6687
(401) 621-4200
Commercial financing, including equipment leasing, secured equipment
lending and receivables and inventory financing. Sold directly
through 35 offices in the U.S., and indirectly through its
relationships with manufacturers, dealers and financial
intermediaries.
PAUL REVERE
Paul Revere Charles E. Soule, President
18 Chestnut Street
Worcester, MA 01608
(508) 799-4441
Individual, non-cancellable and group long-term disability income
insurance products designed for professionals, corporate executives
and small business owners; group life and dental insurance;
individual life and annuities.
PRINCIPAL CORPORATE OFFICERS
Administrative and
Management Committee:
James F. Hardymon
Chairman and
Chief Executive Officer
Lewis B. Campbell
President and
Chief Operating Officer
Thomas P. Hollowell
Executive Vice President
Corporate Development
Mary L. Howell**
Senior Vice President
Government and
International Relations
Richard A. McWhirter***
Executive Vice President
and Chief Financial
Officer
Thomas D. Soutter***
Executive Vice President
and General Counsel
William F. Wayland*
Executive Vice President
Administration and Chief
Human Resources Officer
Staff Officers:
Edward C. Arditte*
Vice President
Investor Relations and
Risk Management
Raymond W. Caine, Jr.**
Vice President
Corporate Communications
Robert B. Clendenen***
Vice President
Audit and Business Ethics
Brian T. Downing*
Vice President and
Treasurer
Arnold M. Friedman**
Vice President and
Deputy General Counsel
Frank Gulden
Senior Vice President
Human Resources
Gregory E. Hudson*
Vice President
Taxes
William P. Janovitz**
Vice President and
Controller
Cecil W. Labhart***
Vice President
Information Systems
Services
Karen A. Quinn-Quintin*
Vice President and
Secretary
Operating Management:
Gary E. Atwell***
Group Vice President
Richard H. Campbell
Group Vice President
Herbert L. Henkel*
Group Vice President
Fred L. Hubacker
Group Vice President and
President Textron Acustar
Plastics
Derek Plummer***
Group Vice President
Terry D. Stinson
Group Vice President
Richard A. Watson**
Group Vice President
Service with Textron and
its subsidiaries/divisions:
***5-9 years
***10-19 years
***20 years and over
This annual report is printed on recycled paper.
<INSIDE BACK COVER>
SHAREHOLDER INFORMATION
ANNUAL MEETING TO BE HELD APRIL 27 IN PROVIDENCE
The annual meeting of Textron shareholders will be held at 10:30 a.m.
on Wednesday, April 27, 1994, at the Omni Biltmore Hotel, Kennedy
Plaza, Providence, Rhode Island. Shareholders are encouraged to
attend.
ABOUT YOUR SECURITIES AND RECORDS
The common stock of Textron Inc. is listed on the New York, Midwest
and Pacific Stock Exchanges and quoted in the daily stock table
carried by most newspapers. The ticker symbol for Textron is TXT.
Textron's preferred stocks are traded only on the New York Stock
Exchange.
First Chicago Trust Company of New York, 14 Wall Street, Suite 4680,
New York, NY 10005, acts as transfer agent, registrar and dividend
paying agent for Textron stock and maintains all shareholder records
for the corporation. First Chicago also acts as conversion agent for
Textron's $2.08 preferred stock and its $1.40 preferred dividend
stock.
Shareholders may obtain information relating to their share position,
dividends, transfer requirements, lost certificates, conversion
rights, dividend reinvestment accounts and other related matters by
telephoning First Chicago Trust Company of New York's "Telephone
Response Center" at (201) 324-0498. Shareholders must provide their
tax identification number, the name(s) in which their shares are
registered and their record address when they request information.
This service is available to all shareholders Monday through Friday
9:00 a.m. to 5:00 p.m. Eastern Time. Shareholders also may obtain
this and other information about their holdings by writing to First
Chicago at the above address.
DIVIDEND PAYMENTS MAILED QUARTERLY
Quarterly dividends are mailed with the intent of reaching
shareholders of common and preferred stock on the first business day
of January, April, July and October. Postal delays may cause actual
receipt dates to vary.
FREE AUTOMATIC DIVIDEND REINVESTMENT
Textron's Shareholder Investment Service offers common shareholders
of record a convenient method to purchase additional shares of
Textron common stock without paying brokerage, commission or other
service fees.
Participants in the plan may choose to have all or part of their
dividends automatically reinvested, make additional cash payments or
do both in purchasing shares of Textron common stock. Brokerage
expenses for these purchases are paid by Textron. Personal
recordkeeping is simplified by an account statement that is mailed to
participants.
More information and an authorization form may be obtained by writing
to First Chicago Trust Company of New York, P. O. Box 2500, Jersey
City, New Jersey, 07303-2500 or by calling (201) 324-0498.
ADDITIONAL INFORMATION AVAILABLE TO SHAREHOLDERS
Questions about Textron should be directed to the Corporate
Communications Department, Textron Inc., 40 Westminster Street,
Providence, RI 02903 or by calling (401) 421-2800.
INVESTOR RELATIONS INQUIRIES
Questions concerning investor relations matters should be directed to
the Investor Relations Department at the address above, or by calling
(401) 421-2800.
FORM 10-K AVAILABLE
After April 1, 1994, shareholders may, without charge, obtain copies
of Textron's Form 10-K annual report filed with the Securities and
Exchange Commission. Requests for this report should also be
addressed to Textron's Corporate Communications Department.
Design: Jack Hough Associates, Inc., Norwalk, CT
Major photography: George Simian. Directors' photograph: Carol Fatta
<BACK COVER>
Textron
1993 Annual Report
Textron Inc.
40 Westminster Street
Providence, RI 02903
(401) 421-2800
APPENDIX
TEXTRON ANNUAL REPORT TO SHAREHOLDERS FOR THE YEAR 1993
APPENDIX OF PHOTO CAPTIONS
On the Cover:
Textron's automotive divisions constitute one of North America's
leading suppliers of interior components to the automotive industry.
Vinyl leather-like parts such as instrument panels, center consoles,
door panels, steering wheel covers and other trim are supplied by
Textron as an integrated package of components for the interior of
the Chrysler LHS and other LH models as well as the Cadillac Seville
and Eldorado. Belinda Reeves, Davidson Interiors, is shown examining
the interior of a Chrysler LHS.
PHOTO CAPTION: Page 6
James F. Hardymon (top)
and Lewis B. Campbell (bottom)
PHOTO CAPTION: Page 8
In designing automotive components, a proper "fit" is essential. This
instrument panel is designed for the 1994 Ford Windstar minivan. It
is being "fitted" to a model of the vehicle by Paul Boisineau (L),
and Jerry Beebe, Instrument Panel Design Engineers, at the Textron
Automotive Engineering Design Center, Walled Lake, Michigan.
PHOTO CAPTION: Page 9
Instrument panels are fully tested at the MacDonald Molding operation
of Textron Acustar Plastics prior to shipment. Modular assembly
methods contribute to Textron's success in automotive component
manufacturing. Deborah Herrington is shown testing a completed
assembly for Chrysler's Jeep (trademark) Grand Cherokee.
PHOTO CAPTION: Page 10
The acquisition of Textron Acustar Plastics (TAP) strengthened
Textron's position as a major automotive components supplier. It also
added new products to Textron's businesses, including these rear
lighting assemblies being inspected by Konnie Thompson, Assembler, at
TAP's Evart Products, Evart, Michigan.
PHOTO CAPTION: Page 11
In addition to more conventional automobiles, Textron's automotive
divisions supply the front and rear fascia, instrument panel and fuel
filler assemblies for the Dodge Viper R/T 10 high-performance sports
car. Shown inspecting the exterior fascia are Bob Galoci, Davidson
Exterior Trim (L), and Ken O'Donnell, Production Control Manager,
Dodge Viper.
PHOTO CAPTION: Page 12
Bell Helicopter Textron is a world leader in commercial helicopter
production. One of the most successful models from Bell is the 206L
LongRanger manufactured at Bell's Mirabel, Canada facility.
Completing assembly of a 206L control console are Pre-flight
Mechanics Francois Clavet (L), and Daniel Lemaire.
Bell's twin-engine Model 230 helicopter is designed for many uses.
This emergency medical helicopter is operated by Survival Flight for
the University of Michigan Medical Center. Greg Bradley, Bell
Helicopter Regional Marketing Manager (R), and Denise Hubert, RN,
Flight Nurse/ Paramedic, inspect the first of two Model 230
helicopters delivered to the University.
PHOTO CAPTION: Page 14
Mature defense programs, like the AH-1W SuperCobra at Bell
Helicopter, undergo continuous development, such as the design of
next generation instrument displays and other control mechanisms. Bob
Traphagen, Simulation Lab Technician, is shown configuring updated
instrumentation in this cockpit simulator.
PHOTO CAPTION: Page 15
Much of the design of the Bell-Boeing V-22 TiltRotor aircraft
utilizes Integrated Product Teams uniting manufacturing, engineering,
tooling and other disciplines to reduce manufacturing costs and
aircraft weight. Team members Jonathan Lane, Lead Engineer, and Bunny
Crump, Engineer, are shown designing a transmission component for the
V-22.
PHOTO CAPTION: Page 16
The Cessna Citation V Ultra business jet incorporates the most
advanced digital avionics package in its class. Large primary flight
displays, plus a central multi-function display, provide easy-to-read
instruments for safe, reliable flight operation. Sales Administrator,
Mike Pierce, is shown inspecting a Citation V Ultra control panel.
PHOTO CAPTION: Page 17
The CitationJet, introduced by Cessna in 1993, has already exceeded
expectations in fuel usage, speed and performance. Mark Shepherd,
Manager Client Relations (L), and Roger Martin, Manager Business
Development, are shown discussing a CitationJet at Cessna's
Completion Center, the last stop for aircraft before delivery.
PHOTO CAPTION: Page 18
The Citation X, Cessna's largest and fastest jet, with estimated
speeds up to Mach .9, completed its first flight in December 1993.
John Daniel, Senior Program Manager (L), and Joanne VanMeter,
Engineer, are shown inspecting the first Citation X aircraft as it
neared completion at Cessna's Wichita, Kansas manufacturing facility.
PHOTO CAPTION: Page 19
Cessna's company-owned Citation service centers are the only
factory-direct service network in the industry and the largest
worldwide service organization of any business jet manufacturer.
Cessna Aircraft Technician, Bill Williams, is shown performing
maintenance service on a Citation III at the Citation Service Center
in Newburgh, New York.
PHOTO CAPTION: Page 20
At Avco Financial Services, the ALEX II data network helps Toni
Sepulveda, Administrative Assistant, quickly obtain accurate credit
information regarding a customer's loan application. Computer
technology at all of Textron's Financial Services divisions reduces
operating costs while improving customer service.
PHOTO CAPTION: Page 21
Paul Revere is the North American leader in individual,
non-cancellable disability income insurance marketed primarily to
individual professionals and independent business owners. Joseph
Cambio, MD (R), is shown discussing his personal coverage with Robert
F. Calise (L), an Independent Broker and Clarke Alderman, RHU, Paul
Revere Sales Manager.
PHOTO CAPTION: Page 22
Direct, personalized customer service is a hallmark of Avco Financial
Services' branch office operations. Discussing the finance needs of
two customers is Gary Vitti (R), Branch Manager of AFS' Brockton,
Massachusetts office. AFS' branch offices operate at nearly 1,200
locations in six countries and provide secured and unsecured consumer
loans as well as credit life, ac-cident and health insurance for its
loan customers.
PHOTO CAPTION: Page 23
Textron Financial Corporation (TFC) provides commercial financing
for a wide range of customers including those who purchase or lease
Textron products. Shown talking over the merits of E-Z-GO's new
Medalist golf car are Herb Petersen (L), E-Z-GO Branch Manager, Ed
Roberts (C), Sales Manager, TFC, and Art Wilson, Head Professional,
Sunnyvale, CA, Municipal Golf Course.
PHOTO CAPTION: Page 25
On December 21, 1993, Cessna Aircraft's Citation X achieved its first
flight.
PHOTO CAPTION: Page 27
In October 1993, 7.5 million shares of Paul Revere stock were listed
on the New York Stock Exchange.
PHOTO CAPTION: Page 28
The members of Textron's Board of Directors are: (seated, L to R)
B. F. Dolan; Joseph R. Carter; Jean Head Sisco; James F. Hardymon,
Chairman; Sam F. Segnar; Webb C. Hayes II; and R. Stuart Dickson.
(Standing L to R) Martin D. Walker; Lewis B. Campbell; John W. Snow;
J. Paul Sticht; John D. Macomber; William M. Ellinghaus; Barbara
Scott Preiskel; Thomas B. Wheeler; and H. Jesse Arnelle.
Exhibit 21
TEXTRON INC. - SIGNIFICANT SUBSIDIARIES
(as of January 1, 1994)
Set forth below are the names of certain subsidiaries of Textron Inc.
Other subsidiaries which, considered in the aggregate, do not constitute a
significant subsidiary are omitted from such list.
Name of Subsidiary Place of Incorporation
Ace Industries Textron Inc. California
Airfoil Forging Textron Inc. Delaware
Airfoil Textron Inc. Delaware
Compressor Components Textron Inc. Delaware
Atlantic Aerospace Textron Inc. Connecticut
Avco Corporation Delaware
ARS Two Inc. Delaware
Avco Community Developers, Inc. California
Avco Overseas Services Corporation Delaware
Textron Pacific Limited Australia
Avco Financial Services, Inc. (1) Delaware
Babco Textron Inc. Massachusetts
Bell Helicopter Services Inc. Delaware
Bell Helicopter Asia (Pte) Limited Singapore
Bell Helicopter Textron Inc. Delaware
Cadillac Gage Textron Inc. Michigan
Cessna Aircraft Company, The Kansas
Cone Drive Operations Inc. Delaware
Evart Products Textron Inc. Delaware
Fuel Systems Textron Inc. Delaware
Greenlee Textron Inc. Delaware
HR Textron Inc. Delaware
McCord Corporation Michigan
Davidson Textron Inc. Delaware
Davidson Overseas Investment Inc. Delaware
Davidson Marley B.V. (2) Netherlands
McCord Winn Textron Inc. Massachusetts
McDonald Molding Textron Inc. Delaware
Micromatic Operations Inc. Delaware
Micro-Precision Operations Inc. Delaware
The Paul Revere Corporation Massachusetts
The Paul Revere Life Insurance Company Massachusetts
The Paul Revere Protective Life Insurance Company Delaware
The Paul Revere Variable Annuity Insurance Company Massachusetts
The Paul Revere Equity Sales Company Massachusetts
The Paul Revere Investment Management Company Massachusetts
_______________
(1) See page 3 hereof for details of subsidiaries of Avco Financial Services,
Inc.
(2) 50.1% owned by Davidson Overseas Investment Inc.
Name of Subsidiary Place of Incorporation
Rantoul Products Textron Inc. Delaware
Textron Atlantic Inc. Delaware
Bell Helicopter Supply Center B.V. Netherlands
Textron Atlantic (Netherlands) B.V. Netherlands
Textron Atlantic Belgium S.A. Belgium
Textron Atlantic SARL France
Textron Limited United Kingdom
Textron Financial Corporation Delaware
Cessna Finance Corporation Kansas
Textron FSC Inc. U.S. Virgin Islands
Textron Properties Inc. Delaware
Textron Canada Limited (3) Canada
Textron Realty Corporation Delaware
Wolverine Metal Specialties, Inc. Michigan
_______________
(3) 64.5% of the capital stock of Textron Canada Limited is held by Textron
Properties Inc. and the remaining 35.5% by Textron Inc.
Name of Subsidiary Place of Incorporation
AFS Corporation (1) Delaware
Avco DC Corporation (1) Delaware
Avco Enterprises, Inc. (3) California
Avco Financial Services Canada Limited (2) Ontario
Avco Financial Services International, Inc. (3) Nebraska
Avco Financial Services Ltd. (1) Australian Capital
Territory
Avco Financial Services Limited (3) New Zealand
Avco Group Limited (1) United Kingdom
Avco National Bank (4) California
Balboa Insurance Company (1) California
Balboa Life Insurance Company (3) California
Family Insurance Corporation (3) Wisconsin
Meritplan Insurance Company (5) California
Newport Insurance Company (5) Arizona
_________________
(1) Owned by Avco Financial Services International, Inc.
(2) Owned by AFS Corporation and Avco DC Corporation
(3) Owned by Avco Financial Services, Inc.
(4) Owned by Avco Enterprises, Inc.
(5) Owned by Balboa Insurance Company
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report
(Form 10-K) of Textron Inc. of our report dated February 3, 1994,
included in the 1993 Annual Report to Shareholders of Textron Inc.
Our audits also included the financial statement schedules of Textron
Inc. listed in the accompanying Index to Financial Statements and
Financial Statement Schedules. These schedules are the
responsibility of the Company's management. Our responsibility is to
express an opinion based on our audits. In our opinion, the
financial statement schedules referred to above, when considered in
relation to the basic financial statements taken as a whole, present
fairly in all material respects the information set forth therein.
We also consent to the incorporation by reference in the Registration
Statements (Form S-3 No. 33-46501, Form S-8 No. 2-78073, Form S-8 No.
2-95413, Form S-8 No. 33-00668, Form S-8 No. 33-19402, Form S-8 No.
33-37139 and Form S-8 No. 33-38094) of Textron Inc. and in the
related Prospectuses and Prospectus Supplements of our report dated
February 3, 1994, with respect to the consolidated financial
statements and schedules of Textron Inc. included or incorporated by
reference in this Annual Report (Form 10-K) for the year ended
January 1, 1994.
s/Ernst & Young
New York, New York
March 24, 1994
<PAGE>
Exhibit 24.1
POWER OF ATTORNEY
The undersigned, Textron Inc. ("Textron"), a Delaware
corporation, and the undersigned directors and officers of
Textron, do hereby constitute and appoint Thomas D. Soutter,
Arnold M. Friedman, Michael D. Cahn and Duncan I. Sutherland,
and each of them, with full powers of substitution, their true
and lawful attorneys and agents to do or cause to be done any
and all acts and things and to execute and deliver any and all
instruments and documents which said attorneys and agents, or
any of them, may deem necessary or advisable in order to enable
Textron to comply with the Securities and Exchange Act of 1934,
as amended, and any requirements of the Securities and Exchange
Commission in respect thereof, in connection with the filing of
Textron's Annual Report on Form 10-K for the fiscal year ended
January 1, 1994, including specifically, but without limitation,
power and authority to sign the names of the undersigned
directors and officers in the capacities indicated below and to
sign the names of such officers on behalf of Textron to such
Annual Report filed with the Securities and Exchange Commission,
to any and all amendments to such Annual Report, to any
instruments or documents or other writings in which the original
or copies thereof are to be filed as a part of or in connection
with such Annual Report or amendments thereto, and to file or
cause to be filed the same with the Securities and Exchange
Commission; and each of the undersigned hereby ratifies and
confirms all that such attorneys and agents, and each of them,
shall do or cause to be done hereunder and such attorneys and
agents, and each of them, shall have, and may exercise, all of
the powers hereby conferred.
IN WITNESS WHEREOF, Textron has caused this Power of
Attorney to be executed and delivered in its name and on its
behalf by the undersigned duly authorized officer and its
corporate seal affixed, and each of the undersigned has signed
his or her name hereto, on this 26th day of March, 1994.
TEXTRON INC.
By: s/James F. Hardymon
James F. Hardymon
Chairman and Chief
Executive Officer
ATTEST:
s/Karen A. Quinn-Quintin
Karen A. Quinn-Quintin
Secretary
s/James F. Hardymon s/Barbara Scott Preiskel
James F. Hardymon Barbara Scott Preiskel
Chairman and Chief Director
Executive Officer
(principal executive officer)
Director
s/Lewis B. Campbell s/Sam F. Segnar
Lewis B. Campbell Sam F. Segnar
President and Chief Operating Director
Officer, Director
s/H. Jesse Arnelle s/Jean Head Sisco
H. Jesse Arnelle Jean Head Sisco
Director Director
s/Joseph R. Carter s/John W. Snow
Joseph R. Carter John W. Snow
Director Director
s/R. Stuart Dickson s/J. Paul Sticht
R. Stuart Dickson J. Paul Sticht
Director Director
s/B. F. Dolan s/Martin D. Walker
B. F. Dolan Martin D. Walker
Director Director
s/William M. Ellinghaus s/Thomas B. Wheeler
William M. Ellinghaus Thomas B. Wheeler
Director Director
s/Webb C. Hayes, III s/Richard A. McWhirter
Webb C. Hayes, III Richard A. McWhirter
Director Executive Vice President
and Chief Financial Officer
(principal financial officer)
s/John D. Macomber s/William P. Janovitz
John D. Macomber William P. Janovitz
Director Vice President and Controller
(principal accounting officer)
EXHIBIT 24.2
TEXTRON INC.
Assistant Secretary's Certificate
I, BHIKHAJI M. MANECKJI, a duly elected Assistant Secretary
of TEXTRON INC., a Delaware corporation (the "Corpora-
tion"), do hereby certify that set forth below is a true
and correct copy of a resolution adopted by the Corpora-
tion's Board of Directors at a meeting duly called and held
on March 26, 1994, at which a quorum was present and voting
throughout:
RESOLVED, that the officers of the Corpora-
tion be, and they hereby are, authorized in the
name and on behalf of the Corporation to execute
and deliver a power of attorney appointing Thomas
D. Soutter, Arnold M. Friedman, Michael D. Cahn
and Duncan I. Sutherland, or any of them, to act
as attorneys-in-fact for the Corporation for the
purpose of executing and filing the Corporation's
Annual Report on Form 10-k for its fiscal year
ended January 1, 1994 and amendments thereto; and
be it further
RESOLVED, that each of Thomas D. Soutter,
Arnold M. Friedman, Michael D. Cahn and Duncan I.
Sutherland, acting singly, be and hereby is
authorized to act as attorney-in-fact for and on
behalf of any and all directors of the
Corporation who may so appoint each of them with
respect to the execution, by such person or
persons on behalf of the Corporation, of the
Corporation's Annual Report on Form 10-K for its
fiscal year ended January 1, 1994, and the taking
of any other action in connection therewith.
I do hereby further certify that the foregoing
resolution has been neither modified nor amended, and
remains in full force and effect as of the date hereof.
IN WITNESS WHEREOF, I have hereunto set my hand and
affixed the seal of the Corporation this 28th day of
March, 1994.
s/Ann T. Willaman
Assistant Secretary
(SEAL)
