<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
0-16979
(COMMISSION FILE NUMBER)
------------------------
TYCO INTERNATIONAL LTD.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
BERMUDA NOT APPLICABLE
(JURISDICTION OF INCORPORATION) (IRS EMPLOYER IDENTIFICATION NUMBER)
</TABLE>
THE GIBBONS BUILDING, 10 QUEEN STREET, SUITE 301, HAMILTON, HM11, BERMUDA
(ADDRESS OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE)
441-292-8674*
(REGISTRANT'S TELEPHONE NUMBER)
------------------------
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes
[X] No [ ].
The number of shares of common stock outstanding as of February 12,
1999 was 652,110,358.
------------------------
* The Executive Offices of the Registrant's principal United States
subsidiary, Tyco International (US) Inc., are located at One Tyco Park,
Exeter, New Hampshire 03833. The telephone number there is (603)
778-9700.
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<PAGE> 2
TYCO INTERNATIONAL LTD.
INDEX TO FORM 10-Q
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<CAPTION>
PAGE
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<S> <C>
PART I -- FINANCIAL INFORMATION:
Item 1 -- Financial Statements --
Consolidated Balance Sheets -- December 31, 1998
(unaudited) and September 30, 1998.................... 1
Consolidated Statements of Operations for the Quarters
ended December 31, 1998
and 1997 (unaudited)................................. 2
Consolidated Statements of Cash Flows for the Quarters
ended December 31, 1998
and 1997 (unaudited)................................. 3
Notes to Consolidated Financial Statements
(unaudited)........................................... 4-10
Item 2 -- Management's Discussion and Analysis of Financial
Condition and Operating Results........................... 11-14
PART II -- OTHER INFORMATION:
Item 6 -- Exhibits and Reports on Form 8-K.................. 15
</TABLE>
<PAGE> 3
PART I -- FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(UNAUDITED)
DECEMBER 31, SEPTEMBER 30,
1998 1998
------------ -------------
(IN MILLIONS, EXCEPT SHARE
DATA)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............................... $ 834.2 $ 836.9
Accounts receivable, less allowance for doubtful
accounts of $266.9 at December 31, 1998 and $274.6 at
September 30, 1998..................................... 2,823.7 2,418.5
Contracts in process.................................... 630.8 565.3
Inventories............................................. 1,838.8 1,706.6
Deferred income taxes................................... 558.0 646.3
Prepaid expenses and other current assets............... 389.6 316.3
--------- ---------
7,075.1 6,489.9
--------- ---------
PROPERTY, PLANT AND EQUIPMENT:
Land.................................................... 223.9 197.0
Buildings............................................... 1,232.6 1,021.0
Subscriber systems...................................... 2,541.8 2,171.5
Machinery and equipment................................. 2,790.9 2,554.6
Leasehold improvements.................................. 198.5 264.5
Construction in progress................................ 378.2 269.9
Accumulated depreciation................................ (2,864.3) (2,319.1)
--------- ---------
4,501.6 4,159.4
--------- ---------
GOODWILL AND OTHER INTANGIBLE ASSETS, NET................... 7,767.9 7,006.5
LONG-TERM INVESTMENTS....................................... 138.0 141.6
DEFERRED INCOME TAXES....................................... 363.2 296.7
OTHER ASSETS................................................ 571.2 628.5
--------- ---------
TOTAL ASSETS........................................ $20,417.0 $18,722.6
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Loans payable and current maturities of long-term
debt................................................... $ 250.0 $ 355.9
Accounts payable........................................ 1,146.1 1,340.4
Accrued expenses and other current liabilities.......... 2,633.5 2,660.7
Contracts in process -- billings in excess of costs..... 434.3 332.9
Deferred revenue........................................ 272.3 260.6
Income taxes............................................ 573.3 591.5
Deferred income taxes................................... 19.4 12.5
--------- ---------
5,328.9 5,554.5
--------- ---------
LONG-TERM DEBT, LESS CURRENT MATURITIES..................... 7,100.9 5,254.3
OTHER LONG-TERM LIABILITIES................................. 628.1 631.8
DEFERRED INCOME TAXES....................................... 86.1 82.4
COMMITMENTS AND CONTINGENCIES (NOTE 12)
SHAREHOLDERS' EQUITY:
Common shares, $.20 par value, 1,503,750,000 shares
authorized; 648,690,353 shares outstanding at December 31,
1998 and 645,883,118 shares outstanding at September 30,
1998, net of 1,382,758 and 3,371,003 shares owned by
subsidiaries at December 31, 1998 and September 30, 1998,
respectively.............................................. 129.7 129.2
Capital in excess:
Share premium........................................... 4,128.7 4,032.8
Contributed surplus, net of deferred compensation of
$51.0 at December 31, 1998 and $46.3 at September 30,
1998................................................... 2,849.4 2,850.5
Retained earnings........................................... 369.1 413.7
Accumulated other comprehensive income...................... (203.9) (226.6)
--------- ---------
7,273.0 7,199.6
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.......... $20,417.0 $18,722.6
========= =========
</TABLE>
See notes to consolidated financial statements (unaudited).
1
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CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE QUARTERS
ENDED DECEMBER 31,
----------------------
1998 1997
-------- --------
(IN MILLIONS, EXCEPT
PER SHARE DATA)
<S> <C> <C>
NET SALES................................................... $3,819.6 $2,990.0
Cost of sales............................................... 2,350.4 1,910.3
Selling, general and administrative expenses................ 820.5 647.9
Merger, restructuring and other non-recurring charges....... 434.9 12.0
Charges for the impairment of long-lived assets............. 76.0 --
-------- --------
OPERATING INCOME............................................ 137.8 419.8
Interest expense, net....................................... (95.6) (39.6)
-------- --------
Income before income taxes and extraordinary item........... 42.2 380.2
Income taxes................................................ (68.2) (124.4)
-------- --------
(Loss) income before extraordinary item..................... (26.0) 255.8
Extraordinary item, net of taxes of $1.0 and $0.5,
respectively.............................................. (2.4) (0.9)
-------- --------
NET (LOSS) INCOME........................................... $ (28.4) $ 254.9
======== ========
BASIC (LOSS) EARNINGS PER COMMON SHARE:
(Loss) income before extraordinary item..................... $ (.04) $ .42
Extraordinary item, net of taxes............................ -- --
Net (loss) income........................................... (.04) .42
DILUTED (LOSS) EARNINGS PER COMMON SHARE:
(Loss) income before extraordinary item..................... $ (.04) $ .41
Extraordinary item, net of taxes............................ -- --
Net (loss) income........................................... (.04) .41
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
Basic....................................................... 646.7 602.9
Diluted..................................................... 646.7 626.8
CASH DIVIDENDS PER COMMON SHARE (SEE NOTE 6)................ $ .025 $ .025
</TABLE>
See notes to consolidated financial statements (unaudited).
2
<PAGE> 5
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE QUARTERS
ENDED DECEMBER 31,
---------------------
1998 1997
--------- ------
(IN MILLIONS)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income........................................... $ (28.4) $254.9
Adjustments to reconcile net (loss) income to net cash (used
in) provided by operating activities:
Restructuring and other non-recurring charges.......... 142.9 12.0
Charges for the impairment of long-lived assets........ 76.0 --
Depreciation........................................... 137.2 118.1
Goodwill and other intangible amortization............. 65.1 39.6
Deferred income taxes.................................. 65.5 58.7
Other non-cash items................................... 10.0 (17.9)
Changes in assets and liabilities net of the effects of
acquisitions:
Accounts receivable and contracts in process...... (262.0) (10.6)
Inventories....................................... (76.2) (7.6)
Prepaid expenses and other current assets......... (39.8) (40.9)
Accounts payable, accrued expenses and other
current liabilities............................. (367.7) (184.9)
Income taxes...................................... (23.1) (9.5)
Deferred revenue.................................. 10.6 (6.5)
Other............................................. (93.9) (52.6)
--------- ------
Net cash (used in) provided by operating activities.... (383.8) 152.8
--------- ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment................... (216.3) (163.0)
Purchase of leased property (Note 2)........................ (234.0) --
Acquisition of businesses, net of cash acquired............. (831.8) (103.3)
Other....................................................... (3.5) (9.4)
--------- ------
Net cash used in investing activities.................. (1,285.6) (275.7)
--------- ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds (repayments) on long-term debt and lines of
credit.................................................... 1,606.7 (39.1)
Dividends paid.............................................. (16.3) (16.4)
Proceeds from exercise of options and warrants.............. 96.4 152.7
Other....................................................... (20.1) (2.4)
--------- ------
Net cash provided by financing activities.............. 1,666.7 94.8
--------- ------
NET DECREASE IN CASH AND CASH EQUIVALENTS................... (2.7) (28.1)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD............ 836.9 411.2
--------- ------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................. $ 834.2 $383.1
========= ======
</TABLE>
See notes to consolidated financial statements (unaudited).
3
<PAGE> 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. BASIS OF PRESENTATION
The unaudited financial statements presented herein include the
consolidated accounts of Tyco International Ltd. (the "Company" or "Tyco"), a
company incorporated in Bermuda, and its subsidiaries. The financial statements
have been prepared in accordance with the instructions to Form 10-Q and do not
include all of the information and note disclosures required by generally
accepted accounting principles. These statements should be read in conjunction
with the Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 1998 ("Form 10-K") and the financial statements and notes thereto
included in the Company's Current Report on Form 8-K filed on December 10, 1998
("Form 8-K"). As described more fully in Note 2, on October 1, 1998, Tyco merged
with United States Surgical Corporation ("USSC"). As the merger with USSC was
consummated subsequent to Tyco's year end, the Form 8-K was filed to present
supplemental consolidated financial statements reflecting the combination of
Tyco and USSC for all periods presented in accordance with the pooling of
interests method of accounting. Upon publication of the Company's consolidated
financial statements for a period including October 1, 1998, the supplemental
consolidated financial statements included in the Company's Form 8-K became the
historical consolidated financial statements of the Company.
The consolidated financial statements presented herein have also been
prepared following the pooling of interests method of accounting for the merger
with USSC and therefore reflect the combined financial position, operating
results and cash flows of Tyco and USSC as if they had been combined for all
periods presented.
The accompanying financial statements have not been examined by independent
accountants in accordance with generally accepted auditing standards, but in the
opinion of management, such financial statements include all adjustments,
consisting only of normal recurring adjustments, necessary to summarize fairly
the Company's financial position and results of operations. Certain prior period
amounts have been reclassified to conform with the current period presentation.
2. MERGERS
On October 1, 1998, Tyco consummated a merger with USSC. A total of
approximately 59.2 million shares were issued to the former shareholders of
USSC.
Aggregate fees and expenses related to the merger and to the integration of
the combined companies have been expensed in the accompanying consolidated
statement of operations for the quarter ended December 31, 1998, as required
under the pooling of interests method of accounting. This includes transaction
costs of approximately $53.3 million consisting of legal, printing, accounting,
financial advisory services and other direct expenses. It also includes charges
of approximately $368.5 million to reflect the combination of the companies,
including severance costs, integration costs, the costs associated with the
elimination of excess facilities and the satisfaction of certain liabilities,
and $71.5 million for the impairment of long-lived assets. See Notes 7 and 8.
In connection with the merger, the Company assumed an operating lease for
USSC's North Haven facilities. In December 1998, the Company assumed the debt
related to the North Haven property of approximately $211 million. The
assumption of the debt combined with the settlement of certain other obligations
in the amount of $23 million resulted in the Company acquiring ownership of the
North Haven property. The total cost incurred to acquire the property of $234
million was recorded on the balance sheet at December 31, 1998.
On November 22, 1998, a subsidiary of Tyco entered into a definitive merger
agreement for the acquisition of AMP Incorporated ("AMP"). It is estimated that
Tyco will issue up to approximately 186.0 million common shares for delivery by
the subsidiary to the former shareholders of AMP in the merger. The actual
number of shares will be based on Tyco's weighted average stock price for a
fifteen day trading period ending four trading days prior to AMP's shareholder
vote on the merger. AMP, with annual revenues of
4
<PAGE> 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
approximately $5.5 billion, designs, manufactures and markets electronic,
electrical and electro-optic connection devices and associated application tools
and machines. The acquisition of AMP, which will be accounted for as a pooling
of interests, is subject to the approval of AMP's shareholders. Issuance of the
Tyco stock to be delivered to AMP shareholders in the merger is subject to
approval of Tyco shareholders. The transaction is expected to close in April
1999.
3. ACQUISITIONS
During the first quarter of fiscal 1999, the Company purchased businesses
in its Healthcare and Specialty Products, Fire and Security Services and Flow
Control Products segments for an aggregate of $972.2 million, including $831.8
million in cash, net of cash acquired, and the assumption of approximately
$140.4 million in debt. The acquisitions were made utilizing cash on hand and
borrowings under the Company's bank credit agreement and uncommitted lines of
credit. Each of these acquisitions was accounted for as a purchase and the
results of operations of the acquired companies have been included in the
consolidated results of the Company from their respective acquisition dates. As
a result of the acquisitions, approximately $827.3 million in goodwill and other
intangibles was recorded by the Company, which reflects the adjustments
necessary to allocate the individual purchase prices to the fair value of assets
acquired, liabilities assumed and additional purchase liabilities recorded.
The fiscal 1999 first quarter acquisitions include the acquisition of
Graphic Controls Corporation, which was purchased for approximately $460
million, including the assumption of certain outstanding debt. Graphic Controls,
a leading designer, manufacturer, marketer and distributor of disposal medical
products, will be integrated with Ludlow Technical Products within the Tyco
Healthcare Group.
Additional purchase liabilities recorded during fiscal 1999 include
approximately $28.2 million for transaction and other direct costs, $42.8
million for severance and related costs and $25.7 million for costs associated
with the shut down and consolidation of certain acquired facilities. The $42.8
million for severance costs and the $25.7 million for the shut down and
consolidation of facilities primarily relate to the acquisition of Graphic
Controls discussed above. These costs include employee termination benefits for
approximately 625 employees located throughout the United States, consisting of
approximately 370 manufacturing and distribution employees, 140 sales and
marketing associates, 65 technical support staff and 50 administrative
personnel. The costs associated with the shut down of facilities primarily
relate to the closing of three large manufacturing plants and, to a lesser
extent, the consolidation of corporate facilities, sales offices and other
locations. At December 31, 1998, approximately 130 employees had been
terminated. None of the manufacturing plants was shut down as of December 31,
1998.
In connection with acquisitions accounted for as purchases consummated
during and prior to the quarter ended December 31, 1998, liabilities for
approximately $45.7 million in transaction and other costs, $162.2 million for
severance and related costs and $299.2 million for the shutdown and
consolidation of acquired facilities remained on the balance sheet at December
31, 1998. The Company expects that the termination of employees and
consolidation of facilities related to these acquisitions will be substantially
complete within one year of the related dates of acquisition.
The following unaudited pro forma data summarize the results of operations
for the periods indicated as if these acquisitions had been completed as of the
beginning of the periods presented. The pro forma data give effect to actual
operating results prior to the acquisitions and adjustments to interest expense,
goodwill amortization and income taxes. No effect has been given to cost
reductions or operating synergies in this presentation. These pro forma amounts
do not purport to be indicative of the results that would have actually been
obtained if the acquisitions had occurred as of the beginning of the periods
presented or that may be obtained in the future. The pro forma data do not give
effect to acquisitions completed subsequent to December 31, 1998.
5
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
<TABLE>
<CAPTION>
QUARTER ENDED
QUARTER ENDED DECEMBER 31,
DECEMBER 31, 1998 1997
----------------- -------------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C>
Net sales........................................... $3,865.5 $3,111.3
(Loss) income before extraordinary item............. (30.5) 242.8
Net (loss) income................................... (32.9) 241.9
Net (loss) income per common share:
Basic.......................................... (.05) .40
Diluted........................................ (.05) .39
</TABLE>
4. LONG-TERM DEBT
Long-term debt is as follows:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1998 1998
------------ -------------
(IN MILLIONS)
<S> <C> <C>
Bank and acceptance facilities............................. $ -- $ 0.8
Bank credit agreement...................................... 2,162.0 1,359.0
Bank credit facilities..................................... 22.1 206.9
Uncommitted lines of credit................................ 125.0 --
8.125% public notes due 1999............................... 10.5 10.5
8.25% senior notes due 2000................................ 9.5 9.5
6.5% public notes due 2001................................. 299.0 299.0
6.125% public notes due 2001............................... 747.3 747.0
9.25% senior subordinated notes due 2003................... -- 14.1
5.875% private placement notes due 2004.................... 397.4 --
6.375% public notes due 2004............................... 104.6 104.6
6.375% public notes due 2005............................... 742.8 742.6
12.0% notes due 2005 - Graphic Controls.................... 75.0 --
6.125% private placement notes due 2008.................... 394.5 --
7.25% senior notes due 2008................................ 300.0 300.0
Zero coupon Liquid Yield Option Notes due 2010............. 114.0 115.3
6.25% public Dealer Remarketable Securities ("Drs.") due
2013..................................................... 762.1 762.8
9.5% public debentures due 2022............................ 49.0 49.0
8.0% public debentures due 2023............................ 50.0 50.0
7.0% public notes due 2028................................. 492.2 492.1
Financing lease obligation................................. 76.2 76.5
Other...................................................... 417.7 270.5
-------- --------
Total debt....................................... 7,350.9 5,610.2
Less current portion....................................... 250.0 355.9
-------- --------
Long-term debt............................................. $7,100.9 $5,254.3
======== ========
</TABLE>
In October 1998, Tyco International Group S.A. ("TIG"), a wholly-owned
subsidiary of the Company, issued $800 million of debt in a private placement
offering consisting of two series of Notes: $400 million of 5.875% Notes due
November 2004 and $400 million of 6.125% Notes due November 2008. Interest on
each series of Notes is payable on May 1 and November 1 of each year, beginning
May 1, 1999. The Notes are fully and unconditionally guaranteed by Tyco. The net
proceeds of approximately $791.7 million were used to repay borrowings under
TIG's $2.25 billion bank credit facility. At the same time, TIG also entered
into an interest rate swap agreement with a notional amount of $400 million to
hedge the fixed rate terms of the 6.125% Notes due 2008. Under this agreement,
which expires in November 2008, TIG will receive payments at a fixed rate of
6.125% and will make floating rate payments based on LIBOR, as defined therein.
During the quarters ended December 31, 1998 and 1997, respectively, 6,631
and 124,264 of the Liquid Yield Option Notes ("LYONs") with a carrying value of
$3.1 million and $55.1 million were exchanged for
6
<PAGE> 9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
180,204 and 3,376,990 common shares of the Company. The extraordinary item of
$2.4 million in the quarter ended December 31, 1998 relates to the write-off of
net unamortized deferred financing costs related to the LYONs and deferred costs
associated with USSC's revolver facility fees which the Company refinanced. The
extraordinary item of $0.9 million in the quarter ended December 31, 1997 was
the write-off of net unamortized deferred financing costs related to the LYONs.
Under TIG's bank credit agreement, the Company is required to meet certain
covenants, none of which is considered restrictive to the operations of the
Company.
5. EARNINGS PER COMMON SHARE
The reconciliations between basic and diluted (loss) earnings per common
share are as follows:
<TABLE>
<CAPTION>
QUARTER ENDED QUARTER ENDED
DECEMBER 31, 1998 DECEMBER 31, 1997
----------------------------- -----------------------------
PER SHARE PER SHARE
(LOSS) SHARES AMOUNT INCOME SHARES AMOUNT
------ ------ --------- ------ ------ ---------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
BASIC (LOSS) INCOME PER COMMON SHARE
Net (loss) income available to common shareholders... $(28.4) 646.7 $(.04) $254.9 602.9 $.42
Stock options and warrants........................... -- -- -- 10.8
Exchange of LYONs debt............................... -- -- 2.2 13.1
------ ----- ------ -----
DILUTED (LOSS) INCOME PER COMMON SHARE
Net (loss) income available to common shareholders
plus assumed conversions........................... $(28.4) 646.7 $(.04) $257.1 626.8 $.41
====== ===== ====== =====
</TABLE>
The computation of diluted loss per common share in the quarter ended
December 31, 1998 excludes the effect of the assumed exercise of all outstanding
stock options and warrants for approximately 42.1 million shares and the assumed
exchange of outstanding LYONs for approximately 6.5 million shares because the
effect would be anti-dilutive. The computation of diluted income per common
share in the quarter ended December 31, 1997 excludes the effect of the assumed
exercise of approximately 16.1 million stock options that were outstanding as of
December 31, 1997 because the effect would be anti-dilutive.
6. CASH DIVIDENDS PER COMMON SHARE
Tyco paid a quarterly cash dividend of $0.025 per common share in the
quarters ended December 31, 1998 and 1997. Prior to its merger with Tyco, USSC
paid a dividend of $0.04 per share in the quarter ended December 31, 1997.
7. MERGER, RESTRUCTURING AND OTHER NON-RECURRING CHARGES
During the first quarter of fiscal 1999, the Company recorded merger,
restructuring and other non-recurring charges of $434.9 million primarily
related to the merger with USSC (Notes 1 and 2). Transaction costs of $53.3
million to effect the merger consists of legal, accounting, financial advisory
services, and other costs payable at the effective time of the merger, as well
as other direct expenses. These were expensed as required under the pooling of
interests method of accounting. Costs incurred to combine USSC's disposable
medical products business with the related business of Tyco include the cost of
announced workforce reductions of $124.8 million involving the elimination of
approximately 800 positions in the United States, 200 positions in Puerto Rico
and 600 positions in Europe; the combination of certain facilities of $51.8
million involving the closure of 20 manufacturing and distribution facilities in
Europe and the shut down and consolidation of 30 sales and administrative
offices located primarily throughout the United States and/or Europe; lease
termination costs of $156.8 million; and other costs of $35.1 million relating
to the consolidation of certain product lines and other non-recurring charges.
Approximately $183.4 million of accrued merger and restructuring costs are
included in other current liabilities at December 31, 1998. The Company
currently anticipates that the restructuring will be substantially completed by
December 31, 1999.
7
<PAGE> 10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
During the first quarter of fiscal 1998, the Company recorded restructuring
charges of $12.0 million related to employee severance costs, facility disposals
and asset write-downs as part of USSC's cost cutting objectives, which was
substantially completed as of December 31, 1998.
8. CHARGE FOR THE IMPAIRMENT OF LONG-LIVED ASSETS
During the first quarter of fiscal 1999, the Company recorded charges of
$76.0 million for the impairment of long-lived assets in Tyco's Healthcare and
Specialty Products segment. This charge primarily relates to the combination of
property, plant and equipment in USSC's operations in the United States and
Europe with that of Tyco's and was determined following a review of the carrying
value of their assets.
9. COMPREHENSIVE INCOME
During the first quarter of fiscal 1999, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No.130, "Reporting Comprehensive
Income." SFAS No.130 establishes standards for the reporting and display of
comprehensive income and its components in financial statements. The purpose of
reporting comprehensive income is to report a measure of all changes in equity,
other than transactions with owners. Total comprehensive (loss) income was
$(5.6) million and $206.6 million for the quarters ended December 31, 1998 and
1997, respectively. Components of other comprehensive income (loss) include
foreign currency translation adjustments of $22.8 million and $(46.3) million
and unrealized loss on marketable securities of $0 and $(2.0) million for the
quarters ended December 31, 1998 and 1997, respectively. Certain prior year
amounts within shareholders' equity have been reclassified as Accumulated Other
Comprehensive Income to comply with the reporting requirements of SFAS No. 130.
10. CONSOLIDATED SEGMENT DATA
Selected information for the Company's four industry segments is as follows
(in millions):
<TABLE>
<CAPTION>
QUARTER ENDED
DECEMBER 31,
----------------------
1998 1997
---- ----
<S> <C> <C>
NET SALES:
Healthcare and Specialty Products........................... $1,342.8 $ 979.1
Fire and Security Services.................................. 1,384.3 1,126.6
Flow Control Products....................................... 652.5 550.0
Electrical and Electronic Components........................ 440.0 334.3
-------- --------
$3,819.6 $2,990.0
======== ========
OPERATING INCOME (LOSS):
Healthcare and Specialty Products........................... $ (237.1)(1) $ 145.3(2)
Fire and Security Services.................................. 205.4 146.4
Flow Control Products....................................... 93.5 71.9
Electrical and Electronic Components........................ 95.0 71.6
Corporate and other expenses................................ (19.0) (15.4)
-------- --------
$ 137.8 $ 419.8
======== ========
</TABLE>
- ---------------
(1) Includes merger, restructuring and other non-recurring charges of $434.9
million and charges for the impairment of long-lived assets of $76.0
million, primarily related to the USSC merger.
(2) Includes restructuring charges of $12.0 million related to USSC's
operations.
8
<PAGE> 11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
11. INVENTORIES
Inventories are classified as follows (in millions):
<TABLE>
<CAPTION>
DECEMBER 31, 1998 SEPTEMBER 30, 1998
----------------- ------------------
<S> <C> <C>
Purchased materials and manufactured parts............ $ 577.5 $ 566.0
Work in process....................................... 324.0 295.4
Finished goods........................................ 937.3 845.2
-------- --------
$1,838.8 $1,706.6
======== ========
</TABLE>
12. COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Company is liable for contract
completion and product performance. In addition, the Company is involved in
various stages of investigation and cleanup related to environmental remediation
matters at a number of sites. In the opinion of management, such obligations
will not materially affect the Company's financial position or results of
operations.
13. TYCO INTERNATIONAL GROUP S.A. ("TIG")
During fiscal 1998, TIG issued $2.75 billion of public debt securities,
which are fully and unconditionally guaranteed by Tyco. TIG, a Luxembourg
holding company, is the parent company of substantially all the operating
subsidiaries of the Company. The Company has not included separate financial
statements and footnotes for TIG because of the full and unconditional guarantee
by Tyco of TIG's debt obligations and the Company's belief that such information
is not material to holders of the debt securities. The following presents
consolidated summary financial information for TIG and its subsidiaries, as if
TIG and its current organizational structure has been in place for all periods
presented.
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1998 1998
------------ -------------
<S> <C> <C>
Total current assets...................................... $ 7,175.2 $ 6,639.5
Total non-current assets.................................. 13,215.7 12,090.0
Total current liabilities................................. 5,299.4 5,519.5
Total non-current liabilities............................. 8,020.9 6,401.5
</TABLE>
<TABLE>
<CAPTION>
QUARTER ENDED
DECEMBER 31,
----------------------
1998 1997
-------- --------
<S> <C> <C>
Net sales................................................... $3,819.2 $2,990.0
Gross profit................................................ 1,466.2 1,079.7
(Loss) income before extraordinary item(1).................. (184.4) 241.5
Net (loss) income(2)........................................ (186.8) 240.6
</TABLE>
- ---------------
(1) Loss before extraordinary item in the quarter ended December 31, 1998
includes merger, restructuring and other non-recurring charges of $434.9
million and charges for the impairment of long-lived assets of $76.0 million
primarily related to the USSC merger. Income before extraordinary item in
the quarter ended December 31, 1997 includes restructuring charges of $12.0
million related to USSC's operations.
(2) Extraordinary item was comprised of losses on the write-off of net
unamortized deferred financing costs relating to the early extinguishment of
debt.
14. SUBSEQUENT EVENTS
In January 1999, TIG issued $400 million of its 6.125% notes due 2009 and
$800 million of its 6.875% notes due 2029 in a public offering. Interest is
payable semi-annually in January and July. Repayment of amounts outstanding
under these securities is fully and unconditionally guaranteed by Tyco (Note
13). The
9
<PAGE> 12
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
net proceeds of approximately $1.17 billion were used to repay borrowings under
TIG's $2.25 billion bank credit facility. At the same time, TIG also entered
into an interest rate swap agreement to hedge the fixed rate terms of the $400
million notes due 2009. Under the agreement, which expires in January 2009, TIG
will receive payments at a fixed rate of 6.125% and will make floating rate
payments based on an average of three different LIBO rates, as defined, plus a
spread.
In January 1999, TIG initiated a commercial paper program under which it
can issue notes with an aggregate face value of up to $1.75 billion from time to
time outstanding. The Company expects to increase the size of the commercial
paper program to $3.25 billion in connection with the increase of TIG's credit
agreement discussed below. The notes are unsecured and are fully and
unconditionally guaranteed by Tyco. Proceeds from the sale of the notes will be
used for working capital and other corporate purposes. The Company is required
to maintain an available unused balance under its bank credit agreement
sufficient to support amounts outstanding under this commercial paper program.
In February 1999, TIG renegotiated its $2.25 billion credit agreement with
a group of commercial banks, giving it the right to borrow up to $3.25 billion
until February 11, 2000, with the option to extend to February 11, 2001, and
borrow up to an additional $0.5 billion until February 12, 2003. TIG has the
option to increase the $3.25 billion part of the credit facility up to $4.0
billion. Interest payable on borrowings is variable based upon TIG's option to
select a Eurodollar rate plus margins ranging from 0.41% to 0.43%, a certificate
of deposit rate plus margins ranging from 0.535% to 0.555%, or a base rate, as
defined. If the outstanding principal amount of loans equals or exceeds 25% of
the commitments, the Eurodollar and certificate of deposit margins are increased
by 0.125%. Repayments of amounts outstanding under this agreement are guaranteed
by the Company. The Company plans to use the $3.25 billion part of the credit
facility principally to fully support its commercial paper program discussed
above and therefore expects this part to remain largely undrawn.
On February 5, 1999, USSC completed a tender offer for its 7 1/4% Senior
Notes due 2008 in which $292 million of the $300 million principal amount of the
notes outstanding were tendered. Graphic Controls has made an offer, scheduled
to expire February 23, 1999, to purchase its 12% Senior Subordinated Notes due
2005, in which all $75 million principal amount of the notes outstanding have
been tendered. See Note 4.
10
<PAGE> 13
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
OPERATING RESULTS
On October 1, 1998, Tyco consummated a merger with United States Surgical
Corporation ("USSC"). The transaction was accounted for as a pooling of
interests and, accordingly, the consolidated financial statements reflect the
combined financial position, results of operations and cash flows of Tyco and
USSC for all periods presented. See Notes 1 and 2 to the Consolidated Financial
Statements presented herein.
RESULTS OF OPERATIONS
Information for all periods presented below reflects the grouping of the
Company's businesses into four business segments consisting of Healthcare and
Specialty Products, Fire and Security Services, Flow Control Products, and
Electrical and Electronic Components.
Overview
(Loss) income before extraordinary item was $(26.0) million, or $(.04) per
share on a diluted basis, for the quarter ended December 31, 1998, as compared
to $255.8 million, or $.41 per diluted share, for the quarter ended December 31,
1997. During the quarter ended December 31, 1998, the Company incurred an
after-tax charge of $427.6 million ($.65 per share) for merger and transaction
costs, write-offs and integration costs primarily associated with the USSC
merger. During the quarter ended December 31, 1997, the Company incurred an
after-tax charge of $9.2 million ($.01 per share) for restructuring charges in
USSC's operations. Excluding these non-recurring charges, income before
extraordinary item rose 51.5% to $401.6 million, or $.61 per diluted share, for
the quarter ended December 31, 1998, as compared to $265.0 million, or $.43 per
diluted share, for the quarter ended December 31, 1997. The increase was
attributable to increased sales, margin improvements and results of acquired
companies in each of the Company's business segments.
After each acquisition, acquired companies are immediately integrated, and
Tyco does not separately track post-acquisition financial results. Accordingly,
the impact of certain acquired companies in the following analysis is based on
estimates and assumes that acquisitions were completed as of the beginning of
the periods discussed.
Quarter ended December 31, 1998 Compared to Quarter ended December 31, 1997
Sales increased 27.7% during the quarter ended December 31, 1998 to $3.82
billion from $2.99 billion in the quarter ended December 31, 1997.
Sales of the Healthcare and Specialty Products group increased $363.7
million to $1.34 billion, or 37.1%, principally due to increased sales of the
Tyco Healthcare Group. This increase was primarily due to the inclusion of
Sherwood-Davis & Geck ("Sherwood"), which was acquired in February 1998.
Excluding the impact of Sherwood, sales increased an estimated $118.4 million,
or 9.7%.
Sales of the Fire and Security Services group increased $257.7 million to
$1.38 billion, or 22.9%, principally due to increased sales in the Company's
electronic security services business in the United States and, to a lesser
extent, in the North American fire protection operations and the European fire
protection and security operations. This increase was primarily due to the
higher volume of recurring service revenues and the inclusion of CIPE S.A.
("CIPE"), acquired in May 1998 and Wells Fargo Alarm ("Wells Fargo"), acquired
in June 1998. Excluding the impact of CIPE and Wells Fargo, sales increased an
estimated $130.3 million or 10.4%.
Sales of the Flow Control Products group increased $102.5 million to $652.5
million, or 18.6%, primarily reflecting increased demand for valve products in
North America and Europe and the inclusion of the U.S. Operations of Crosby
Valve, Inc. ("Crosby"), acquired in July 1998, and Rust Environmental and
Infrastructure, Inc. ("Rust"), acquired in September 1998. Excluding the impact
of Crosby and Rust, sales increased an estimated $52.8 million, or 8.8%.
Sales of the Electrical and Electronic Components group increased $105.7
million to $440.0 million, or 31.6%, principally due to increased sales at Tyco
Submarine Systems Ltd ("TSSL"), the inclusion of Sigma
11
<PAGE> 14
Circuits, Inc. ("Sigma"), which was acquired in July 1998, and, to a lesser
extent, increased sales at Tyco Printed Circuit Group. Excluding the impact of
Sigma, sales increased an estimated $82.1 million, or 22.9%
Pre-tax income was $42.2 million for the quarter ended December 31, 1998,
as compared to $380.2 million for the quarter ended December 31, 1997. Pre-tax
income for the quarter ended December 31, 1998 included charges of $434.9
million for merger, restructuring and other non-recurring items and $76.0
million for the impairment of long-lived assets primarily related to the USSC
merger. Pre-tax income for the quarter ended December 31, 1997 included charges
of $12.0 million for restructuring and other non-recurring items related to
USSC's operations. See Notes 7 and 8 to the Consolidated Financial Statements.
Excluding these non-recurring charges, pre-tax income increased $160.9 million,
or 41.0%, to $553.1 million. Amortization expense for goodwill and other
intangible assets was $65.1 million for the quarter ended December 31, 1998 and
$39.6 million for the quarter ended December 31, 1997. The following analysis is
presented exclusive of these non-recurring charges to better portray
management's view of the comparability of continuing operations.
Operating profits for the Healthcare and Specialty Products group increased
$116.5 million to $273.8 million, or 74.1%. Operating profits were 20.4% of
sales in the quarter ended December 31, 1998 as compared to 16.1% in the quarter
ended December 31, 1997. The increase was principally due to increased volume
and margins in the Tyco Healthcare Group, including the effect of the
acquisition of Sherwood, and improved margins at Tyco Plastics and Adhesives.
Operating profits for the Fire and Security Services increased $59.0
million to $205.4 million, or 40.3%. Operating profits were 14.8% of sales in
the quarter ended December 31, 1998 as compared to 13.0% in the quarter ended
December 31, 1997. The overall increase was primarily due to higher service
volume in the Company's worldwide security and fire protection businesses. The
increase in operating profits as a percentage of sales was due to improved
margins in the European security and fire protection operations.
Operating profits for the Flow Control Products group increased $21.6
million to $93.5 million, or 30.0%. Operating profits were 14.3% of sales in the
quarter ended December 31, 1998 as compared to 13.1% in the quarter ended
December 31, 1997. The increase was due to higher volume and margins in the
Company's European flow control products operations and improved margins at
Mueller and Allied Tube & Conduit.
Operating profits for the Electrical and Electronic Components group
increased $23.4 million to $95.0 million, or 32.7%. Operating profits were 21.6%
of sales in the quarter ended December 31, 1998 and 21.4% in the quarter ended
December 31, 1997. The overall increase was principally due to increased sales
at TSSL and higher margins at Allied Electrical Conduit.
The effect of changes in foreign exchange rates during the quarter ended
December 31, 1998 as compared to the quarter ended December 31, 1997 was not
material to the Company's sales and operating profits.
The effective income tax rate was 27.4% during the quarter ended December
31, 1998 and 32.4% during the quarter ended December 31, 1997. The decrease was
due to higher earnings in domiciles with lower income tax rates.
LIQUIDITY AND CAPITAL RESOURCES
As presented in the Consolidated Statement of Cash Flows, cash used in
operating activities net of the effect of acquired assets and liabilities was
$383.8 million during the first quarter of fiscal 1999. The working capital
acquired as a result of acquisitions during the period is included in the cost
of acquisitions in the Consolidated Statement of Cash Flows. The significant
operating changes in working capital were a $367.7 million decrease in accounts
payable and accrued expenses, which resulted principally from the reduction in
trade accounts payable in the ordinary course of business and spending for
merger, restructuring and other non-recurring costs, and a $262.0 million
increase in accounts receivable and contracts in process. The impact of changes
in foreign exchange rates did not materially affect net working capital during
the quarter.
12
<PAGE> 15
During the first quarter of fiscal 1999, the Company used cash of $831.8
million to acquire companies in its Healthcare and Specialty Products, Fire and
Security Services and Flow Control Products segments, $216.3 million to purchase
property, plant and equipment, $234 million to purchase the USSC North Haven
facilities discussed below and $16.3 million to pay dividends to shareholders.
The Company received proceeds of $96.4 million from the exercise of common share
options.
The source of the cash used for acquisitions was primarily from an increase
in total debt. At December 31, 1998, the Company's total debt was $7.35 billion,
as compared to $5.61 billion at September 30, 1998. The increase resulted
principally from the issuance of $800 million private placement notes discussed
below and borrowings under the Company's bank credit agreement and uncommitted
lines of credit. Shareholders' equity was $7.27 billion, or $11.21 per share, at
December 31, 1998, compared to $7.20 billion, or $11.15 per share, at September
30, 1998. Goodwill and other intangible assets were $7.77 billion at December
31, 1998, compared to $7.01 billion at September 30, 1998. Total debt as a
percent of total capitalization (total debt and shareholders' equity) was 50% at
December 31, 1998 and 44% at September 30, 1998.
In October 1998, TIG issued $800 million of debt in a private placement
offering consisting of two series of Notes: $400 million of 5.875% Notes due
November 2004 and $400 million of 6.125% Notes due November 2008. The Notes are
fully and unconditionally guaranteed by Tyco. The net proceeds of approximately
$791.7 million were used to repay borrowings under TIG's $2.25 billion bank
credit facility. At the same time, TIG also entered into an interest rate swap
agreement to hedge the fixed rate terms of the $400 million Notes due 2008.
Under this agreement, which expires in November 2008, TIG will receive payments
at a fixed rate of 6.125% and will make floating rate payments based on LIBOR,
as defined.
In December 1998, the Company assumed the debt related to USSC's North
Haven facilities of approximately $211 million. The assumption of the debt
combined with the settlement of certain other obligations in the amount of $23
million resulted in the Company acquiring ownership of the North Haven property
for a total cost of $234 million.
In January 1999, TIG issued $400 million of its 6.125% notes due 2009 and
$800 million of its 6.875% notes due 2029 utilizing the capacity under its $3.75
billion public shelf registration statement. Interest is payable semi-annually
in January and July. Repayment of amounts outstanding under these securities is
fully and unconditionally guaranteed by Tyco (See Note 13 to the Consolidated
Financial Statements). The net proceeds of approximately $1.17 billion were used
to repay borrowings under the $2.25 billion bank credit facility. At the same
time, TIG also entered into an interest rate swap agreement to hedge the fixed
rate terms of the $400 million notes due 2009. Under the agreement, which
expires in January 2009, TIG will receive payments at a fixed rate of 6.125% and
will make floating rate payments based on an average of three different LIBO
rates, as defined, plus a spread.
In January 1999, TIG initiated a commercial paper program under which it
can issue notes with an aggregate face value of up to $1.75 billion from time to
time outstanding. The Company expects to increase the size of the Commercial
paper program to $3.25 billion in connection with the increase of TIG's credit
agreement discussed below. The notes are unsecured and are fully and
unconditionally guaranteed by Tyco. Proceeds from the sale of the notes will be
used for working capital and other corporate purposes. The Company is required
to maintain an available unused balance under its bank credit agreement
sufficient to support amounts outstanding under this commercial paper program.
In February 1999, TIG renegotiated its $2.25 billion credit agreement with
a group of commercial banks, giving it the right to borrow up to $3.25 billion
until February 11, 2000, with the option to extend to February 11, 2001, and
borrow up to an additional $0.5 billion until February 12, 2003. TIG has the
option to increase the $3.25 billion part of the credit facility up to $4.0
billion. Interest payable on borrowings is variable based upon TIG's option to
select a Eurodollar rate plus margins ranging from 0.41% to 0.43%, a certificate
of deposit rate plus margins ranging from 0.535% to 0.555%, or a base rate, as
defined. If the outstanding principal amount of loans equals or exceeds 25% of
the commitments, the Eurodollar and certificate of deposit margins are increased
by 0.125%. Repayments of amounts outstanding under this agreement are guaranteed
by the Company. The Company plans to use the $3.25 billion part of the credit
facility principally to fully
13
<PAGE> 16
support its commercial paper program discussed above and therefore expects this
part to remain largely undrawn.
The Company believes that its cash flow from operations together with its
existing credit facilities and other credit arrangements, is adequate to fund
its operations.
BACKLOG
The backlog of unfilled orders was approximately $3.9 billion at December
31, 1998 as compared to $4.2 billion at September 30, 1998. The net decrease
principally resulted from a decrease in backlog in the Company's submarine
systems business, due to the timing of contracts, partially offset by an
increase in backlog at Earth Tech and at the Company's worldwide security and
North American fire protection businesses.
YEAR 2000 COMPLIANCE
Year 2000 compliance programs and system modifications were initiated by
the Company in fiscal 1997 in an attempt to ensure that these systems and key
processes will remain functional. The Company is continuing its assessment of
the potential impact of the Year 2000 on date-sensitive information in computer
software programs and operating systems in its product development, financial
business systems and administrative functions, and has begun implementing
strategies to avoid adverse implications. This objective is expected to be
achieved either by modifying present systems using existing internal and
external programming resources or by installing new systems, and by monitoring
supplier, customer and other third-party readiness. Review of the systems
affecting the Company is progressing. The costs of the Company's Year 2000
program to date have not been material, and the Company does not anticipate that
the costs of any required modifications to its information technology or
embedded technology systems will have a material adverse effect on its financial
position, results of operations or liquidity.
In the event that the Company or material third parties fail to complete
their Year 2000 compliance programs successfully and on time, the Company's
ability to operate its businesses, service customers, bill or collect its
revenues or purchase products in a timely manner could be adversely affected.
Although there can be no assurance that the conversion of the Company's systems
will be successful or that the Company's key third-party relationships will have
successful conversion programs, management does not expect that any such failure
would have a material adverse effect on the financial position, results of
operations or liquidity of the Company. The Company has day-to-day operational
contingency plans, and management is in the process of updating these plans for
possible Year 2000 specific operational requirements.
ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which is effective for fiscal years
beginning after June 15, 1999. This statement establishes accounting and
reporting standards requiring that every derivative instrument be recorded in
the balance sheet as either an asset or liability measured at its fair value.
SFAS No. 133 also requires that changes in the derivative's fair value be
recognized currently in earnings unless specific hedge accounting criteria are
met. Adoption of this standard is not expected to have a material impact on the
financial position or results of operations of the Company.
CONVERSION TO THE EURO
On January 1, 1999, 11 European countries began using the "euro" as their
single currency, while still continuing to use their own notes and coins for
cash transactions. Banknotes and coins denominated in euros are expected to be
put in circulation during 2002. Uncertainty exists as to the effect the
introduction of the euro and the conversion of cash in circulation into euros
will have on the marketplace. Tyco conducts a significant amount of business in
these countries. The Company has not yet determined the effect, if any, the euro
will have on its operations.
14
<PAGE> 17
PART II -- OTHER INFORMATION
ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
4.1 364-Day Credit Agreement dated as of February 12, 1999 among Tyco
International Group S.A., the Banks named therein and Morgan
Guaranty Trust Company of New York, as Agent
4.2 Parent Guarantee Agreement (as amended) dated as of February 12,
1999 between Tyco International Ltd. and Morgan Guaranty Trust
Company of New York, as Agent
27 Financial Data Schedule
(b) Reports on Form 8-K
A Current Report on Form 8-K was filed by the registrant on December 10,
1998 to put on file supplemental consolidated financial statements for the
fiscal year ended September 30, 1998 reflecting the restatement for the merger
with United States Surgical Corporation, which was accounted for as a pooling of
interests.
An amended Current Report on Form 8-K/A was filed by the registrant on
December 11, 1998 to amend Exhibit 99.2, Management's Discussion and Analysis of
Financial Condition and Results of Operations, included in the registrant's Form
8-K filed on December 10, 1998.
15
<PAGE> 18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TYCO INTERNATIONAL LTD.
/s/ MARK H. SWARTZ
------------------------------------
Mark H. Swartz
EXECUTIVE VICE PRESIDENT AND CHIEF
FINANCIAL OFFICER
(PRINCIPAL ACCOUNTING AND FINANCIAL
OFFICER)
Date: February 16, 1999
16
<PAGE> 19
TYCO INTERNATIONAL LTD.
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO.
- -----------
<S> <C>
4.1 364-Day Credit Agreement dated as of February 12, 1999 among
Tyco International Group S.A., the Banks named therein and
Morgan Guaranty Trust Company of New York, as Agent
4.2 Parent Guarantee Agreement (as amended) dated as of February
12, 1999 between Tyco International Ltd. and Morgan Guaranty
Trust Company of New York, as Agent
27 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 4.1
CONFORMED COPY
$3,250,000,000
364-DAY CREDIT AGREEMENT
dated as of
February 12, 1999
Tyco International Group S.A.,
Borrower
Morgan Guaranty Trust Company of New York,
Administrative Agent
Bank of America National Trust and Savings Association,
The Chase Manhattan Bank
and Commerzbank AG, New York Branch,
Co-Syndication Agents
J.P. Morgan Securities Inc.,
Arranger
<PAGE> 2
TABLE OF CONTENTS
----------------------
<TABLE>
<CAPTION>
PAGE
----
ARTICLE 1
DEFINITIONS
<S> <C> <C>
SECTION 1.01. Definitions......................................................................1
SECTION 1.02. Types of Borrowings.............................................................11
ARTICLE 2
THE CREDITS
SECTION 2.01. Commitments to Lend.............................................................12
SECTION 2.02. Notice of Committed Borrowing...................................................12
SECTION 2.03. The Money Market Borrowings.....................................................13
SECTION 2.04. Notice to Banks; Funding of Loans...............................................17
SECTION 2.05. Promissory Notes................................................................18
SECTION 2.06. Maturity of Loans...............................................................18
SECTION 2.07. Interest Rates..................................................................19
SECTION 2.08. Facility Fee....................................................................22
SECTION 2.09. Optional Termination or Reduction of Commitments................................22
SECTION 2.10. Mandatory Termination of Commitments............................................23
SECTION 2.11. Optional Prepayments............................................................23
SECTION 2.12. General Provisions as to Payments...............................................23
SECTION 2.13. Funding Losses..................................................................24
SECTION 2.14. Computation of Interest and Fees................................................24
SECTION 2.15. Regulation D Compensation.......................................................25
SECTION 2.16. Method of Electing Interest Rates...............................................25
SECTION 2.17. Optional Increase in Commitments................................................27
ARTICLE 3
CONDITIONS
SECTION 3.01. Effectiveness...................................................................28
SECTION 3.02. Existing Agreements.............................................................29
SECTION 3.03. Borrowings......................................................................31
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Corporate Existence and Power...................................................32
SECTION 4.02. Corporate and Governmental Authorization; No
Contravention...................................................................32
SECTION 4.03. Binding Effect..................................................................32
SECTION 4.04. Litigation......................................................................33
SECTION 4.05. Not an Investment Company.......................................................33
ARTICLE 5
COVENANTS
SECTION 5.01. Information.....................................................................33
SECTION 5.02. Payment of Obligations..........................................................34
SECTION 5.03. Maintenance of Property; Insurance..............................................34
SECTION 5.04. Conduct of Business and Maintenance of Existence................................35
SECTION 5.05. Compliance with Laws............................................................35
SECTION 5.06. Inspection of Property, Books and Records; Confidentiality......................36
SECTION 5.07. Consolidations, Mergers and Sales of Assets.....................................37
SECTION 5.08. Use of Proceeds.................................................................38
SECTION 5.09. Transactions with Affiliates....................................................38
SECTION 5.10. Subsidiary Guarantors...........................................................39
ARTICLE 6
DEFAULTS
SECTION 6.01. Events of Defaults..............................................................39
SECTION 6.02. Notice of Default...............................................................41
ARTICLE 7
THE AGENT
SECTION 7.01. Appointment and Authorization...................................................42
SECTION 7.02. Agent and Affiliates............................................................42
SECTION 7.03. Action by Agent.................................................................42
SECTION 7.04. Consultation with Experts.......................................................42
SECTION 7.05. Limits of Liability.............................................................42
SECTION 7.06. Indemnification.................................................................43
SECTION 7.07. Credit Decision.................................................................43
SECTION 7.08. Successor Agent.................................................................43
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
SECTION 7.09. Agent's Fee.....................................................................44
ARTICLE 8
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair........................44
SECTION 8.02. Illegality......................................................................45
SECTION 8.03. Increased Cost and Reduced Return...............................................45
SECTION 8.04. Taxes...........................................................................47
SECTION 8.05. Base Rate Loans Substituted for Affected Fixed Rate Loans.......................49
SECTION 8.06. Substitution of Bank............................................................50
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. Notices.........................................................................50
SECTION 9.02. No Waivers......................................................................51
SECTION 9.03. Expenses; Indemnification.......................................................51
SECTION 9.04. Sharing of Set-Offs.............................................................52
SECTION 9.05. Amendments and Waivers..........................................................52
SECTION 9.06. Successors and Assigns..........................................................52
SECTION 9.07. Collateral......................................................................55
SECTION 9.08. Governing Law...................................................................55
SECTION 9.09. Counterparts; Integration.......................................................55
SECTION 9.10. Waiver of Jury Trial............................................................55
SECTION 9.11. Judgment Currency...............................................................55
SECTION 9.12. Judicial Proceedings............................................................56
Commitment Schedule
Pricing Schedule
Exhibit A - Promissory Note
Exhibit B - Money Market Quote Request
Exhibit C - Invitation for Money Market Quotes
Exhibit D - Money Market Quote
Exhibit E - Opinion of Chief Corporate Counsel of the Parent Guarantor
Exhibit F - Opinion of Special Counsel for the Borrower
Exhibit G - Opinion of Special Counsel for the Parent Guarantor
Exhibit H - Opinion of Special Counsel for the Agent
Exhibit I - Assignment and Assumption Agreement
Exhibit J - Form of Parent Guarantee
Exhibit K - Existing Five-Year Agreement Pricing Schedule
</TABLE>
iii
<PAGE> 5
364-DAY CREDIT AGREEMENT
AGREEMENT dated as of February 12, 1999 among TYCO INTERNATIONAL GROUP
S.A., the BANKS listed on the signature pages hereof and MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as Agent.
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as used herein, have
the following meanings:
"ABSOLUTE RATE AUCTION" means a solicitation of Money Market Quotes
setting forth Money Market Absolute Rates pursuant to Section 2.03.
"ADJUSTED CD RATE" has the meaning set forth in Section 2.07(b).
"ADMINISTRATIVE QUESTIONNAIRE" means, with respect to each Bank, an
administrative questionnaire in the form prepared by the Agent and submitted to
the Agent (with a copy to the Borrower) duly completed by such Bank.
"AFFILIATE" means (i) any Person that directly, or indirectly through
one or more intermediaries, controls the Borrower (a "Controlling Person") or
(ii) any Person (other than the Borrower or a Subsidiary) which is controlled by
or is under common control with a Controlling Person. As used herein, the term
"control" means possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through
the ownership of voting securities, by contract or otherwise. The fact that an
Affiliate of a Person is a member of a law firm that renders services to such
Person or its Affiliates does not mean that the law firm is an Affiliate of such
Person.
"AGENT" means Morgan Guaranty Trust Company of New York in its capacity
as administrative agent for the Banks under the Financing Documents, any
successor agent that becomes the Agent pursuant to Section 7.08, and the
respective corporate successors of the foregoing acting in such capacity.
<PAGE> 6
"APPLICABLE LENDING OFFICE" means, with respect to any Bank, (i) in the
case of its Domestic Loans, its Domestic Lending Office, (ii) in the case of its
Euro-Dollar Loans, its Euro-Dollar Lending Office and (iii) in the case of its
Money Market Loans, its Money Market Lending Office.
"ASSESSMENT RATE" has the meaning set forth in Section 2.07(b).
"ASSIGNEE" has the meaning set forth in Section 9.06(c).
"BANK" means each bank listed on the signature pages hereof, each
financial institution which becomes a Bank pursuant to Section 2.17, each
Assignee which becomes a Bank pursuant to Section 9.06(c), and the respective
corporate successors of the foregoing.
"BANK AFFILIATE" means, with respect to the Agent or any Bank, any
Person controlling, controlled by or under common control with the Agent or such
Bank, as the case may be.
"BASE RATE" means, for any day, a rate per annum equal to the higher of
(i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the Federal
Funds Rate for such day.
"BASE RATE LOAN" means a Committed Loan which bears interest at the
Base Rate pursuant to the applicable Notice of Committed Borrowing or Notice of
Interest Rate Election or the provisions of Section 2.07(a) or Article 8.
"BORROWER" means Tyco International Group S.A., a Luxembourg
company, and its successors.
"BORROWING" has the meaning set forth in Section 1.02.
"CD BASE RATE" has the meaning set forth in Section 2.07(b).
"CD LOAN" means a Committed Loan which bears interest at a CD Rate
pursuant to the applicable Notice of Committed Borrowing or Notice of Interest
Rate Election.
"CD MARGIN" means a rate per annum determined daily in accordance with
the Pricing Schedule.
"CD RATE" means a rate of interest determined pursuant to Section
2.07(b) on the basis of an Adjusted CD Rate.
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<PAGE> 7
"CD REFERENCE BANKS" means The Hongkong and Shanghai Banking
Corporation Limited, Commerzbank AG and Morgan Guaranty Trust Company of New
York.
"COMMITMENT" means (i) with respect to each Bank listed on the
Commitment Schedule, the amount set forth opposite the name of such Bank on the
Commitment Schedule and (ii) with respect to any financial institution which
becomes a Bank pursuant to Section 2.17 or any Assignee, the amount of the
Commitment assumed by it pursuant to Section 2.17 or 9.06(c), as the case may
be, in each case as such amount may be changed from time to time pursuant to
Section 2.09, 2.17 or 9.06(c).
"COMMITMENT SCHEDULE" means the Commitment Schedule attached
hereto.
"COMMITTED BORROWING" has the meaning set forth in Section 1.02.
"COMMITTED LOAN" means a loan made by a Bank pursuant to Section 2.01;
provided that, if any such loan or loans (or portions thereof) are combined or
subdivided pursuant to a Notice of Interest Rate Election, the term Committed
Loan shall refer to the combined principal amount resulting from such
combination or to each of the separate principal amounts resulting from such
subdivision, as the case may be.
"CONDUIT" means a special purpose corporation which is engaged in
making, purchasing or otherwise investing in commercial loans in the ordinary
course of its business.
"CONDUIT DESIGNATION" has the meaning set forth in Section 9.06(f).
"CONSENTS" has the meaning set forth in Section 4.01.
"DEBT RATING" means a rating of the Borrower's long-term debt which is
not secured or supported by a guarantee, letter of credit or other form of
credit enhancement. If a Debt Rating by a Rating Agency is required to be at or
above a specified level and such Rating Agency shall have changed its system of
classifications after the date hereof, the requirement will be met if the Debt
Rating by such Rating Agency is at or above the new rating which most closely
corresponds to the specified level under the old rating system.
"DEFAULT" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
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<PAGE> 8
"DOMESTIC BUSINESS DAY" means any day except a Saturday, Sunday or
other day on which commercial banks in New York City are authorized by law to
close.
"DOMESTIC LENDING OFFICE" means, as to each Bank, its office located at
its address set forth in its Administrative Questionnaire (or identified in its
Administrative Questionnaire as its Domestic Lending Office) or such other
office as such Bank may hereafter designate as its Domestic Lending Office by
notice to the Borrower and the Agent; provided that any Bank may so designate
separate Domestic Lending Offices for its Base Rate Loans, on the one hand, and
its CD Loans, on the other hand, in which case all references herein to the
Domestic Lending Office of such Bank shall be deemed to refer to either or both
of such offices, as the context may require.
"DOMESTIC LOANS" means CD Loans or Base Rate Loans or both.
"DOMESTIC RESERVE PERCENTAGE" has the meaning set forth in Section
2.07(b).
"EFFECTIVE DATE" means the date this Agreement becomes effective in
accordance with Section 3.01.
"ENVIRONMENTAL LAWS" means any and all federal, state, local and
foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and other governmental restrictions relating to
the environment, the effect of the environment on human health or to emissions,
discharges or releases of pollutants, contaminants, hazardous substances or
wastes into the environment including, without limitation, ambient air, surface
water, ground water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, hazardous substances or wastes or the
clean-up or other remediation thereof.
"EURO-DOLLAR BUSINESS DAY" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Bank, its office, branch
or affiliate located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its
Euro-Dollar Lending Office) or such other office, branch or affiliate of such
Bank as it may hereafter designate as its Euro-Dollar Lending Office by notice
to the Borrower and the Agent.
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<PAGE> 9
"EURO-DOLLAR LOAN" means a Committed Loan which bears interest at a
Euro-Dollar Rate pursuant to the applicable Notice of Committed Borrowing or
Notice of Interest Rate Election.
"EURO-DOLLAR MARGIN" means a rate per annum determined daily in
accordance with the Pricing Schedule.
"EURO-DOLLAR RATE" means a rate of interest determined pursuant to
Section 2.07(c) on the basis of a London Interbank Offered Rate.
"EURO-DOLLAR REFERENCE BANKS" means the principal London offices of The
Hongkong and Shanghai Banking Corporation Limited, Commerzbank AG and Morgan
Guaranty Trust Company of New York.
"EURO-DOLLAR RESERVE PERCENTAGE" has the meaning set forth in Section
2.15.
"EVENT OF DEFAULT" has the meaning set forth in Section 6.01.
"EXISTING CREDIT AGREEMENTS" means the Existing 364-Day Agreement and
the Existing Five-Year Agreement.
"EXISTING FIVE-YEAR AGREEMENT" means the Extendible 364-Day Credit
Agreement dated as of February 13, 1998, among the Borrower, the banks listed
therein and Morgan Guaranty Trust Company of New York, as agent for such banks,
as amended to the Effective Date.
"EXISTING 364-DAY AGREEMENT" means the 364-Day Credit Agreement dated
as of February 13, 1998, among the Borrower, the banks listed therein and Morgan
Guaranty Trust Company of New York, as agent for such banks, as amended to the
Effective Date.
"FACILITY FEE RATE" means a rate per annum determined daily in
accordance with the Pricing Schedule.
"FEDERAL FUNDS RATE" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Domestic Business Day
next succeeding such day, provided that (i) if such day is not a Domestic
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Domestic Business Day as so published on the
next succeeding
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<PAGE> 10
Domestic Business Day, and (ii) if no such rate is so published on such next
succeeding Domestic Business Day, the Federal Funds Rate for such day shall be
the average rate quoted to Morgan Guaranty Trust Company of New York on such day
on such transactions as determined by the Agent.
"FINAL MATURITY DATE" means the first anniversary of the Termination
Date or, if such day is not a Euro-Dollar Business Day, the next preceding Euro-
Dollar Business Day.
"FINANCING DOCUMENTS" means this Agreement, the Subsidiary Guarantees,
the Promissory Notes and the Parent Guarantee.
"FIXED RATE LOANS" means CD Loans or Euro-Dollar Loans or Money Market
Loans (excluding Money Market LIBOR Loans bearing interest at the Base Rate
pursuant to Section 8.01(a)) or any combination of the foregoing.
"GROUP OF LOANS" means, at any time, a group of Loans consisting of (i)
all Committed Loans which are Base Rate Loans at such time, (ii) all Euro-Dollar
Loans having the same Interest Period at such time or (iii) all CD Loans having
the same Interest Period at such time, provided that, if a Committed Loan of any
particular Bank is converted to or made as a Base Rate Loan pursuant to Article
8, such Loan shall be included in the same Group or Groups of Loans from time to
time as it would have been in if it had not been so converted or made.
"INDEMNITEE" has the meaning set forth in Section 9.03(b).
"INDENTURE" means the Indenture dated as of April 23, 1998 among the
Borrower, the Parent Guarantor and The Bank of New York, as Trustee, as amended
or supplemented from time to time.
"INTEREST PERIOD" means: (1) with respect to each Euro-Dollar Loan, the
period commencing on the date of borrowing specified in the applicable Notice of
Borrowing or on the date specified in an applicable Notice of Interest Rate
Election and ending one, two, three or six months thereafter (or such other
period of time as may at the time be mutually agreed by the Borrower and the
Banks), as the Borrower may elect in such notice; provided that:
(a) any Interest Period which would otherwise end on a day
which is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar Business
Day falls in another calendar month, in which case such Interest Period
shall end on the next preceding Euro-Dollar Business Day; and
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<PAGE> 11
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Euro-Dollar Business Day of a
calendar month;
(2) with respect to each CD Loan, the period commencing on the date of
borrowing specified in the applicable Notice of Borrowing or on the date
specified in an applicable Notice of Interest Rate Election and ending 30, 60,
90 or 180 days thereafter (or such other period of time as may at the time be
mutually agreed by the Borrower and the Banks), as the Borrower may elect in
such notice; provided that any Interest Period which would otherwise end on a
day which is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day;
(3) with respect to each Money Market LIBOR Loan, the period
commencing on the date of borrowing specified in the applicable Notice of
Borrowing and ending such whole number of months thereafter as the Borrower may
elect in accordance with Section 2.03; provided that:
(a) any Interest Period which would otherwise end on a day
which is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar Business
Day falls in another calendar month, in which case such Interest Period
shall end on the next preceding Euro-Dollar Business Day; and
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Euro-Dollar Business Day of a
calendar month; and
(4) with respect to each Money Market Absolute Rate Loan, the period
commencing on the date of borrowing specified in the applicable Notice of
Borrowing and ending such number of days thereafter (but not less than 30 days)
as the Borrower may elect in accordance with Section 2.03; provided that any
Interest Period which would otherwise end on a day which is not a Euro-Dollar
Business Day shall be extended to the next succeeding Euro-Dollar Business Day;
and
provided further that:
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<PAGE> 12
(x) any Interest Period applicable to any Loan which begins
before the Termination Date and would otherwise end after the
Termination Date shall end on the Termination Date ; and
(y) any Interest Period applicable to any Loan which would
otherwise end after the Final Maturity Date shall end on the Final
Maturity Date.
"LIBOR AUCTION" means a solicitation of Money Market Quotes setting
forth Money Market Margins based on the London Interbank Offered Rate pursuant
to Section 2.03.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For the purposes of this Agreement, the Borrower or any Subsidiary shall be
deemed to own subject to a Lien any asset which it has acquired or holds subject
to the interest of a vendor or lessor under any conditional sale agreement,
capital lease or other title retention agreement (other than an operating lease)
relating to such asset.
"LOAN" means a Domestic Loan or a Euro-Dollar Loan or a Money Market
Loan and "LOANS" means Domestic Loans or Euro-Dollar Loans or Money Market Loans
or any combination of the foregoing.
"LONDON INTERBANK OFFERED RATE" has the meaning set forth in Section
2.07(c).
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the
business, consolidated financial position or consolidated results of operations
of the Parent Guarantor and its Consolidated Subsidiaries, considered as a
whole, or (ii) the ability of the Obligors to perform their obligations under
the Financing Documents.
"MONEY MARKET ABSOLUTE RATE" has the meaning set forth in Section
2.03(d).
"MONEY MARKET ABSOLUTE RATE LOAN" means a loan to be made by a Bank
pursuant to an Absolute Rate Auction.
"MONEY MARKET BORROWING" has the meaning set forth in Section 1.02.
"MONEY MARKET LENDING OFFICE" means, as to each Bank, its Domestic
Lending Office or such other office, branch or affiliate of such Bank as it may
8
<PAGE> 13
hereafter designate as its Money Market Lending Office by notice to the Borrower
and the Agent; provided that any Bank may from time to time by notice to the
Borrower and the Agent designate separate Money Market Lending Offices for its
Money Market LIBOR Loans, on the one hand, and its Money Market Absolute Rate
Loans, on the other hand, in which case all references herein to the Money
Market Lending Office of such Bank shall be deemed to refer to either or both of
such offices, as the context may require.
"MONEY MARKET LIBOR LOAN" means a loan to be made by a Bank pursuant to
a LIBOR Auction (including such a loan bearing interest at the Base Rate
pursuant to Section 8.01(a)).
"MONEY MARKET LOAN" means a Money Market LIBOR Loan or a Money
Market Absolute Rate Loan.
"MONEY MARKET MARGIN" has the meaning set forth in Section 2.03(d).
"MONEY MARKET QUOTE" means an offer by a Bank to make a Money Market
Loan in accordance with Section 2.03.
"MOODY'S" means Moody's Investors Service, Inc., or any successor to
such corporation's business of rating debt securities.
"NOTICE OF BORROWING" means a Notice of Committed Borrowing (as defined
in Section 2.02 or a Notice of Money Market Borrowing (as defined in Section
2.03(f)).
"NOTICE OF INTEREST RATE ELECTION" has the meaning set forth in Section
2.16.
"OBLIGOR" means, at any time, the Borrower, the Parent Guarantor and
each Subsidiary Guarantor at such time.
"PARENT" means, with respect to any Bank, any Person controlling such
Bank.
"PARENT GUARANTOR" means Tyco International Ltd., a Bermuda company,
and its successors.
"PARENT GUARANTEE" means an Amended and Restated Parent Guarantee
Agreement between the Parent Guarantor and the Agent for the benefit of the
Banks, substantially in the form of Exhibit J, as amended from time to time.
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<PAGE> 14
"PARTICIPANT" has the meaning set forth in Section 9.06(b).
"PERSON" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
"PRICING SCHEDULE" means the Pricing Schedule attached hereto.
"PRIME RATE" means the rate of interest publicly announced by Morgan
Guaranty Trust Company of New York in New York City from time to time as its
Prime Rate.
"PROMISSORY NOTES" means promissory notes of the Borrower,
substantially in the form of Exhibit A hereto, evidencing the obligation of the
Borrower to repay the Loans, and "PROMISSORY NOTE" means any one of such
promissory notes issued hereunder.
"PROPERTY" means any interest of any kind in any property or assets,
whether real, mixed or personal and whether tangible or intangible.
"QUARTERLY PAYMENT DATES" means each March 31, June 30, September 30
and December 31.
"RATING AGENCY" means S&P or Moody's.
"REFERENCE BANKS" means the CD Reference Banks or the Euro-Dollar
Reference Banks, as the context may require, and "REFERENCE BANK" means any one
of such Reference Banks.
"REGULATION U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"REQUIRED BANKS" means at any time Banks having more than 60% of the
aggregate amount of the Commitments or, if the Commitments shall have been
terminated, holding Promissory Notes evidencing more than 60% of the aggregate
unpaid principal amount of the Loans.
"RESPONSIBLE OFFICER" means any of the following: the Chairman,
President, Vice President and Chief Financial Officer, Treasurer or Secretary of
the Borrower or a Managing Director of the Borrower.
"REVOLVING CREDIT LOAN" means a loan made or to be made by a Bank
pursuant to Section 2.01(a).
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<PAGE> 15
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., or any successor to its business of rating debt
securities.
"SIGNIFICANT SUBSIDIARY" means, at any date, any Subsidiary of the
Borrower which is a "Significant Subsidiary" as defined in the Parent Guarantee
at such date.
"SUBSIDIARY" means, with respect to any Person, any corporation or
other entity of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions are at the time directly or indirectly owned by
such Person; unless otherwise specified, Subsidiary means a Subsidiary of the
Borrower.
"SUBSIDIARY GUARANTOR" has the meaning set forth in the Parent
Guarantee.
"TERMINATION DATE" means February 11, 2000, or, if such day is not a
Euro-Dollar Business Day, the next preceding Euro-Dollar Business Day.
"TERM LOAN" means a loan made or to be made by a Bank pursuant to
Section 2.01(b).
"TYCOLUX DEBT SECURITIES" means any unsecured debt securities issued by
the Borrower pursuant to the Indenture.
"UNITED STATES" means the United States of America, including the
States and the District of Columbia, but excluding its territories and
possessions.
"WHOLLY-OWNED CONSOLIDATED SUBSIDIARY" has the meaning set forth in
the Parent Guarantee.
SECTION 1.02. Types of Borrowings. The term "Borrowing" denotes the
aggregation of Loans of one or more Banks to be made to the Borrower pursuant to
Article 2 on a single date and for a single Interest Period. Borrowings are
classified for purposes of this Agreement either by reference to the pricing of
Loans comprising such Borrowing (e.g., a "Euro-Dollar Borrowing" is a Borrowing
comprised of Euro-Dollar Loans) or by reference to the provisions of Article 2
under which participation therein is determined (i.e., a "Committed Borrowing"
is a Borrowing under Section 2.01 in which all Banks participate in proportion
to their Commitments, while a "Money Market Borrowing" is a Borrowing under
Section 2.03 in which the Bank participants are determined on the basis of their
bids in accordance therewith) or by reference to the maturity of
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<PAGE> 16
Loans comprising such Borrowing (e.g., a "TERM BORROWING" is a Borrowing
comprised of Term Loans).
ARTICLE 2
THE CREDITS
SECTION 2.01. Commitments to Lend. (a) Revolving Credit Loans. Each
Bank severally agrees, on the terms and conditions set forth in this Agreement,
to make loans to the Borrower pursuant to this Section 2.01 from time to time
prior to the Termination Date in amounts such that the aggregate principal
amount of Committed Loans by such Bank at any one time outstanding shall not
exceed the amount of its Commitment. Each Borrowing under this Section shall be
in an aggregate principal amount of $10,000,000 or any larger multiple of
$1,000,000 (except that any such Borrowing may be in the aggregate amount
available in accordance with Section 3.03(b)) and shall be made from the several
Banks ratably in proportion to their respective Commitments. Within the
foregoing limits, the Borrower may borrow under this Section, repay or, to the
extent permitted by Section 2.11, prepay Loans and reborrow at any time prior to
the Termination Date under this Section 2.01.
(b) Term Loans. Each Bank severally agrees, on the terms and conditions
set forth in this Agreement, to make a loan to the Borrower on the Termination
Date in an aggregate amount up to but not exceeding the amount of its
Commitment.
SECTION 2.02. Notice of Committed Borrowing. The Borrower shall give
the Agent notice (a "NOTICE OF COMMITTED BORROWING") not later than 11:00 A.M.
(New York City time) on (x) the date of each Base Rate Borrowing, (y) the second
Domestic Business Day before each CD Borrowing and (z) the third Euro-Dollar
Business Day before each Euro-Dollar Borrowing, specifying:
(a) the date of such Borrowing, which shall be a Domestic Business Day
in the case of a Domestic Borrowing or a Euro-Dollar Business Day in the case of
a Euro-Dollar Borrowing,
(b) the aggregate amount of such Borrowing,
(c) whether the Loans comprising such Borrowing are to bear interest
initially at the Base Rate, a CD Rate or a Euro-Dollar Rate, and
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(d) in the case of a Fixed Rate Borrowing, the duration of the initial
Interest Period applicable thereto, subject to the provisions of the definition
of Interest Period.
SECTION 2.03. The Money Market Borrowings.
(a) The Money Market Option. In addition to Committed Borrowings
pursuant to Section 2.01, the Borrower may, as set forth in this Section,
request the Banks, at any time prior to the Termination Date, to make offers to
make Money Market Loans to the Borrower. The Banks may, but shall have no
obligation to, make such offers and the Borrower may, but shall have no
obligation to, accept any such offers in the manner set forth in this Section.
(b) Money Market Quote Request. When the Borrower wishes to request
offers to make Money Market Loans under this Section, it shall transmit to the
Agent by telex or facsimile transmission a Money Market Quote Request
substantially in the form of Exhibit B hereto so as to be received no later than
10:30 A.M. (New York City time) on (x) the fifth Euro-Dollar Business Day prior
to the date of Borrowing proposed therein, in the case of a LIBOR Auction or (y)
the Domestic Business Day next preceding the date of Borrowing proposed therein,
in the case of an Absolute Rate Auction (or, in either case, such other time or
date as the Borrower and the Agent shall have mutually agreed and shall have
notified to the Banks not later than the date of the Money Market Quote Request
for the first LIBOR Auction or Absolute Rate Auction for which such change is to
be effective), specifying:
(i) the proposed date of Borrowing, which shall be a
Euro-Dollar Business Day in the case of a LIBOR Auction or a Domestic
Business Day in the case of an Absolute Rate Auction,
(ii) the aggregate amount of such Borrowing, which shall be
$10,000,000 or a larger multiple of $1,000,000,
(iii) the duration of the Interest Period applicable thereto,
subject to the provisions of the definition of Interest Period, and
(iv) whether the Money Market Quotes requested are to set
forth a Money Market Margin or a Money Market Absolute Rate.
The Borrower may request offers to make Money Market Loans for more than one
Interest Period in a single Money Market Quote Request. No Money Market Quote
Request shall be given within five Euro-Dollar Business Days (or such
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<PAGE> 18
other number of days as the Borrower and the Agent may agree) of any other Money
Market Quote Request.
(c) Invitation for Money Market Quotes. Promptly upon receipt of a
Money Market Quote Request, the Agent shall send to the Banks by telex or
facsimile transmission an Invitation for Money Market Quotes substantially in
the form of Exhibit C hereto, which shall constitute an invitation by the
Borrower to each Bank to submit Money Market Quotes offering to make the Money
Market Loans to which such Money Market Quote Request relates in accordance with
this Section.
(d) Submission and Contents of Money Market Quotes. (i) Each Bank may,
in its sole discretion, submit a Money Market Quote containing an offer or
offers to make Money Market Loans in response to any Invitation for Money Market
Quotes. Each Money Market Quote must comply with the requirements of this
subsection 2.03(d) and must be submitted to the Agent by telex or facsimile
transmission at its offices specified in or pursuant to Section 9.01 not later
than (x) 2:00 P.M. (New York City time) on the fourth Euro-Dollar Business Day
prior to the proposed date of Borrowing, in the case of a LIBOR Auction or (y)
9:30 A.M. (New York City time) on the proposed date of Borrowing, in the case of
an Absolute Rate Auction (or, in either case, such other time or date as the
Borrower and the Agent shall have mutually agreed and shall have notified to the
Banks not later than the date of the Money Market Quote Request for the first
LIBOR Auction or Absolute Rate Auction for which such change is to be
effective); provided that Money Market Quotes submitted by the Agent (or any
affiliate of the Agent) in the capacity of a Bank may be submitted, and may only
be submitted, if the Agent or such affiliate notifies the Borrower of the terms
of the offer or offers contained therein not later than (x) one hour prior to
the deadline for the other Banks, in the case of a LIBOR Auction or (y) 15
minutes prior to the deadline for the other Banks, in the case of an Absolute
Rate Auction. Subject to Articles 3 and 6, any Money Market Quote so made shall
be irrevocable except with the written consent of the Agent given on the
instructions of the Borrower.
(ii) Each Money Market Quote shall be in substantially the
form of Exhibit D hereto and shall in any case specify:
(A) the proposed date of Borrowing and the Interest
Period therefor,
(B) the principal amount of the Money Market Loan for
which each such offer is being made, which principal amount
(w) may be greater than or less than the Commitment of the
quoting Bank, (x) must be $5,000,000 or a larger multiple of
$1,000,000,
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(y) may not exceed the principal amount of Money Market Loans
for which offers were requested and (z) may be subject to an
aggregate limitation as to the principal amount of Money
Market Loans for which offers being made by such quoting Bank
may be accepted,
(C) in the case of a LIBOR Auction, the margin above
or below the applicable London Interbank Offered Rate (the
"Money Market Margin") offered for each such Money Market
Loan, expressed as a percentage (specified to the nearest
1/10,000th of 1%) to be added to or subtracted from the
applicable London Interbank Offered Rate,
(D) in the case of an Absolute Rate Auction, the rate
of interest per annum (specified to the nearest 1/10,000th of
1%) (the "Money Market Absolute Rate") offered for each such
Money Market Loan, and
(E) the identity of the quoting Bank.
A Money Market Quote may set forth up to five separate offers by the quoting
Bank with respect to each Interest Period specified in the related Invitation
for Money Market Quotes.
(iii) Any Money Market Quote shall be disregarded if it:
(A) is not substantially in conformity with Exhibit D
hereto or does not specify all of the information required by
subsection 2.03(d)(ii);
(B) contains qualifying, conditional or similar
language;
(C) proposes terms other than or in addition to those
set forth in the applicable Invitation for Money Market
Quotes; or
(D) arrives after the time set forth in subsection
2.03(d)(i).
(e) Notice to Borrower. The Agent shall promptly notify the Borrower of
the terms (x) of any Money Market Quote submitted by a Bank that is in
accordance with subsection 2.03(d) and (y) of any Money Market Quote that
amends, modifies or is otherwise inconsistent with a previous Money Market Quote
submitted by such Bank with respect to the same Money Market Quote Request. Any
such subsequent Money Market Quote shall be disregarded by the
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Agent unless such subsequent Money Market Quote is submitted solely to correct a
manifest error in such former Money Market Quote. The Agent's notice to the
Borrower shall specify (A) the aggregate principal amount of Money Market Loans
for which offers have been received for each Interest Period specified in the
related Money Market Quote Request, (B) the respective principal amounts and
Money Market Margins or Money Market Absolute Rates, as the case may be, so
offered and (C) if applicable, limitations on the aggregate principal amount of
Money Market Loans for which offers in any single Money Market Quote may be
accepted.
(f) Acceptance and Notice by Borrower. Not later than 10:30 A.M. (New
York City time) on (x) the third Euro-Dollar Business Day prior to the proposed
date of Borrowing, in the case of a LIBOR Auction or (y) the proposed date of
Borrowing, in the case of an Absolute Rate Auction (or, in either case, such
other time or date as the Borrower and the Agent shall have mutually agreed and
shall have notified to the Banks not later than the date of the Money Market
Quote Request for the first LIBOR Auction or Absolute Rate Auction for which
such change is to be effective), the Borrower shall notify the Agent of its
acceptance or non-acceptance of the offers so notified to it pursuant to
subsection 2.03(e) (and the failure of the Borrower to give such notice by such
time shall constitute non-acceptance) and the Agent shall promptly notify each
affected Bank. In the case of acceptance, such notice (a "Notice of Money Market
Borrowing") shall specify the aggregate principal amount of offers for each
Interest Period that are accepted. The Borrower may, but shall not be obligated
to, accept any Money Market Quote in whole or in part; provided that:
(i) the aggregate principal amount of each Money Market
Borrowing may not exceed the applicable amount set forth in the related
Money Market Quote Request,
(ii) the principal amount of each Money Market Borrowing must
be $10,000,000 or a larger multiple of $1,000,000,
(iii) acceptance of offers may only be made on the basis of
ascending order of Money Market Margins or Money Market Absolute Rates,
as the case may be, in each case beginning with the lowest rate so
offered, and
(iv) the Borrower may not accept any offer where the Agent has
advised the Borrower that such offer is described in subsection
2.03(d)(iii) or that otherwise fails to comply with the requirements of
this Agreement.
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<PAGE> 21
(g) Allocation by Agent. If offers are made by two or more Banks with
the same Money Market Margins or Money Market Absolute Rates, as the case may
be, for a greater aggregate principal amount than the amount in respect of which
such offers are accepted for the related Interest Period, the principal amount
of Money Market Loans in respect of which such offers are accepted shall be
allocated by the Agent among such Banks as nearly as possible (in multiples of
$1,000,000, as the Agent may deem appropriate) in proportion to the aggregate
principal amounts of such offers. Determinations by the Agent of the amounts of
Money Market Loans shall be conclusive in the absence of manifest error.
SECTION 2.04. Notice to Banks; Funding of Loans.
(a) Upon receipt of a Notice of Borrowing, the Agent shall promptly
notify each Bank of the contents thereof and of such Bank's share (if any) of
such Borrowing and such Notice of Borrowing shall not thereafter be revocable by
the Borrower.
(b) Not later than 2:00 P.M. (New York City time) on the date of each
Borrowing, each Bank participating therein shall make available its share of
such Borrowing, in Federal or other funds immediately available in New York
City, to the Agent at its address referred to in Section 9.01. Unless the Agent
determines that any applicable condition specified in Article 3 has not been
satisfied or waived in accordance with Section 9.05, the Agent will make the
funds so received from the Banks available to the Borrower no later than 3:00
P.M. (New York City time) on such date, in Federal or other funds immediately
available in New York City, as directed by the Borrower.
(c) If any Bank makes a new Loan hereunder on any day on which the
Borrower is to repay all or any part of an outstanding Loan from such Bank, such
Bank shall apply the proceeds of its new Loan to make such repayment and only an
amount equal to the difference (if any) between the amount being borrowed and
the amount being repaid shall be made available by such Bank to the Agent as
provided in subsection 2.04(b), or remitted by the Borrower to the Agent as
provided in Section 2.12, as the case may be.
(d) Unless the Agent shall have received notice from a Bank prior to
the date of any Borrowing that such Bank will not make available to the Agent
such Bank's share of such Borrowing, the Agent may assume that such Bank has
made such share available to the Agent on the date of such Borrowing in
accordance with subsections (b) and (c) of this Section 2.04 and the Agent may,
in reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Bank shall not have so made
such share available to the Agent, such Bank and, if such Bank shall not have
paid
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<PAGE> 22
such amount to the Agent within two Domestic Business Days of the Agent's demand
therefor, the Borrower severally agree to repay to the Agent forthwith on demand
such corresponding amount together with interest thereon, for each day from the
date such amount is made available to the Borrower until the date such amount is
repaid to the Agent, at the Federal Funds Rate. If such Bank shall repay to the
Agent such corresponding amount, such amount so repaid shall constitute such
Bank's Loan included in such Borrowing for purposes of this Agreement.
(e) The failure of any Bank to make any Loan to be made by it on the
date specified therefor shall not relieve any other Bank of any obligation to
make a Loan on such date.
SECTION 2.05. Promissory Notes. (a) The Loans of each Bank shall be
evidenced by a single Promissory Note payable to the order of such Bank for the
account of its Applicable Lending Office in an amount equal to the aggregate
unpaid principal amount of such Bank's Loans.
(b) Each Bank may, by notice to the Borrower and the Agent, request
that its Loans of a particular type be evidenced by a separate Promissory Note
in an amount equal to the aggregate unpaid principal amount of such Loans. Each
such Promissory Note shall be in substantially the form of Exhibit A hereto with
appropriate modifications to reflect the fact that it evidences solely Loans of
the relevant type. Each reference in this Agreement to the "Promissory Note" of
such Bank shall be deemed to refer to and include any or all of such Promissory
Notes, as the context may require.
(c) Upon receipt of each Bank's Promissory Note pursuant to Section
3.01(b), the Agent shall forward such Promissory Note to such Bank. Each Bank
shall record the date, amount, type and maturity of each Loan made by it and the
date and amount of each payment of principal made by the Borrower with respect
thereto, and may, if such Bank so elects in connection with any transfer or
enforcement of its Promissory Note, endorse on the schedule forming a part
thereof appropriate notations to evidence the foregoing information with respect
to each such Loan then outstanding; provided that the failure of any Bank to
make any such recordation or endorsement shall not affect the obligations of the
Borrower hereunder or under the Promissory Notes. Each Bank is hereby
irrevocably authorized by the Borrower so to endorse its Promissory Note and to
attach to and make a part of its Promissory Note a continuation of any such
schedule as and when required.
SECTION 2.06. Maturity of Loans. (a) Each Revolving Credit Loan shall
mature, and the principal amount thereof shall be due and payable (together with
interest accrued thereon), on the Termination Date.
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<PAGE> 23
(b) Each Term Loan shall mature, and the principal amount thereof shall
be due and payable, together with accrued interest thereon, on the Final
Maturity Date.
(c) Each Money Market Loan included in any Money Market Borrowing shall
mature, and the principal amount thereof shall be due and payable (together with
interest accrued thereon), on the last day of the Interest Period applicable to
such Borrowing.
SECTION 2.07. Interest Rates. (a) Each Base Rate Loan shall bear
interest on the outstanding principal amount thereof, for each day from the date
such Loan is made until it becomes due, at a rate per annum equal to the Base
Rate for each such day. Such interest shall be payable at maturity, quarterly in
arrears on each Quarterly Payment Date prior to maturity and, with respect to
the principal amount of any Base Rate Loan converted to a CD Loan or a
Euro-Dollar Loan, on the date such amount is so converted. Any overdue principal
of or interest on any Base Rate Loan shall bear interest, payable on demand, for
each day from and including the date payment thereof was due to but excluding
the date of actual payment, at a rate per annum equal to the sum of 2% plus the
rate otherwise applicable to Base Rate Loans for each such day.
(b) Each CD Loan shall bear interest on the outstanding principal
amount thereof, for each day during each Interest Period applicable thereto, at
a rate per annum equal to the sum of the CD Margin for each such day plus the
applicable Adjusted CD Rate for such Interest Period; provided that if any CD
Loan shall, as a result of the further proviso to the definition of Interest
Period, have an Interest Period of less than 30 days, such CD Loan shall bear
interest during such Interest Period at the rate applicable to Base Rate Loans
during such period. Such interest shall be payable for each Interest Period on
the last day thereof and, if such Interest Period is longer than 90 days, at
intervals of 90 days after the first day thereof. Any overdue principal of or
interest on any CD Loan shall bear interest, payable on demand, for each day
from and including the date payment thereof was due to but excluding the date of
actual payment, at a rate per annum equal to the sum of 2% plus the higher of
(i) the sum of the CD Margin for each such day plus the Adjusted CD Rate
applicable to such Loan on the day before such payment was due and (ii) the rate
applicable to Base Rate Loans for each such day.
The "Adjusted CD Rate" applicable to any Interest Period means a rate
per annum determined pursuant to the following formula:
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<PAGE> 24
[ CDBR ]*
ACDR = [ ---------- ] + AR
[ 1.00 - DRP ]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve Percentage
AR = Assessment Rate
- ----------
* The amount in brackets being rounded upward, if
necessary, to the next higher 1/100 of 1%
The "CD BASE RATE" applicable to any Interest Period is the rate of
interest determined by the Agent to be the average (rounded upward, if
necessary, to the next higher 1/100 of 1%) of the prevailing rates per annum bid
at 10:00 A.M. (New York City time) (or as soon thereafter as practicable) on the
first day of such Interest Period by two or more New York certificate of deposit
dealers of recognized standing for the purchase at face value from each CD
Reference Bank of its certificates of deposit in an amount comparable to the
principal amount of the CD Loan of such CD Reference Bank to which such Interest
Period applies and having a maturity comparable to such Interest Period.
"DOMESTIC RESERVE PERCENTAGE" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including without limitation any
basic, supplemental or emergency reserves) for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of new non-personal time deposits in dollars in New York City having a
maturity comparable to the related Interest Period and in an amount of $100,000
or more. The Adjusted CD Rate shall be adjusted automatically on and as of the
effective date of any change in the Domestic Reserve Percentage.
"ASSESSMENT RATE" means for any day the annual assessment rate in
effect on such day which is payable by a member of the Bank Insurance Fund
classified as adequately capitalized and within supervisory subgroup "A" (or a
comparable successor assessment risk classification) within the meaning of 12
C.F.R. ss. 327.4(a) or any successor provision (a "BIF Member") to the Federal
Deposit Insurance Corporation (or any successor) for the Federal Deposit
Insurance Corporation's (or such successor's) insuring time deposits at offices
of such BIF Member in the United States. The Adjusted CD Rate shall be adjusted
automatically on and as of the effective date of any change in the Assessment
Rate.
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(c) Each Euro-Dollar Loan shall bear interest on the outstanding
principal amount thereof, for each day during each Interest Period applicable
thereto, at a rate per annum equal to the sum of the Euro-Dollar Margin for each
such day plus the applicable London Interbank Offered Rate for such Interest
Period. Such interest shall be payable for each Interest Period on the last day
thereof and, if such Interest Period is longer than three months, at intervals
of three months after the first day thereof.
The "LONDON INTERBANK OFFERED RATE" applicable to any Interest Period
means the average (rounded upward, if necessary, to the next higher 1/16 of 1%)
of the respective rates per annum at which deposits in dollars are offered to
each of the Euro-Dollar Reference Banks in the London interbank market at
approximately 11:00 A.M. (London time) two Euro-Dollar Business Days before the
first day of such Interest Period in an amount approximately equal to the
principal amount of the Euro-Dollar Loan of such Euro-Dollar Reference Bank to
which such Interest Period is to apply and for a period of time comparable to
such Interest Period.
(d) Any overdue principal of or interest on any Euro-Dollar Loan shall
bear interest, payable on demand, for each day from and including the date
payment thereof was due to but excluding the date of actual payment, at a rate
per annum equal to the sum of 2% plus the higher of (i) the sum of the
Euro-Dollar Margin for such day plus the London Interbank Offered Rate
applicable to such Loan on the day before such payment was due and (ii) the
Euro-Dollar Margin for such day plus the quotient obtained (rounded upward, if
necessary, to the next higher 1/100 of 1%) by dividing (x) the average (rounded
upward, if necessary, to the next higher 1/16 of 1%) of the respective rates per
annum at which one day (or, if such amount due remains unpaid more than three
Euro-Dollar Business Days, then for such other period of time not longer than
six months as the Agent may select) deposits in dollars in an amount
approximately equal to such overdue payment due to each of the Euro-Dollar
Reference Banks are offered to such Euro-Dollar Reference Bank in the London
interbank market for the applicable period determined as provided above by (y)
1.00 minus the Euro-Dollar Reserve Percentage (or, if the circumstances
described in subsection (a) or (b) of Section 8.01 shall exist, at a rate per
annum equal to the sum of 2% plus the rate applicable to Base Rate Loans for
such day).
(e) Subject to Section 8.01(a), each Money Market LIBOR Loan shall bear
interest on the outstanding principal amount thereof, for each day during the
Interest Period applicable thereto, at a rate per annum equal to the sum of the
London Interbank Offered Rate for such Interest Period (determined in accordance
with Section 2.07(c) as if the related Money Market LIBOR Borrowing were a
Euro-Dollar Borrowing) plus (or minus) the Money Market Margin quoted by the
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<PAGE> 26
Bank making such Loan in accordance with Section 2.03. Each Money Market
Absolute Rate Loan shall bear interest on the outstanding principal amount
thereof, for each day during the Interest Period applicable thereto, at a rate
per annum equal to the Money Market Absolute Rate quoted by the Bank making such
Loan in accordance with Section 2.03. Such interest shall be payable for each
Interest Period on the last day thereof and, if such Interest Period is longer
than three months, at intervals of three months after the first day thereof. Any
overdue principal of or interest on any Money Market Loan shall bear interest,
payable on demand, for each day from and including the date payment thereof was
due to but excluding the date of actual payment, at a rate per annum equal to
the sum of 2% plus the Base Rate for each such day.
(f) The Agent shall determine each interest rate applicable to the
Loans hereunder. The Agent shall give prompt notice to the Borrower and the
participating Banks of each rate of interest so determined, and its
determination thereof shall be conclusive in the absence of manifest error.
(g) Each Reference Bank agrees to use its best efforts to furnish
quotations to the Agent as contemplated by this Section. If any Reference Bank
does not furnish a timely quotation, the Agent shall determine the relevant
interest rate on the basis of the quotation or quotations furnished by the
remaining Reference Bank or Banks or, if none of such quotations is available on
a timely basis, the provisions of Section 8.01 shall apply.
SECTION 2.08. Facility Fee. (a) The Borrower shall pay to the Agent for
the account of the Banks ratably a facility fee at the Facility Fee Rate. Such
facility fee shall accrue (i) from and including the date hereof to but
excluding the Termination Date (or earlier date of termination of the
Commitments in their entirety), on the daily aggregate amount of the Commitments
(whether used or unused) and (ii) from and including the Termination Date (or
earlier date of termination of the Commitments in their entirety) to but
excluding the date the Loans shall be repaid in their entirety, on the daily
aggregate outstanding principal amount of the Loans.
(b) Accrued fees under this Section shall be payable quarterly in
arrears on each Quarterly Payment Date and upon the date of termination of the
Commitments in their entirety (and, if later, the date the Loans shall be repaid
in their entirety).
SECTION 2.09. Optional Termination or Reduction of Commitments. The
Borrower may, upon at least three Domestic Business Days' notice to the Agent,
(i) terminate the Commitments at any time, if no Loans are outstanding at such
time or (ii) ratably reduce from time to time by an aggregate amount of
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<PAGE> 27
$10,000,000 or any larger multiple thereof, the aggregate amount of the
Commitments in excess of the aggregate outstanding principal amount of the
Loans. Promptly after receiving a notice pursuant to this Section, the Agent
shall notify each Bank of the contents thereof.
SECTION 2.10. Mandatory Termination of Commitments. The Commitments
shall terminate on the Termination Date, and any Revolving Credit Loans then
outstanding (together with accrued interest thereon) shall be due and payable on
such date.
SECTION 2.11. Optional Prepayments. (a) The Borrower may (i) upon at
least one Domestic Business Day's notice to the Agent, prepay any Group of Base
Rate Loans (or any Money Market Borrowing bearing interest at the Base Rate
pursuant to Section 8.01(a)), (ii) upon at least three Domestic Business Days'
notice to the Agent, subject to Section 2.13, prepay any Group of CD Loans and
(iii) upon at least three Euro-Dollar Business Days' notice to the Agent,
subject to Section 2.13, prepay any Group of Euro-Dollar Loans, in whole at any
time, or from time to time in part in amounts aggregating $10,000,000 or any
larger multiple of $1,000,000, by paying the principal amount to be prepaid
together with accrued interest thereon to but not including the date of
prepayment. Each such optional prepayment shall be applied to prepay ratably the
Loans of the several Banks included in such Group of Loans (or such Money Market
Borrowing).
(b) Except as provided in Section 2.11(a)(i), the Borrower may not
prepay all or any portion of the principal amount of any Money Market Loan prior
to the maturity thereof.
(c) Upon receipt of a notice of prepayment pursuant to this Section,
the Agent shall promptly notify each Bank of the contents thereof and of such
Bank's ratable share (if any) of such prepayment and once notice is so given to
the Banks, the Borrower's notice of prepayment shall not thereafter be revocable
by the Borrower.
SECTION 2.12. General Provisions as to Payments. (a) The Borrower shall
make each payment of principal of, and interest on, the Loans and of fees
hereunder, not later than 2:00 P.M. (New York City time) on the date when due,
in Federal or other funds immediately available in New York City, to the Agent
at its address referred to in Section 9.01. The Agent will promptly distribute
to each Bank its ratable share of each such payment received by the Agent for
the respective accounts of the Banks. Whenever any payment of principal of, or
interest on, the Domestic Loans or of fees shall be due on a day which is not a
Domestic Business Day, the date for payment thereof shall be extended to the
next
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succeeding Domestic Business Day. Whenever any payment of principal of, or
interest on, the Euro-Dollar Loans shall be due on a day which is not a
Euro-Dollar Business Day, the date for payment thereof shall be extended to the
next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day
falls in another calendar month, in which case the date for payment thereof
shall be the next preceding Euro-Dollar Business Day. Whenever any payment of
principal of, or interest on, the Money Market Loans shall be due on a day which
is not a Euro-Dollar Business Day, the date for payment thereof shall be
extended to the next succeeding Euro-Dollar Business Day. If the date for any
payment of principal is extended by operation of law or otherwise, interest
thereon shall be payable for such extended time.
(b) Unless the Agent shall have received notice from the Borrower prior
to the date on which any payment is due to the Banks hereunder that the Borrower
will not make such payment in full, the Agent may assume that the Borrower has
made such payment in full to the Agent on such date and the Agent may, in
reliance upon such assumption, cause to be distributed to each Bank on such due
date an amount equal to the amount then due such Bank. If and to the extent that
the Borrower shall not have so made such payment, each Bank shall repay to the
Agent forthwith on demand such amount distributed to such Bank together with
interest thereon, for each day from the date such amount is distributed to such
Bank until the date such Bank repays such amount to the Agent, at the Federal
Funds Rate.
SECTION 2.13. Funding Losses. If the Borrower makes any payment of
principal with respect to any Fixed Rate Loan or any Fixed Rate Loan is
converted to a different type of Loan (pursuant to Article 2, 6 or 8 (other than
Section 8.02)) on any day other than the last day of an Interest Period
applicable thereto, or the last day of an applicable period fixed pursuant to
Section 2.07(d), or if the Borrower fails to borrow, prepay, convert or continue
any Fixed Rate Loans after notice has been given to any Bank in accordance with
Section 2.04(a), 2.11(c) or 2.16 (other than as a result of default by such
Bank), the Borrower shall reimburse each Bank within 15 days after written
demand for any resulting loss or expense reasonably incurred by it (or by an
existing or prospective Participant in the related Loan) in obtaining,
liquidating or employing deposits from third parties, but excluding loss of
margin for the period after any such payment or conversion or failure to borrow,
prepay, convert or continue; provided that such Bank shall have delivered to the
Borrower a certificate specifying in reasonable detail the calculation of, and
the reasons for, the amount of such loss or expense, which certificate shall be
conclusive in the absence of manifest error.
SECTION 2.14. Computation of Interest and Fees. Interest based on the
Prime Rate hereunder shall be computed on the basis of a year of 365 days (or
366
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<PAGE> 29
days in a leap year) and paid for the actual number of days elapsed (including
the first day but excluding the last day). All other interest and fees shall be
computed on the basis of a year of 360 days and paid for the actual number of
days elapsed (including the first day but excluding the last day).
SECTION 2.15. Regulation D Compensation. Each Bank may require the
Borrower to pay, contemporaneously with each payment of interest on the Euro-
Dollar Loans, additional interest on the related Euro-Dollar Loan of such Bank
at a rate per annum determined by such Bank up to but not exceeding the excess
of (i) (A) the applicable London Interbank Offered Rate divided by (B) one minus
the Euro-Dollar Reserve Percentage over (ii) the applicable London Interbank
Offered Rate. Any Bank wishing to require payment of such additional interest
(x) shall so notify the Borrower and the Agent, in which case such additional
interest on the Euro-Dollar Loans of such Bank shall be payable to such Bank at
the place indicated in such notice with respect to each Interest Period
commencing at least three Euro-Dollar Business Days after the giving of such
notice, and (y) shall notify the Borrower at least five Euro-Dollar Business
Days prior to each date on which interest is payable on the Euro-Dollar Loans of
the amount then due it under this Section.
"EURO-DOLLAR RESERVE PERCENTAGE" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of "Eurocurrency liabilities" (or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate on
Euro-Dollar Loans is determined or any category of extensions of credit or other
assets which includes loans by a non-United States office of any Bank to United
States residents).
SECTION 2.16. Method of Electing Interest Rates. (a) The Loans included
in each Committed Borrowing shall bear interest initially at the type of rate
specified by the Borrower in the applicable Notice of Committed Borrowing.
Thereafter, the Borrower may from time to time elect to change or continue the
type of interest rate borne by each Group of Loans (subject to subsection
2.16(d) of this Section and the provisions of Article 8), as follows:
(i) if such Loans are Base Rate Loans, the Borrower may elect
to convert such Loans to CD Loans as of any Domestic Business Day or to
Euro-Dollar Loans as of any Euro-Dollar Business Day;
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(ii) if such Loans are CD Loans, the Borrower may elect to
convert such Loans to Base Rate Loans or Euro-Dollar Loans or elect to
continue such Loans as CD Loans for an additional Interest Period,
subject to Section 2.13 if any such conversion is effective on any day
other than the last day of an Interest Period applicable to such Loans;
and
(iii) if such Loans are Euro-Dollar Loans, the Borrower may
elect to convert such Loans to Base Rate Loans or CD Loans or elect to
continue such Loans as Euro-Dollar Loans for an additional Interest
Period, subject to Section 2.13 if any such conversion is effective on
any day other than the last day of an Interest Period applicable to
such Loans.
Each such election shall be made by delivering a notice (a "Notice of Interest
Rate Election") to the Agent not later than 10:30 A.M. (New York City time) on
the third Euro-Dollar Business Day before the conversion or continuation
selected in such notice is to be effective (unless the relevant Loans are to be
converted from Domestic Loans of one type to Domestic Loans of the other type or
are CD Loans to be continued as CD Loans for an additional Interest Period, in
which case such notice shall be delivered to the Agent not later than 10:30 A.M.
(New York City time) on the second Domestic Business Day before such conversion
or continuation is to be effective). A Notice of Interest Rate Election may, if
it so specifies, apply to only a portion of the aggregate principal amount of
the relevant Group of Loans; provided that (i) such portion is allocated ratably
among the Loans comprising such Group and (ii) the portion to which such Notice
applies, and the remaining portion to which it does not apply, are each at least
$10,000,000 (unless such portion is comprised of Base Rate Loans). If no such
notice is timely received before the end of an Interest Period for any Group of
CD Loans or Euro-Dollar Loans, the Borrower shall be deemed to have elected that
such Group of Loans be converted to Base Rate Loans at the end of such Interest
Period.
(b) Each Notice of Interest Rate Election shall specify:
(i) the Group of Loans (or portion thereof) to which such
notice applies;
(ii) the date on which the conversion or continuation selected
in such notice is to be effective, which shall comply with the
applicable clause of subsection 2.16(a) above;
(iii) if the Loans comprising such Group are to be converted,
the new type of Loans and, if the Loans resulting from such conversion
are to be CD Loans or Euro-Dollar Loans, the duration of the next
succeeding Interest Period applicable thereto; and
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(iv) if such Loans are to be continued as CD Loans or
Euro-Dollar Loans for an additional Interest Period, the duration of
such additional Interest Period.
Each Interest Period specified in a Notice of Interest Rate Election shall
comply with the provisions of the definition of Interest Period.
(c) Promptly after receiving a Notice of Interest Rate Election from
the Borrower pursuant to subsection (a) above, the Agent shall notify each Bank
of the contents thereof and such notice shall not thereafter be revocable by the
Borrower.
(d) The Borrower shall not be entitled to elect to convert any
Committed Loans to, or continue any Committed Loans for an additional Interest
Period as, CD Loans or Euro-Dollar Loans if (i) the aggregate principal amounts
of any Group of CD Loans or Euro-Dollar Loans created or continued as a result
of such election would be less than $10,000,000 or (ii) a Default shall have
occurred and be continuing when the Borrower delivers notice of such election to
the Agent.
SECTION 2.17. Optional Increase in Commitments. At any time, if no
Default shall have occurred and be continuing, the Borrower may, if it so
elects, increase the aggregate amount of the Commitments, either by designating
a financial institution not theretofore a Bank to become a Bank (such
designation to be effective only with the prior written consent of the Agent,
which consent will not be unreasonably withheld) or by agreeing with an existing
Bank that such Bank's Commitment shall be increased. Upon execution and delivery
by the Borrower and such Bank or other financial institution of an instrument in
form reasonably satisfactory to the Agent, such existing Bank shall have a
Commitment as therein set forth or such other financial institution shall become
a Bank with a Commitment as therein set forth and all the rights and obligations
of a Bank with such a Commitment hereunder; provided:
(a) that the Borrower shall provide prompt notice of such increase to
the Agent, who shall promptly notify the Banks;
(b) that no Commitment of any Bank exceeds, as a result of such
increase, 10% of the aggregate amount of the Commitments; and
(c) that the amount of such increase, together with all other increases
in the aggregate amount of the Commitments pursuant to this Section 2.17 since
the date of this Agreement, does not exceed $750,000,000.
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Upon any increase in the aggregate amount of the Commitments pursuant
to this Section 2.17, within five Domestic Business Days, in the case of any
Group of Base Rate Loans then outstanding, and at the end of the then current
Interest Period with respect thereto, in the case of any Group of Euro-Dollar
Loans or CD Loans then outstanding, the Borrower shall prepay such Group in its
entirety and, to the extent the Borrower elects to do so and subject to the
conditions specified in Article 3, the Borrower shall reborrow Committed Loans
from the Banks in proportion to their respective Commitments after giving effect
to such increase, until such time as all outstanding Committed Loans are held by
the Banks in such proportion.
ARTICLE 3
CONDITIONS
SECTION 3.01. Effectiveness. This Agreement shall become effective on
the date that each of the following conditions shall have been satisfied (or
waived in accordance with Section 9.05):
(a) receipt by the Agent of counterparts hereof signed by each of the
parties hereto (or, in the case of any party as to which an executed counterpart
shall not have been received, receipt by the Agent in form satisfactory to it of
telegraphic, telex or other written confirmation from such party of execution of
a counterpart hereof by such party);
(b) receipt by the Agent of a duly executed Promissory Note for the
account of each Bank dated on or before the Effective Date complying with the
provisions of Section 2.05;
(c) receipt by the Agent of the Parent Guarantee, duly executed by the
Parent Guarantor;
(d) receipt by the Agent of an opinion of each of (i) Mark A. Belnick,
Executive Vice President and Chief Corporate Counsel of the Parent Guarantor,
substantially in the form of Exhibit E hereto, (ii) Beghin Nothar Feider Loeff
Claeys Verbeke, special Luxembourg counsel for the Borrower, substantially in
the form of Exhibit F hereto and (iii) Appleby, Spurling & Kempe, special
Bermuda counsel for the Parent Guarantor, substantially in the form of Exhibit G
hereto;
(e) receipt by the Agent of an opinion of Davis Polk & Wardwell,
special counsel for the Agent, substantially in the form of Exhibit H hereto and
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covering such additional matters relating to the transactions contemplated
hereby as the Required Banks may reasonably request;
(f) receipt by the Agent of all documents the Agent may reasonably
request relating to the existence of the Borrower and the Parent Guarantor, the
corporate authority for and the validity of this Agreement, the Parent Guarantee
and the Promissory Notes, and any other matters reasonably determined by the
Agent to be relevant hereto, all in form and substance reasonably satisfactory
to the Agent;
(g) receipt by the Agent of evidence satisfactory to it that all
principal of any loans outstanding under, and all accrued interest and fees
under, the Existing 364-Day Agreement shall have been paid in full; and
(h) receipt by the Agent of payment of participation fees for the
account of the Banks in the respective amounts heretofore mutually agreed;
provided that this Agreement shall not become effective or be binding on any
party hereto unless all of the foregoing conditions are satisfied not later than
February 15, 1999. The Agent shall promptly notify the Borrower, each Bank and
each other party to the Existing Credit Agreements of the Effective Date, and
such notice shall be conclusive and binding on all parties to the Financing
Documents.
SECTION 3.02. Existing Agreements. (a) On the Effective Date, the
commitments under the Existing 364-Day Agreement shall terminate, without
further action by any party thereto.
(b) On the Effective Date, without further action by any party to the
Existing Five-Year Agreement, the Existing Five-Year Agreement shall be amended
as follows:
(i) The following provisions of the Existing Five-Year
Agreement shall be amended to read exactly as the corresponding
provisions of this Agreement:
(A) the following definitions: Borrower, Financing
Documents, Indenture, Material Adverse Effect, Obligor, Parent
Guarantee, Parent Guarantor, Responsible Officer, Significant
Subsidiary, Subsidiary Guarantor, TycoLux Debt Securities and
Wholly-Owned Consolidated Subsidiary;
(B) subsections (b), (c), (d) and (e) of Section
2.07;
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(C) subsection (d) of Section 3.03;
(D) Articles 4, 5 and 6; and
(E) Section 9.08.
(ii) The following new provisions are added to the Existing
Five- Year Agreement to read exactly as the corresponding provisions of
this Agreement:
(A) the following definitions: CD Margin, Euro-Dollar
Margin, Facility Fee Rate and Pricing Schedule; and
(B) Section 9.12.
(iii) The following portions of the Existing Five-Year
Agreement are deleted:
(A) Exhibits E-1, E-2, F, H, I, L, K and M;
(B) the following definitions: Acquisition,
Applicable Margin, Consolidated Assets, Consolidated Debt,
Consolidated EBIT, Consolidated Interest Expense, Consolidated
Net Income, Consolidated Net Worth, Consolidated Subsidiary,
Consolidated Tangible Assets, Consolidated Tangible Net Worth,
Consolidated Total Capitalization, Debt, Domestic Parent,
ERISA, ERISA Group, Existing Agreements, Existing Five-Year
Agreement, Existing 364-Day Agreement, Existing Tyco US Debt,
Guarantee, Guarantor, Hazardous Substances, Intangible Assets,
Internal Revenue Code, Level I Status, Level II Status, Level
III Status, Level IV Status, Level V Status, Level VI Status,
Material Debt, Material Plan, Multiemployer Plan, New Borrower
Agreement, New Borrower Date, PBGC, Permitted Receivables
Transaction, Plan, Prospects, Refinancing, Related Agreement,
Status, Subsidiary Guarantee, Tyco Luxembourg, Tyco US and
Unfunded Liabilities;
(C) Section 1.02;
(D) subsection (h) of Section 2.07;
(E) the second paragraph of Section 2.08(a) and
(F) Section 3.01, 3.02 and 3.04.
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(iv) The definition of Termination Date is amended to read as
follows:
"TERMINATION DATE" means February 12, 2003; provided that if
such date is not a Euro-Dollar Business Day, the Termination Date shall
be the next preceding Euro-Dollar Business Day.
(v) The pricing schedule set forth as Exhibit K to this
Agreement is added to the Existing Five-Year Agreement as the Pricing
Schedule referred to therein.
(c) The Banks which are parties to the Existing Credit Agreements,
comprising the "Required Banks" as defined therein, hereby (i) waive any
requirement of notice of termination of the commitments pursuant to Section 2.09
of the Existing 364-Day Agreement and of prepayment of Loans to the extent
necessary to give effect to the subsections 3.01(g) and 3.02(a), provided that
any such prepayment of Loans shall be subject to Section 2.13 of the Existing
364- Day Agreement and (ii) agree to the amendments specified in subsection
3.02(b) and the amendment and restatement of the "Parent Guarantee" (as defined
in the Existing Credit Agreements) pursuant to subsection 3.01(c).
SECTION 3.03. Borrowings. The obligation of any Bank to make a Loan on
the occasion of any Borrowing is subject to the satisfaction (or waiver in
accordance with Section 9.05) of the following conditions:
(a) receipt by the Agent of a Notice of Borrowing as required by
Section 2.02 or 2.03, as the case may be;
(b) the fact that, immediately after such Borrowing, the aggregate
outstanding principal amount of the Loans will not exceed the aggregate amount
of the Commitments;
(c) the fact that, immediately before and after such Borrowing, no
Default shall have occurred and be continuing; and
(d) the fact that the representations and warranties of each Obligor
contained in the Financing Documents (except the representations and warranties
set forth in Section 3.04(a) and (b) of the Parent Guarantee, which are made
only as of the date of the Parent Guarantee) shall be true in all material
respects on and as of the date of such Borrowing.
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Each Borrowing hereunder shall be deemed to be a representation and
warranty by the Borrower on the date of such Borrowing as to the facts specified
in subsections (b), (c) and (d) of this Section.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Agent and the Banks that:
SECTION 4.01. Corporate Existence and Power. The Borrower is a company
duly organized and validly existing under the laws of its jurisdiction of
organization. The Borrower has all corporate powers and all governmental
licenses, authorizations, consents and approvals (collectively, the "Consents")
required to carry on its business as now conducted, other than those powers and
Consents, the failure of which to be possessed or obtained could not, based upon
the facts and circumstances in existence at the time this representation and
warranty is made or deemed made, reasonably be expected to have a Material
Adverse Effect.
SECTION 4.02. Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by the Borrower of this
Agreement and the Promissory Notes: (a) are within the Borrower's corporate
powers; (b) have been duly authorized by all necessary corporate action on the
part of the Borrower; (c) require no action by or in respect of, or filing with,
any governmental body, agency or official, in each case, on the part of the
Borrower; and (d) do not contravene, or constitute a default by the Borrower
under, any provision of (i) applicable law or regulation, (ii) the
organizational documents of the Borrower, or (iii) any agreement or instrument
evidencing or governing debt of the Borrower or any other material agreement,
judgment, injunction, order, decree or other instrument binding upon the
Borrower.
SECTION 4.03. Binding Effect. This Agreement constitutes a valid and
binding agreement of the Borrower and the Promissory Notes, when executed and
delivered in accordance with this Agreement, will constitute valid and binding
obligations of the Borrower.
SECTION 4.04. Litigation. There is no action, suit or proceeding
pending against, or to the knowledge of the Borrower threatened against or
affecting, the Borrower or any of its Subsidiaries before any court or
arbitrator or any governmental body, agency or official in which there is a
reasonable possibility of an adverse decision which could, based upon the facts
and circumstances in
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existence at the time this representation and warranty is made or deemed made,
reasonably be expected to have a Material Adverse Effect or which in any manner
draws into question the validity of the Financing Documents.
SECTION 4.05. Not an Investment Company. The Borrower is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
ARTICLE 5
COVENANTS
The Borrower agrees that, so long as any Bank has any Commitment
hereunder or any amount payable under any Promissory Note remains unpaid:
SECTION 5.01. Information. The Borrower will deliver to each of the
Banks:
(a) within five Domestic Business Days after any Responsible Officer
obtains knowledge of any Default, if such Default is then continuing, a
certificate on behalf of the Borrower signed by the chief financial officer, the
chief accounting officer or the treasurer of the Borrower setting forth, in
reasonable detail, the nature thereof and the action which the Borrower is
taking or proposes to take with respect thereto;
(b) promptly upon the filing thereof, copies of all final registration
statements (other than the exhibits thereto and any registration statements on
Form S-8 or its equivalent) and final reports on Forms 10-K, 10-Q and 8-K (or
their equivalents) which the Borrower may file with the Securities and Exchange
Commission;
(c) promptly following, and in any event within 10 days of, any change
in a Debt Rating by any Rating Agency, notice thereof; and
(d) from time to time, upon reasonable notice, such additional
information regarding the financial position or business of the Borrower and its
Subsidiaries as the Agent, at the request of any Bank, may reasonably request.
Information required to be delivered pursuant to subsection (b) above
shall be deemed to have been delivered on the date on which the Borrower
provides (or causes to be provided) notice to the Banks that such information
has been posted on the Parent Guarantor's website on the Internet at the website
address listed on
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the signature pages hereof, at sec.gov/edaux/searches.htm or at another website
identified in such notice and accessible by the Banks without charge; provided
that (i) such notice may be included in a certificate delivered pursuant to
Section 4.01(c) of the Parent Guarantee and (ii) the Borrower shall deliver
paper copies of the information referred to in subsection (b) to any Bank which
requests such delivery.
SECTION 5.02. Payment of Obligations. The Borrower will pay and
discharge, and will cause each Subsidiary to pay and discharge, at or before
maturity, all their respective material obligations and liabilities, including,
without limitation, tax liabilities, except where (i) any such failure to so pay
or discharge could not, based upon the facts and circumstances in existence at
the time, reasonably be expected to have a Material Adverse Effect or (ii) such
liabilities or obligations may be contested in good faith by appropriate
proceedings. The Borrower will maintain, and will cause each Subsidiary to
maintain, in accordance with generally accepted accounting principles,
appropriate reserves for the accrual of any of such liabilities or obligations.
SECTION 5.03. Maintenance of Property; Insurance. (a) Except as
permitted by Section 5.04 or 5.07, the Borrower will keep, and will cause each
Subsidiary to keep, all property necessary in its business in good working order
and condition, ordinary wear and tear excepted, unless the failure to so keep
could not, based upon the facts and circumstances existing at the time,
reasonably be expected to have a Material Adverse Effect.
(b) The Borrower will maintain, and will cause each Subsidiary to
maintain, with financially sound and reputable insurers, insurance with respect
to its assets and business against such casualties and contingencies, of such
types (including, without limitation, loss or damage, product liability,
business interruption, larceny, embezzlement or other criminal misappropriation)
and in such amounts as is customary in the case of similarly situated
corporations of established reputations engaged in the same or a similar
business, unless the failure to maintain such insurance could not, based upon
the facts and circumstances existing at the time, reasonably be expected to have
a Material Adverse Effect.
SECTION 5.04. Conduct of Business and Maintenance of Existence. The
Borrower (a) will continue, and will cause each Subsidiary to continue, to
engage in business of the same general type as now conducted by the Borrower and
its Subsidiaries and reasonably related extensions thereof, and (b) will
preserve, renew and keep in full force and effect, and will cause each
Subsidiary to preserve, renew and keep in full force and effect (x) their
respective corporate existence and (y) their respective rights, privileges and
franchises necessary or
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desirable in the normal conduct of business, unless in the case of either the
failure of the Borrower to comply with subclause (b) (y) of this Section 5.04 or
the failure of a Subsidiary to comply with clauses (a) or (b) of this Section
5.04, such failure could not, based upon the facts and circumstances existing at
the time, reasonably be expected to have a Material Adverse Effect; provided
that nothing in this Section 5.04 shall prohibit (i) the merger or consolidation
of a Subsidiary with or into the Borrower or a Wholly-Owned Consolidated
Subsidiary, (ii) the sale, lease, transfer, assignment or other disposition by a
Subsidiary of all or any part of its assets to the Borrower or to a Wholly-Owned
Consolidated Subsidiary, (iii) the merger or consolidation of a Subsidiary with
or into a Person other than the Borrower or a Wholly-Owned Consolidated
Subsidiary, if the Person surviving such consolidation or merger is a Subsidiary
of the Parent Guarantor and immediately after giving effect thereto, no Default
shall have occurred and be continuing, (iv) the sale, lease, transfer,
assignment or other disposition by a Subsidiary of all or any part of its assets
to a Person other than the Borrower or a Wholly-Owned Consolidated Subsidiary if
the Person to which such sale, lease, transfer, assignment or other disposition
is made is a Subsidiary of the Parent Guarantor and immediately after giving
effect thereto, no Default shall have occurred and be continuing, (v) any
transaction permitted pursuant to Section 5.07, (vi) the termination of the
corporate existence of any Subsidiary if the Borrower in good faith determines
that such termination is in the best interest of the Borrower and is not
materially disadvantageous to the Banks and (vii) the sale, lease, transfer,
assignment or other disposition (including any such transaction by way of merger
or consolidation) by the Borrower of all or any part of its assets to a Person
other than the Borrower or a Subsidiary if (A) immediately after giving effect
thereto, no Default shall have occurred and be continuing and (B) the Borrower
is a Subsidiary of such Person or the Borrower and such Person are Subsidiaries
of the same Person.
SECTION 5.05. Compliance with Laws. The Borrower will comply, and cause
each Subsidiary to comply, in all material respects with all applicable laws,
ordinances, rules, regulations, and requirements of governmental authorities
(including, without limitation, Environmental Laws and ERISA and the rules and
regulations thereunder) except where (a) noncompliance therewith could not,
based upon the facts and circumstances in existence at the time, reasonably be
expected to have a Material Adverse Effect or (b) the necessity of compliance
therewith is contested in good faith by appropriate proceedings.
SECTION 5.06. Inspection of Property, Books and Records;
Confidentiality. (a) The Borrower will keep, and will cause each Subsidiary to
keep, proper books of record and account in which true and correct entries shall
be made of its business transactions and activities so that financial statements
that
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fairly present its business transactions and activities can be properly prepared
in accordance with generally accepted accounting principles.
(b) The Borrower will permit, and will cause each Subsidiary to permit,
representatives of any Bank at such Bank's expense to visit and inspect any of
their respective properties, to examine and make abstracts from any of their
respective books and records and to discuss their respective affairs, finances
and accounts with their respective officers, employees and independent public
accountants, all upon reasonable notice to the Borrower, at such reasonable
times and as often as may reasonably be requested by any Bank.
(c) Each Bank and the Agent shall, by its receipt of Confidential
Information (as defined below) pursuant to or in connection with this Agreement
or its exercise of any of its rights hereunder, be deemed to have agreed (on
behalf of itself and each of its affiliates, directors, officers, employees and
representatives) to (i) keep such information confidential, (ii) (except as
permitted by clause (iii) of this Section 5.06(c)) not disclose such information
to any Person other than an officer, director, employee, legal counsel,
independent auditor or authorized agent or advisor of the Agent or such Bank
needing to know such information (it being understood that any such officer,
director, employee, legal counsel, independent auditor or authorized agent or
advisor shall be informed by the Agent or such Bank of the confidential nature
of such information), (iii) not disclose such information to any Assignee or
Participant (or prospective Assignee or Participant), unless such Assignee or
Participant (or prospective Assignee or Participant) shall agree in writing to
be bound by the provisions of this Section 5.06(c) and (iv) not use any such
information except for purposes relating to this Agreement or the Notes. The
term "Confidential Information" shall mean non-public information furnished by
or on behalf of the Borrower or any of its Subsidiaries to the Agent, any Bank
or other Person exercising rights hereunder or required to be bound hereby
(collectively "Recipients"), but shall not include any such information which
(1) has become or hereafter becomes available to the public other than as a
result of a disclosure by a Recipient, or (2) has become or hereafter becomes
available to a Recipient, on a non-confidential basis, from a source other than
the Borrower or any of its Subsidiaries (or any of their respective
representatives or agents) or any Recipient, which source, to the knowledge of
the Recipient, is not prohibited from disclosing such information by a
confidentiality agreement with, or other legal or fiduciary obligation to, the
Borrower or its Subsidiaries.
The restrictions set forth in the immediately preceding paragraph shall
not prevent the disclosure by a Recipient of any such information:
(A) with the prior written consent of the Borrower,
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(B) at the request of a bank regulatory agency or in
connection with an examination by bank examiners, or
(C) upon order of any court or administrative agency
of competent jurisdiction, to the extent required by such
order and not effectively stayed on appeal or otherwise, or as
otherwise required by law; provided that in the case of any
intended disclosure under this clause (C), the Recipient shall
(unless otherwise required by applicable law) give the
Borrower not less than five Domestic Business Days prior
notice (or such shorter period as may, in the good faith
discretion of the Recipient, be reasonable under the
circumstances or may be required by any court or agency under
the circumstances), specifying the Confidential Information
involved and stating such Recipient's intention to disclose
such Confidential Information (including the manner and extent
of such disclosure) in order to allow the Borrower an
opportunity to seek an appropriate protective order.
Each Recipient shall agree that, in addition to all other remedies
available, the Borrower shall be entitled to specific performance and injunctive
and other equitable relief as a remedy for any breach of this Section 5.06(c) by
such Recipient.
SECTION 5.07. Consolidations, Mergers and Sales of Assets. The
Borrower will not (i) consolidate or merge with or into any other Person or (ii)
sell, lease or otherwise transfer all or substantially all of its assets to any
other Person, unless
(A) the Borrower or a Subsidiary is the surviving
corporation;
(B) the Person (if other than the Borrower) formed by
such consolidation or into which the Borrower is merged, or
the Person which acquires by sale or other transfer, or which
leases, all or substantially all of the assets of the Borrower
(any such Person, the "Successor"), shall be organized and
existing under the laws of Luxembourg, and shall expressly
assume, in a writing executed and delivered to the Agent for
delivery to each of the Banks, in form reasonably satisfactory
to the Agent, the due and punctual payment of the principal of
and interest on the Promissory Notes and the performance of
the other obligations under this Agreement and the Promissory
Notes on the part of the Borrower to be performed or
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observed, as fully as if such Successor were originally named
as the Borrower in this Agreement;
(C) immediately after giving effect to such
transaction, no Default shall have occurred and be continuing;
and
(D) the Borrower has delivered to the Agent a
certificate on behalf of the Borrower signed by a Responsible
Officer and an opinion of counsel (which counsel may be an
employee of the Borrower), each stating that all conditions
provided in this Section 5.07 relating to such transaction
have been satisfied.
The foregoing provisions of this Section 5.07 shall not restrict the
merger or consolidation of any Subsidiary with and into the Borrower.
Upon the satisfaction (or waiver in accordance with Section 9.05) of
the conditions set forth in this Section 5.07, the Successor shall succeed, and
may exercise every right and power of, the Borrower under this Agreement and the
Promissory Notes with the same effect as if the Successor had been originally
named as the Borrower herein and in the Promissory Notes, and the Borrower shall
be relieved of its obligations under this Agreement and the Promissory Notes.
SECTION 5.08. Use of Proceeds. The proceeds of the Loans made under
this Agreement will be used by the Borrower for its general corporate purposes,
including, without limitation, capital expenditures and (subject to the
following sentence) acquisitions. None of such proceeds will be used, directly
or indirectly, for the purpose, whether immediate, incidental or ultimate, of
buying or carrying any "margin stock" within the meaning of Regulation U.
SECTION 5.09. Transactions with Affiliates. The Borrower will not, and
will not permit any Subsidiary to, directly or indirectly, pay any funds to or
for the account of, make any investment (whether by acquisition of stock or
indebtedness, by loan, advance, transfer of property, guarantee or other
agreement to pay, purchase or service, directly or indirectly, any Debt, or
otherwise) in, lease, sell, transfer or otherwise dispose of any assets,
tangible or intangible, to, or participate in, or effect any transaction in
connection with any joint enterprise or other joint arrangement with, any
Affiliate (collectively, "AFFILIATE TRANSACTIONS"); provided, however, that the
foregoing provisions of this Section 5.09 shall not prohibit the Borrower or any
of its Subsidiaries from: (a) making sales to or purchases from any Affiliate
and, in connection therewith, extending credit or making payments, or from
making payments for services rendered by any Affiliate, if such sales or
purchases are made or such services are rendered in the
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ordinary course of business and on terms and conditions at least as favorable to
the Borrower or such Subsidiary as the terms and conditions which the Borrower
would reasonably expect to be obtained in a similar transaction with a Person
which is not an Affiliate at such time, (b) making payments of principal,
interest and premium on any debt of the Borrower or such Subsidiary held by an
Affiliate if the terms of such debt are at least as favorable to the Borrower or
such Subsidiary as the terms which the Borrower would reasonably expect to have
been obtained at the time of the creation of such debt from a lender which was
not an Affiliate, (c) participating in, or effecting any transaction in
connection with, any joint enterprise or other joint arrangement with any
Affiliate if the Borrower or such Subsidiary participates in the ordinary course
of its business and on a basis no less advantageous than the basis on which such
Affiliate participates, (d) paying or granting reasonable compensation and
benefits to any director, officer, employee or agent of the Borrower or any
Subsidiary, (e) paying reasonable legal fees and expenses to a law firm of which
an Affiliate is a member or (f) engaging in any Affiliate Transaction not
otherwise addressed in subsections (a) - (e) of this Section 5.09, the
consummation of which could not reasonably be expected to have a Material
Adverse Effect.
SECTION 5.10. Subsidiary Guarantors. If any Subsidiary becomes a
guarantor of TycoLux Debt Securities under the Indenture, the Borrower will
cause such Person to become a Subsidiary Guarantor concurrently therewith.
ARTICLE 6
DEFAULTS
SECTION 6.01. Events of Defaults. If one or more of the following
events ("EVENTS OF DEFAULT") shall have occurred and be continuing and shall not
have been waived in accordance with Section 9.05:
(a) any principal of any Loan shall not be paid when due, or any
interest on any Loan or any fees payable hereunder shall not be paid within
three Domestic Business Days of the due date thereof;
(b) the Borrower shall fail to observe or perform any covenant
contained in Section 5.10;
(c) the Borrower shall fail to observe or perform any covenant
contained in Sections 5.07 to 5.09, inclusive, and such failure shall not be
remedied within five days after any Responsible Officer obtains actual knowledge
thereof;
(d) the Borrower shall fail to observe or perform any covenant or
agreement contained in this Agreement (other than those covered by clause (a),
(b)
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or (c) of this Section 6.01) for 10 days after notice thereof has been given to
the Borrower by the Agent at the request of any Bank;
(e) any representation, warranty, certification or statement made in
writing by the Borrower in the Financing Documents or in any certificate,
financial statement or other document required to be delivered to the Agent or
any of the Banks pursuant to the Financing Documents shall prove to have been
incorrect in any material respect when made (or deemed made);
(f) there shall occur any Guarantor Event of Default (as defined in the
Parent Guarantee);
(g) the Borrower shall (i) commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or substantially all of
its property, or (ii) consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary case or other similar
proceeding commenced against it, or (iii) make a general assignment for the
benefit of creditors, or (iv) fail generally to pay its debts as they become
due, or (v) take corporate action authorizing any of the foregoing;
(h) (i) an involuntary case or other proceeding shall be commenced
against the Borrower seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or substantially all of
its property, and such involuntary case or other proceeding shall remain in
effect and undismissed and unstayed for a period of 60 consecutive days or (ii)
an order for relief shall be entered against the Borrower under the federal
bankruptcy laws as now or hereafter in effect;
(i) a judgment or order for the payment of money in excess of
$30,000,000 (after deducting amounts covered by insurance, except to the extent
that the insurer providing such insurance has declined such coverage) shall be
rendered against the Borrower or any Subsidiary and, within 60 days after entry
thereof, such judgment or order is not discharged or execution thereof stayed
pending appeal, or within 60 days after the expiration of any such stay, such
judgment or order is not discharged;
(j) the Borrower shall cease to be a Wholly-Owned Consolidated
Subsidiary of the Parent Guarantor; or
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(k) any Financing Document shall cease to be valid and enforceable
(except for the termination of a Subsidiary Guarantee in accordance with its
terms); or any Obligor shall so assert in writing;
then, and in every such event, the Agent shall (i) if requested by Banks having
more than 60% in aggregate amount of the Commitments, by notice to the Borrower
terminate the Commitments and they shall thereupon terminate, and (ii) if
requested by Banks holding Promissory Notes evidencing more than 60% in
aggregate principal amount of the Loans, by notice to the Borrower declare the
Promissory Notes (together with accrued interest thereon) to be, and the
Promissory Notes shall thereupon become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower; provided that in the case of any of the Events of
Default specified in subsection (g) or (h) above or any Guarantor Event of
Default specified in Section 5.01(g) of the Parent Guarantee with respect to any
Obligor, without any notice to the Borrower or any other act by the Agent or the
Banks, the Commitments shall thereupon terminate and the Promissory Notes
(together with accrued interest thereon) shall become immediately due and
payable without presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Borrower.
SECTION 6.02. Notice of Default. The Agent shall give notice to the
Borrower under Section 6.01(d) promptly upon being requested to do so by any
Bank and shall thereupon notify all the Banks thereof.
ARTICLE 7
THE AGENT
SECTION 7.01. Appointment and Authorization. Each Bank irrevocably
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers under the Financing Documents as are delegated to the
Agent by the terms hereof or thereof, together with all such powers as are
reasonably incidental thereto.
SECTION 7.02. Agent and Affiliates. Morgan Guaranty Trust Company of
New York (and any successor acting as Agent) in its capacity as a Bank hereunder
shall have the same rights and powers under the Financing Documents as any other
Bank and may exercise or refrain from exercising the same as though it were not
the Agent, and Morgan Guaranty Trust Company of New York (and any successor
acting as Agent) and its affiliates may accept deposits from, lend money
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to, and generally engage in any kind of business with the Borrower or any
Subsidiary or affiliate of the Borrower as if it were not the Agent hereunder.
SECTION 7.03. Action by Agent. The obligations of the Agent under the
Financing Documents are only those expressly set forth therein. Without limiting
the generality of the foregoing, the Agent shall not be required to take any
action with respect to any Default, except as expressly provided in Article 6.
SECTION 7.04. Consultation with Experts. The Agent may consult with
legal counsel (who may be counsel for the Borrower), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.
SECTION 7.05. Limits of Liability. Neither the Agent nor any of its
affiliates nor any of their respective directors, officers, agents or employees
shall be liable for any action taken or not taken by it in connection herewith
(i) with the consent or at the request of the Required Banks or (ii) in the
absence of its own gross negligence or willful misconduct. Neither the Agent nor
any of its affiliates nor any of their respective directors, officers, agents or
employees shall be responsible for or have any duty to ascertain, inquire into
or verify (i) any statement, warranty or representation made in connection with
this Agreement or any borrowing hereunder; (ii) the performance or observance of
any of the covenants or agreements of the Borrower or any Guarantor; (iii) the
satisfaction of any condition specified in Article 3, except receipt of items
required to be delivered to the Agent; or (iv) the validity, effectiveness or
genuineness of this Agreement, the Subsidiary Guarantees, the Parent Guarantee,
the Promissory Notes or any other instrument or writing furnished in connection
herewith. The Agent shall not incur any liability by acting in reliance upon any
notice, consent, certificate, statement, or other writing (which may be a bank
wire, telex or similar writing) believed by it in good faith to be genuine or to
be signed by or on behalf of the proper party or parties. Without limiting the
generality of the foregoing, the use of the term "agent" in this Agreement with
reference to the Agent is not intended to connote any fiduciary or other implied
(or express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom and is intended
to create or reflect only an administrative relationship between independent
contracting parties.
SECTION 7.06. Indemnification. Each Bank shall, ratably in accordance
with its Commitment, indemnify the Agent, its affiliates and their respective
directors, officers, agents and employees (to the extent not reimbursed by the
Borrower) against any cost, expense (including counsel fees and disbursements),
claim, demand, action, loss or liability (except such as result from such
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indemnitees' gross negligence or willful misconduct) that such indemnitees may
suffer or incur in connection with the Financing Documents or any action taken
or omitted by such indemnitees thereunder.
SECTION 7.07. Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis of the Borrower and its Subsidiaries and its own decision to
enter into this Agreement. Each Bank also acknowledges that it will,
independently and without reliance upon the Agent or any other Bank, and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking any action
under this Agreement.
SECTION 7.08. Successor Agent. The Agent may resign at any time by
giving notice thereof to the Banks and the Borrower. Upon any such resignation,
the Required Banks shall have the right to appoint a successor Agent, subject to
the consent of the Borrower. If no successor Agent shall have been so appointed
by the Required Banks and consented to by the Borrower and shall have accepted
such appointment within 45 days after the retiring Agent gives notice of
resignation, then the retiring Agent may, on behalf of the Banks, appoint a
successor Agent, which shall be a commercial bank organized or licensed under
the laws of the United States of America or of any State thereof and having a
combined capital and surplus of at least $50,000,000. Upon the acceptance of its
appointment as Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations under the Financing Documents. After any
retiring Agent's resignation hereunder as Agent, the provisions of this Article
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was acting as the Agent.
SECTION 7.09. Agent's Fee. The Borrower shall pay to the Agent for its
own account fees in the amounts and at the times previously agreed upon in
writing between the Borrower and the Agent.
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ARTICLE 8
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair.
If on or prior to the first day of any Interest Period for any CD Loan,
Euro-Dollar Loan or Money Market LIBOR Loan:
(a) the Agent is advised by the Reference Banks that deposits in
dollars (in the applicable amounts) are not being offered to the Reference Banks
in the relevant market for such Interest Period, or
(b) in the case of CD Loans or Euro-Dollar Loans, Banks holding 50% or
more of the aggregate amount of the affected Loans advise the Agent that the
Adjusted CD Rate or the London Interbank Offered Rate, as the case may be, as
determined by the Agent will not adequately and fairly reflect the cost to such
Banks of funding their CD Loans or Euro-Dollar Loans, as the case may be, for
such Interest Period, the Agent shall forthwith give notice thereof to the
Borrower and the Banks, whereupon, until the Agent notifies the Borrower that
the circumstances giving rise to such suspension no longer exist (which the
Agent agrees to do promptly upon such circumstances ceasing to exist), (i) the
obligations of the Banks to make CD Loans or Euro-Dollar Loans, as the case may
be, or to continue or convert outstanding Loans as or into CD Loans or
Euro-Dollar Loans, as the case may be, shall be suspended and (ii) each
outstanding CD Loan or Euro-Dollar Loan, as the case may be, shall be converted
into a Base Rate Loan on the last day of the then current Interest Period
applicable thereto. Unless the Borrower notifies the Agent at least one Domestic
Business Day before the date of any Fixed Rate Borrowing for which a Notice of
Borrowing has previously been given that it elects not to borrow on such date,
(i) if such Fixed Rate Borrowing is a Committed Borrowing, such Borrowing shall
instead be made as a Base Rate Borrowing and (ii) if such Fixed Rate Borrowing
is a Money Market LIBOR Borrowing, the Money Market LIBOR Loans comprising such
Borrowing shall bear interest for each day from and including the first day to
but excluding the last day of the Interest Period applicable thereto at the Base
Rate for such day.
SECTION 8.02. Illegality. If, on or after the date of this Agreement,
any Bank has determined in its reasonable judgment that the adoption of any
applicable law, rule or regulation, or any change in any applicable law, rule or
regulation, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank (or its
Euro-Dollar Lending Office) with any request or directive (whether or not having
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the force of law) of any such authority, central bank or comparable agency,
shall make it unlawful or impossible for such Bank (or its Euro-Dollar Lending
Office) to make, maintain or fund its Euro-Dollar Loans and such Bank shall so
notify the Agent, the Agent shall forthwith give notice specifying the
circumstances giving rise to such suspension to the other Banks and the
Borrower, whereupon, until such Bank notifies the Borrower and the Agent that
the circumstances giving rise to such suspension no longer exist (which such
Bank agrees to do promptly upon such circumstances ceasing to exist), the
obligation of such Bank to make Euro-Dollar Loans, or to continue or convert
outstanding Loans as or into Euro-Dollar Loans, shall be suspended. Before
giving any notice to the Agent pursuant to this Section, such Bank shall
designate a different Euro-Dollar Lending Office if such designation will avoid
the need for giving such notice and will not, in the judgment of such Bank in
the good faith exercise of its discretion, be otherwise disadvantageous to such
Bank. If such notice is given, each Euro-Dollar Loan of such Bank then
outstanding shall be converted to a Base Rate Loan either (a) on the last day of
the then current Interest Period applicable to such Euro-Dollar Loan if such
Bank may lawfully continue to maintain and fund such Loan as a Euro-Dollar Loan
to such day or (b) immediately if such Bank shall determine that it may not
lawfully continue to maintain and fund such Loan as a Euro-Dollar Loan to such
day.
SECTION 8.03. Increased Cost and Reduced Return. (a) If on or after (x)
the date of this Agreement, in the case of any Committed Loan or any obligation
to make Committed Loans or (y) the date of the related Money Market Quote, in
the case of any Money Market Loan, any Bank has determined in its reasonable
judgment that the adoption of any applicable law, rule or regulation, or any
change in any applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank (or its Applicable Lending Office) with any
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency, shall impose, modify or deem
applicable any reserve (including, without limitation, any such requirement
imposed by the Board of Governors of the Federal Reserve System, but excluding
(i) with respect to any CD Loan any such requirement included in an applicable
Domestic Reserve Percentage and (ii) with respect to any Euro-Dollar Loan any
such requirement with respect to which such Bank is entitled to compensation
during the relevant Interest Period under Section 2.15), special deposit,
insurance assessment (excluding, with respect to any CD Loan, any such
requirement reflected in an applicable Assessment Rate) or similar requirement
against assets of, deposits with or for the account of, or credit extended by,
such Bank (or its Applicable Lending Office) or shall impose on any Bank (or its
Applicable Lending Office) or on the United States market for certificates of
deposit or the London interbank
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market any other condition affecting its Fixed Rate Loans, its Promissory Note
or its obligation to make Fixed Rate Loans and the result of any of the
foregoing is to increase the cost to such Bank (or its Applicable Lending
Office) of making or maintaining any Fixed Rate Loan, or to reduce the amount of
any sum received or receivable by such Bank (or its Applicable Lending Office)
under this Agreement or under its Promissory Note with respect thereto, by an
amount deemed by such Bank to be material to such Bank, then, within 15 days
after written demand by such Bank (with a copy to the Agent), the Borrower shall
pay to such Bank such additional amount or amounts as will compensate such Bank
for such increased cost or reduction.
(b) If any Bank shall have determined that, after the date of this
Agreement, the adoption of any applicable law, rule or regulation regarding
capital adequacy, or any change in any such law, rule or regulation, or any
change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency (including any determination by any such authority, central
bank or comparable agency that, for purposes of capital adequacy requirements,
the Commitments hereunder do not constitute commitments with an original
maturity of one year or less), has or would have the effect of reducing the rate
of return on capital of such Bank (or its Parent) as a consequence of such
Bank's obligations hereunder to a level below that which such Bank (or its
Parent) could have achieved but for such adoption, change, request or directive
(taking into consideration its policies with respect to capital adequacy) by an
amount deemed by such Bank to be material, then from time to time, within 15
days after written demand by such Bank (with a copy to the Agent), the Borrower
shall pay to such Bank such additional amount or amounts as will compensate such
Bank (or its Parent) for such reduction.
(c) Each Bank will promptly notify the Borrower and the Agent of any
event of which it has knowledge, occurring after the date of this Agreement,
which will entitle such Bank to compensation pursuant to this Section; provided
that (i) if any Bank fails to give such notice within 90 days after it obtains
actual knowledge of such an event, such Bank shall only be entitled to payment
under this Section 8.03 for costs incurred from and after the date 90 days prior
to the date that such Bank does give such notice and (ii) each such Bank will
designate a different Applicable Lending Office if such designation will avoid
the need for, or reduce the amount of, such compensation and will not, in the
judgment of such Bank in the good faith exercise of its discretion, be otherwise
disadvantageous to such Bank. A certificate of any Bank claiming compensation
under this Section and setting forth in reasonable detail the additional amount
or amounts to be paid
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to it hereunder and the basis used to determine such amounts shall be conclusive
in the absence of manifest error. In determining such amount, such Bank will use
reasonable averaging and attribution methods and will have a reasonable basis
for any assumptions it makes in connection therewith.
SECTION 8.04. Taxes. (a) Any and all payments by the Borrower to or for
the account of any Bank or the Agent hereunder or under any Promissory Note
shall be made free and clear of and without deduction for any and all present or
future taxes, duties, levies, imposts, deductions, charges or withholdings, and
all liabilities with respect thereto, excluding, in the case of each Bank and
the Agent, taxes imposed on or measured by its income, and franchise taxes
imposed on it, by the jurisdiction under the laws of which such Bank or the
Agent (as the case may be) is organized or any political subdivision thereof
and, in the case of each Bank, taxes imposed on or measured by its income, and
franchise or similar taxes imposed on it, by the jurisdiction of such Bank's
Applicable Lending Office or any political subdivision thereof (all such
non-excluded taxes, duties, levies, imposts, deductions, charges, withholdings
and liabilities being hereinafter referred to as its "TAXES", and all such
excluded taxes being hereinafter referred to as its "DOMESTIC TAXES"). If the
Borrower shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder or under any Promissory Note to any Bank or the Agent, (i)
the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 8.04 such Bank or the Agent (as the case may be) receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) the Borrower shall make such deductions, (iii) the Borrower shall pay the
full amount deducted to the relevant taxation authority or other authority in
accordance with applicable law and (iv) the Borrower shall furnish to the Agent,
at its address referred to in Section 9.01, the original or a certified copy of
a receipt evidencing payment thereof.
(b) In addition, the Borrower agrees to pay any present or future stamp
or documentary taxes and any other excise or property taxes, or charges or
similar levies which arise from any payment made hereunder or under any
Promissory Note or from the execution or delivery of, or otherwise with respect
to, this Agreement or any other Financing Document (hereinafter referred to as
"OTHER TAXES").
(c) The Borrower agrees to indemnify each Bank and the Agent for the
full amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed or asserted by any jurisdiction on amounts payable under
this Section 8.04 paid by such Bank or the Agent (as the case may be) and any
liability (including penalties, interest and expenses) arising therefrom or with
respect thereto. In addition, on and after the New Borrower Date, the Borrower
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agrees to indemnify the Agent and each Bank for all Domestic Taxes and any
liability (including penalties, interest and expenses) arising therefrom or with
respect thereto, in each case to the extent that such Domestic Taxes result from
any payment or indemnification pursuant to this Section for (i) Taxes or Other
Taxes imposed by any jurisdiction other than the United States or (ii) Domestic
Taxes of the Agent or such Bank, as the case may be. This indemnification shall
be made within 15 days from the date such Bank or the Agent (as the case may be)
makes demand therefor.
(d) At the times indicated herein, each Bank organized under the laws
of a jurisdiction outside the United States shall provide the Borrower with
Internal Revenue Service form 1001 or 4224 (in each case accompanied by any
statements which may be required under applicable Treasury regulations), as
appropriate, or any successor form prescribed by the Internal Revenue Service,
certifying that such Bank is entitled to receive payments under this Agreement
(i) without deduction or withholding of any United States federal income taxes
or (ii) subject to a reduced rate of United States federal withholding tax,
unless, in each case of clause (i) and (ii) of this Section 8.04(d), an event
(including, without limitation, any change in treaty, law or regulation) has
occurred prior to the date on which any such delivery would otherwise be
required which renders such forms inapplicable or which would prevent the Bank
from duly completing and delivering any such form with respect to it and the
Bank advises the Borrower and the Agent that it is not capable of receiving
payments without any deduction or withholding of such taxes. Such forms shall be
provided (x) on or prior to the date of the Bank's execution and delivery of
this Agreement in the case of each Bank listed on the signature pages hereof,
and on or prior to the date on which it becomes a Bank in the case of each other
Bank, and (y) on or before the date that such form expires or becomes obsolete
or after the occurrence of any event requiring a change in the most recent form
so delivered by the Bank. If the form provided by a Bank at the time such Bank
first becomes a party to this Agreement indicates a United States interest
withholding tax rate in excess of zero, United States withholding tax at such
rate shall be considered excluded from "TAXES" as defined in Section 8.04(a). In
addition, to the extent that for reasons other than a change of treaty, law or
regulation any Bank becomes subject to an increased rate of United States
interest withholding tax while it is a party to this Agreement, United States
withholding tax at such increased rate shall be considered excluded from "Taxes"
as defined in Section 8.04(a).
(e) For any period with respect to which a Bank has failed to provide
the Borrower with the appropriate form in accordance with Section 8.04(d)
(unless such failure is excused by the terms of Section 8.04(d)), such Bank
shall not be entitled to indemnification under Section 8.04(a) or 8.04(c) with
respect to Taxes imposed by the United States; provided, however, that should a
Bank, which is
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otherwise exempt from or subject to a reduced rate of withholding tax, become
subject to Taxes because of its failure to deliver a form required hereunder,
the Borrower shall take such steps as such Bank shall reasonably request to
assist such Bank to recover such Taxes.
(f) If the Borrower is required to pay additional amounts to or for the
account of any Bank pursuant to this Section 8.04, then such Bank will change
the jurisdiction of its Applicable Lending Office so as to eliminate or reduce
any such additional payment which may thereafter accrue if such change, in the
judgment of such Bank in the good faith exercise of its discretion, is not
otherwise disadvantageous to such Bank.
SECTION 8.05. Base Rate Loans Substituted for Affected Fixed Rate
Loans. If (i) the obligation of any Bank to make, or to continue or convert
outstanding Loans as or to Euro-Dollar Loans has been suspended pursuant to
Section 8.02 or (ii) any Bank has demanded compensation under Section 8.03 or
8.04 with respect to its CD Loans or Euro-Dollar Loans and the Borrower shall,
by at least five Euro-Dollar Business Days' prior notice to such Bank through
the Agent, have elected that the provisions of this Section shall apply to such
Bank, then, unless and until such Bank notifies the Borrower that the
circumstances giving rise to such suspension or demand for compensation no
longer exist (which such Bank agrees to do promptly upon such circumstances
ceasing to exist), all Loans which would otherwise be made by such Bank as (or
continued as or converted to) CD Loans or Euro-Dollar Loans, as the case may be,
shall instead be Base Rate Loans (on which interest and principal shall be
payable contemporaneously with the related Fixed Rate Loans of the other Banks).
If such Bank notifies such Borrower that the circumstances giving rise to such
suspension or demand for compensation no longer exist, the principal amount of
each such Base Rate Loan shall be converted into a CD Loan or Euro-Dollar Loan,
as the case may be, on the first day of the next succeeding Interest Period
applicable to the related CD Loans or Euro-Dollar Loans of the other Banks.
SECTION 8.06. Substitution of Bank. If any Bank (i) has demanded
compensation for increased costs pursuant to Section 8.03 or 8.04 or is entitled
to payments under Section 8.04(a) or (ii) has determined that the making or
maintaining of any Euro-Dollar Loan has become unlawful or impossible pursuant
to Section 8.02 and similar additional interest or compensation has not been
demanded by, or a similar determination has not been made by, all of the Banks,
the Borrower shall have the right (with the assistance of the Agent) to
designate an Assignee which is not an Affiliate of the Borrower to purchase for
cash, pursuant to an Assignment and Assumption Agreement in substantially the
form of Exhibit G hereto, the outstanding Loans and Commitment of such Bank and
to assume all of such Bank's other rights and obligations hereunder without
recourse
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to or warranty by, or expense to, such Bank, for a purchase price equal to the
principal amount of all of such Bank's outstanding Loans plus any accrued but
unpaid interest thereon and the accrued but unpaid fees in respect of that
Bank's Commitment hereunder plus such amount, if any, as would be payable
pursuant to Section 2.13 if the outstanding Loans of such Bank were prepaid in
their entirety on the date of consummation of such assignment.
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. Notices. All notices, requests and other communications
to any party provided for hereunder shall be in writing (including, without
limitation, bank wire, telex, facsimile transmission or similar writing) and
shall be given to such party: (x) in the case of the Borrower or the Agent, at
its address or facsimile or telex number set forth on the signature pages
hereof, (y) in the case of any Bank, at its address or facsimile or telex number
set forth in its Administrative Questionnaire or (z) in the case of any party,
such other address or facsimile or telex number as such party may hereafter
specify for the purpose by notice to the Agent and the Borrower. Each such
notice, request or other communication shall be effective (i) if given by telex,
when such telex is transmitted to the telex number specified in this Section and
the appropriate answerback is received, (ii) if given by facsimile, when such
facsimile is transmitted to the facsimile number specified in this Section 9.01
and electronic, telephonic or other appropriate confirmation of receipt is
received by the sender, (iii) if given by mail, 72 hours after such
communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (iv) if given by any other means, when delivered at
the address specified in this Section; provided that notices to the Agent under
Article 2 or Article 8 shall not be effective until received.
SECTION 9.02. No Waivers. No failure or delay by the Agent or any Bank
in exercising any right, power or privilege hereunder or under any other
Financing Document shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
and therein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 9.03. Expenses; Indemnification. (a) The Borrower shall pay (i)
all reasonable out-of-pocket expenses of the Agent, including reasonable fees
and disbursements of special counsel for the Agent, in connection with the
preparation and administration of the Financing Documents, any waiver or consent
hereunder
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or any amendment thereof or any Default or alleged Default hereunder and (ii) if
an Event of Default occurs, all reasonable out-of-pocket expenses incurred by
the Agent and each Bank, including reasonable fees and disbursements of counsel,
in connection with such Event of Default and collection, bankruptcy, insolvency
and other enforcement proceedings resulting therefrom.
(b) The Borrower agrees to indemnify the Agent and each Bank, their
respective Bank Affiliates and the respective directors, officers, agents and
employees of the foregoing (each an "Indemnitee") and hold each Indemnitee
harmless from and against any and all liabilities, losses, damages, costs and
expenses, including, without limitation, the reasonable fees and disbursements
of counsel, which may be incurred by such Indemnitee (whether or not such
Indemnitee shall be designated a party thereto) arising out of any
investigative, administrative or judicial proceeding (brought or threatened)
relating to or arising out of the Financing Documents, the arrangement,
administration, performance or enforcement thereof or any actual or proposed use
of proceeds of Loans hereunder; provided that no Indemnitee shall have the right
to be indemnified hereunder for such Indemnitee's own gross negligence or
willful misconduct as determined by a court of competent jurisdiction; provided
further that no Indemnitee shall have the right to be indemnified hereunder in
connection with any proceedings between it and another Indemnitee which does not
relate to the Borrower.
(c) If any proceeding or claim shall be brought or asserted against any
Indemnitee in respect of which indemnity may be sought pursuant to the preceding
subsection, such Indemnitee shall promptly notify the Borrower. The Borrower
shall not be liable for any costs or expenses in connection with any settlement
entered into without its consent.
SECTION 9.04. Sharing of Set-Offs. Each Bank agrees that if it shall,
by exercising any right of set-off or counterclaim or otherwise, receive payment
of a proportion of the aggregate amount of principal and interest due with
respect to any Promissory Note held by it which is greater than the proportion
received by any other Bank in respect of the aggregate amount of principal and
interest due with respect to any Promissory Note held by such other Bank, the
Bank receiving such proportionately greater payment shall purchase such
participations in the Promissory Notes held by the other Banks, and such other
adjustments shall be made, as may be required, so that all such payments of
principal and interest with respect to the Promissory Notes held by the Banks
shall be shared by the Banks pro rata; provided that nothing in this Section
shall impair the right of any Bank to exercise any right of set-off or
counterclaim it may have and to apply the amount subject to such exercise to the
payment of indebtedness of the Borrower other than its indebtedness under the
Promissory Notes.
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SECTION 9.05. Amendments and Waivers. Any provision of this Agreement
or the Promissory Notes may be amended or waived if, but only if, such amendment
or waiver is in writing and is signed by the Borrower and the Required Banks
(and, if the rights or duties of the Agent are affected thereby, by the Agent);
provided that no such amendment or waiver shall, unless signed by all the Banks,
(i) increase or decrease the Commitment of any Bank (except for a ratable
decrease in the Commitments of all Banks) or subject any Bank to any additional
obligation, (ii) reduce the principal of or rate of interest on any Loan or any
fees hereunder, (iii) postpone the date fixed for any payment of principal of or
interest on any Loan or any fees hereunder or for termination of any Commitment,
(iv) change the percentage of the Commitments or of the aggregate unpaid
principal amount of the Promissory Notes, or the number of Banks, which shall be
required for the Banks or any of them to take any action under this Section or
any other provision of this Agreement or (v) release the Parent Guarantor from
its obligations under the Parent Guarantee.
SECTION 9.06. Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, except that the Borrower may not
assign or otherwise transfer any of its rights under this Agreement without the
prior written consent of all Banks.
(b) Any Bank may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in its Commitment or
any or all of its Loans. In the event of any such grant by a Bank of a
participating interest to a Participant, whether or not upon notice to the
Borrower and the Agent, such Bank shall remain responsible for the performance
of its obligations hereunder, and the Borrower and the Agent shall continue to
deal solely and directly with such Bank in connection with such Bank's rights
and obligations under this Agreement. Any agreement pursuant to which any Bank
may grant such a participating interest shall provide that such Bank shall
retain the sole right and responsibility to enforce the obligations of the
Borrower hereunder including, without limitation, the right to approve any
amendment, modification or waiver of any provision of this Agreement; provided
that such participation agreement may provide that such Bank will not agree to
any modification, amendment or waiver of this Agreement described in clause (i),
(ii), (iii) or (iv) of Section 9.05 without the consent of the Participant. The
Borrower agrees that each Participant shall, to the extent provided in its
participation agreement and subject to subsection (e), (f) and (g) below, be
entitled to the benefits of Article 8 with respect to its participating
interest. An assignment or other transfer which is not permitted by subsection
9.06(c) or 9.06(d) below shall be given effect for purposes of this Agreement
only to the extent of a participating interest granted in accordance with this
subsection (b).
52
<PAGE> 57
(c) Any Bank may at any time assign to one or more banks or other
institutions (each an "Assignee") all, or a proportionate part (in an amount
equivalent to an original Commitment of not less than $10,000,000) of all, of
its rights and obligations under this Agreement and the Promissory Notes, and
such Assignee shall assume such rights and obligations, pursuant to an
Assignment and Assumption Agreement in substantially the form of Exhibit I
hereto executed by such Assignee and such transferor Bank, with (and subject to)
the subscribed consent of the Borrower and the Agent, which shall not be
unreasonably withheld; provided that if an Assignee is an affiliate of such
transferor Bank, no such consent shall be required; and provided further that
such assignment may, but need not, include rights of the transferor Bank in
respect of outstanding Money Market Loans. Upon execution and delivery of such
instrument and payment by such Assignee to such transferor Bank of an amount
equal to the purchase price agreed between such transferor Bank and such
Assignee, such Assignee shall be a Bank party to this Agreement and shall have
all the rights and obligations of a Bank with a Commitment as set forth in such
instrument of assumption, and the transferor Bank shall be released from its
obligations hereunder to a corresponding extent, and no further consent or
action by any party shall be required. Upon the consummation of any assignment
pursuant to this subsection (c), the transferor Bank, the Agent and the Borrower
shall make appropriate arrangements so that, if required, a new Promissory Note
is issued to the Assignee. In connection with any such assignment, the
transferor Bank shall pay to the Agent an administrative fee for processing such
assignment in the amount of $2,500. If the Assignee is not incorporated under
the laws of the United States of America or a state thereof, it shall deliver to
the Borrower and the Agent certification as to exemption from deduction or
withholding of any United States federal income taxes in accordance with Section
8.04.
(d) Any Bank may at any time assign all or any portion of its rights
under this Agreement and its Promissory Note to a Federal Reserve Bank. No such
assignment shall release the transferor Bank from its obligations hereunder.
(e) No Assignee, Participant or other transferee of any Bank's rights
shall be entitled to receive any greater payment under Section 8.03 or 8.04 than
such Bank would have been entitled to receive with respect to the rights
transferred, unless such transfer is made with the Borrower's prior written
consent or by reason of the provisions of Section 8.02, 8.03 or 8.04 requiring
such Bank to designate a different Applicable Lending Office under certain
circumstances or at a time when the circumstances giving rise to such greater
payment did not exist.
(f) Notwithstanding anything to the contrary contained in this Section
9.06 but subject to the terms and conditions set forth in this subsection (f),
any
53
<PAGE> 58
Bank may from time to time, elect to designate a Conduit to provide all
or any part of Loans required to be made by such Bank to the Borrower pursuant
to this Agreement or to acquire a participation interest in any Loans extended
by such Bank hereunder (a "CONDUIT DESIGNATION"), provided the designation of a
Conduit by any Bank for purposes of this Section 9.06(f) shall be subject to the
approval of the Borrower, which shall not be unreasonably withheld. No
additional Note shall be required with regard to a Conduit Designation;
provided, however, to the extent any Conduit shall advance funds under a Conduit
Designation, the designating Bank shall be deemed to hold the Note in its
possession as an agent for such Conduit to the extent of the Loan funded by such
Conduit. Notwithstanding any such Conduit Designation, (x) the designating Bank
shall remain solely responsible to the other parties hereto for its obligations
under this Agreement and (y) the Borrower and the Agent may continue to deal
solely and directly with the designating Bank as administrative agent for such
designating Bank's Conduit, in connection with all of such Conduit's rights and
obligations under this Agreement, unless and until the Borrower and the Agent
are notified that the designating Bank has been replaced as administrative agent
for its Conduit; any payments for the benefit of any designating Bank and its
Conduit shall be paid to such designating Bank for itself as administrative
agent for its Conduit, as applicable; provided neither the Borrower nor the
Agent shall be responsible for any designating Bank's application of any such
payments. In addition, any Conduit may (i) with notice to, but without the prior
written consent of the Borrower and the Agent, and without paying any processing
fee therefor, assign all or portions of its interest in any Loans to the Bank
that designated such Conduit or to any financial institutions consented to by
the Borrower and the Agent providing liquidity and/or credit facilities to or
for the account of such Conduit to support the funding or maintenance of Loans
and (ii) disclose on a confidential basis any non-public information relating to
its Loans to any rating agency, commercial paper dealer or provider of any
guarantee, surety, credit or liquidity enhancement to such Conduit.
(g) Each party to this Agreement hereby agrees that, at any time a
Conduit Designation is in effect, it shall not institute against, or join any
other person in instituting against, any Conduit any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding or other proceedings under any
federal or state bankruptcy or similar law, for one year and a day after the
latest maturing commercial paper note issued by such Conduit is paid. This
Section 9.06(g) shall survive the termination of this Agreement.
SECTION 9.07. Collateral. Each of the Banks represents to the Agent and
each of the other Banks that it in good faith is not relying upon any "margin
stock" (as defined in Regulation U) as collateral in the extension or
maintenance of the credit provided for in this Agreement.
54
\
<PAGE> 59
SECTION 9.08. Governing Law. THIS AGREEMENT AND EACH PROMISSORY NOTE
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK.
SECTION 9.09. Counterparts; Integration. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement constitutes the entire agreement and understanding among the
parties hereto and supersedes any and all prior agreements and understandings,
oral or written, relating to the subject matter hereof.
SECTION 9.10. Waiver of Jury Trial. EACH OF THE BORROWER, THE AGENT AND
THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 9.11. Judgment Currency. If, under any applicable law and
whether pursuant to a judgment being made or registered against the Borrower or
for any other reason, any payment under or in connection with this Agreement, is
made or satisfied in a currency (the "Other Currency") other than that in which
the relevant payment is due (the "Required Currency") then, to the extent that
the payment (when converted into the Required Currency at the rate of exchange
on the date of payment or, if it is not practicable for the party entitled
thereto (the "Payee") to purchase the Required Currency with the other Currency
on the date of payment, at the rate of exchange as soon thereafter as it is
practicable for it to do so) actually received by the Payee falls short of the
amount due under the terms of this Agreement, the Borrower shall, to the extent
permitted by law, as a separate and independent obligation, indemnify and hold
harmless the Payee against the amount of such short-fall. For the purpose of
this Section, "rate of exchange" means the rate at which the Payee is able on
the relevant date to purchase the Required Currency with the Other Currency and
shall take into account any premium and other costs of exchange.
SECTION 9.12. Judicial Proceedings. (a) Consent to Jurisdiction. The
Borrower irrevocably submits to the non-exclusive jurisdiction of any federal or
New York State court sitting in New York City over any suit, action or
proceeding arising out of or relating to the Financing Documents. The Borrower
irrevocably waives, to the fullest extent permitted by law, any objection which
it may now or hereafter have to the laying of the venue of any such suit, action
or proceeding brought in such court and any claim that any suit, action or
proceeding brought in such court has been brought in an inconvenient forum. The
Borrower agrees that a final judgment in any such suit, action or proceeding
brought in such a court shall
55
<PAGE> 60
be conclusive and binding upon it and will be given effect in Luxembourg to the
fullest extent permitted by applicable law and may be enforced in any federal or
New York State court sitting in New York City (or any other courts to the
jurisdiction of which the Borrower is or may be subject) by a suit upon such
judgment, provided that service of process is effected upon it in one of the
manners specified herein or as otherwise permitted by law.
(b) Appointment of Agent for Service of Process. The Borrower hereby
irrevocably designates and appoints CT Corporation System having an office on
the date hereof at 1633 Broadway, New York, New York 10019 as its authorized
agent, to accept and acknowledge on its behalf, service of any and all process
which may be served in any suit, action or proceeding of the nature referred to
in subsection (a) above in any federal or New York State court sitting in New
York City. The Borrower represents and warrants that such agent has agreed in
writing to accept such appointment and that a true copy of such designation and
acceptance has been delivered to the Agent. Such designation and appointment
shall be irrevocable until all principal and interest and all other amounts
payable under the Financing Documents shall have been paid in full in accordance
with the provisions hereof. If such agent shall cease so to act, the Borrower
covenants and agrees to designate irrevocably and appoint without delay another
such agent satisfactory to the Agent and to deliver promptly to the Agent
evidence in writing of such other agent's acceptance of such appointment.
(c) Service of Process. The Borrower hereby consents to process being
served in any suit, action, or proceeding of the nature referred to in
subsection (a) above in any federal or New York State court sitting in New York
City by service of process upon the agent of the Borrower, as the case may be,
for service of process in such jurisdiction appointed as provided in subsection
(b) above; provided that, to the extent lawful and possible, written notice of
said service upon such agent shall be mailed by registered airmail, postage
prepaid, return receipt requested, to the Borrower at its address specified on
the signature pages hereof or to any other address of which the Borrower shall
have given written notice to the Agent. The Borrower irrevocably waives, to the
fullest extent permitted by law, all claim of error by reason of any such
service and agrees that such service shall be deemed in every respect effective
service of process upon the Borrower in any such suit, action or proceeding and
shall, to the fullest extent permitted by law, be taken and held to be valid and
personal service upon and personal delivery to the Borrower.
(d) No Limitation on Service or Suit. Nothing in this Section shall
affect the right of the Agent or any Bank to serve process in any other manner
permitted by law or limit the right of the Agent or any Bank to bring
proceedings against the Borrower in the courts of any jurisdiction or
jurisdictions.
56
<PAGE> 61
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
TYCO INTERNATIONAL GROUP S.A.
By: /s/ Richard Brann
---------------------------------------
Title: Managing Director
By: /s/ Erik D. Lazar
---------------------------------------
Title: Managing Director
Address: 6 Avenue Emile Reuter
2nd Floor
Luxembourg, 2420
Facsimile number: 352-46-43-50
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By: /s/ SoVonna L. Day
---------------------------------------
Title: Vice President
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By: /s/ SoVonna L. Day
---------------------------------------
Title: Vice President
60 Wall Street
New York, New York 10260-0060
Attention: SoVonna L. Day
Telex number: 177615
Facsimile number: 212-648-5018
<PAGE> 62
Co-Syndication Agents:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: /s/ John W. Pocalyko
---------------------------------------
Title: Managing Director
THE CHASE MANHATTAN BANK
By: /s/ Michael Lancia
---------------------------------------
Title: Vice President
COMMERZBANK AG, NEW YORK BRANCH
By: /s/ Robert Donohue
---------------------------------------
Title: Senior Vice President
By: /s/ Peter Doyle
---------------------------------------
Title: Assistant Vice President
Managing Agents:
ABN AMRO BANK N.V.
By: /s/ James S. Adelsheim
---------------------------------------
Title: Group Vice President
By: /s/ David A. Carroll
---------------------------------------
Title: Officer
<PAGE> 63
BARCLAYS BANK PLC
By: /s/ Paul Kavanagh
---------------------------------------
Title: Director
BANKERS TRUST COMPANY
By: /s/ Patricia Hogan
---------------------------------------
Title: Principal
CITIBANK, N.A.
By: /s/ Diane L. Pockaj
---------------------------------------
Title: Vice President
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ Vladimir Labun
---------------------------------------
Title: First Vice President - Manager
<PAGE> 64
CREDIT SUISSE FIRST BOSTON
By: /s/ David W. Kratovil
---------------------------------------
Title: Director
By: /s/ Robert Hetu
---------------------------------------
Title: Vice President
DRESDNER BANK AG, NEW YORK AND
GRAND CAYMAN BRANCHES
By: /s/ A. Richard Morris
---------------------------------------
Title: First Vice President
By: /s/ Ken Hamilton
---------------------------------------
Title: Senior Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Robert McMillan
---------------------------------------
Title: Corporate Banking Officer
FIRST UNION NATIONAL BANK
By: /s/ Mareen Walker Duvall
---------------------------------------
Title: Senior Vice President
<PAGE> 65
ISTITUTO BANCARIO SAN PAOLO DI
TORINO ISTITUTO MOBILIARE
ITALIANO, SPA
By: /s/ Luca Sacchi
---------------------------------------
Title: Vice President
By: /s/ Carlo Persico
---------------------------------------
Title: Deputy General Manager
MARINE MIDLAND BANK
By: /s/ Mark J. Rakov
---------------------------------------
Title: Vice President
MELLON BANK, N.A.
By: /s/ Charles H. Staub
---------------------------------------
Title: First Vice President
SOCIETE GENERALE
By: /s/ Louis P. Laville, III
---------------------------------------
Title: Director
<PAGE> 66
THE BANK OF NOVA SCOTIA
By: /s/ William E. Zarrett
---------------------------------------
Title: Senior Relationship Manager
TORONTO DOMINION (TEXAS), INC.
By: /s/ Anne C. Favoriti
---------------------------------------
Title: Vice President
WESTDEUTSCHE LANDESBANK
GIROZENTRALE
By: /s/ Duncan M. Robertson
---------------------------------------
Title: Vice President
By: /s/ Alan S. Bookspan
---------------------------------------
Title: Vice President
Co-Agents:
BANKBOSTON, N.A.
By: /s/ Roberta F. Keeler
---------------------------------------
Title: Vice President
<PAGE> 67
BANQUE NATIONALE DE PARIS
By: /s/ Richard L. Sted
---------------------------------------
Title: Senior Vice President
By: /s/ Richard Pace
---------------------------------------
Title: Vice President
Corporate Banking Division
Lead Managers:
DEN DANSKE BANK AKTIESELSKAB,
CAYMAN ISLANDS BRANCH
By: /s/ Peter L. Hargraves
---------------------------------------
Title: Vice President
By: /s/ Henrik K. Ibsen
---------------------------------------
Title: Vice President
FLEET BANK - NH
By: /s/ Amy LeBlanc Hackett
---------------------------------------
Title: Vice President
KEYBANK NATIONAL ASSOCIATION
By: /s/ Frank J. Jancar
---------------------------------------
Title: Vice President
<PAGE> 68
NATIONAL WESTMINSTER BANK PLC
NEW YORK BRANCH
NATIONAL WESTMINSTER BANK PLC
NASSAU BRANCH
By: /s/ B. T. Sharpe
---------------------------------------
Title: Senior Corporate Manager
By: /s/ B. T. Sharpe
---------------------------------------
Title: Senior Corporate Manager
STANDARD CHARTERED BANK
By: /s/ Jacob H. Yahiayan
---------------------------------------
Title: Vice President
Participants:
AUSTRALIA AND NEW ZEALAND BANKING
GROUP LIMITED
By: /s/ Robert Sloan
---------------------------------------
Title: First Vice President
<PAGE> 69
BANCA COMMERCIALE ITALIANA
NEW YORK BRANCH
By: /s/ C. Dougherty
---------------------------------------
Title: Vice President
By: /s/ Karen Purelis
---------------------------------------
Title: Vice President
BANCA POPOLARE DI MILANO
NEW YORK BRANCH
By: /s/ Fulvio Montanari
---------------------------------------
Title: First Vice President
By: /s/ Patrick F. Dillon
---------------------------------------
Title: Vice President
Chief Credit Officer
BBL INTERNATIONAL, (U.K.) LTD
By: /s/ C. F. Wright
---------------------------------------
Title: Authorized Signatory
By: /s/ M-C Swinnen
---------------------------------------
Title: Authorized Signatory
<PAGE> 70
BANK OF TOKYO-MITSUBISHI, LTD.
By: /s/ Thomas Fennessey
---------------------------------------
Title: Attorney-in-fact
BAYERISCHE HYPO-UND VEREINSBANK AG,
NEW YORK BRANCH
By: /s/ Marianne Weinzinger
---------------------------------------
Title: Director
By: /s/ Imke Engelmann
---------------------------------------
Title: Associate Director
BAYERISCHE LANDESBANK
GIROZENTRALE CAYMAN ISLANDS
BRANCH
By: /s/ Alexander Kohnert
---------------------------------------
Title: First Vice President
By: /s/ James H. Boyle
---------------------------------------
Title: Senior Vice President
<PAGE> 71
CARIPLO - CASSA DI RISPARMIO DELLE
PROVINCIE LOMBARDE S.p.A.
By: /s/ Anthony F. Giobbi
---------------------------------------
Title: First Vice President
By: /s/ Maria Elena Greene
---------------------------------------
Title: Assistant Vice President
COMERICA BANK
By: /s/ Martin G. Elllis
---------------------------------------
Title: Vice President
CREDIT COMMERCIAL DE FRANCE
NEW YORK BRANCH
By: /s/ J. J. Salomon
---------------------------------------
Title: Senior Vice President
By: /s/ Elizabeth A. Fallon
---------------------------------------
Title: Vice President
<PAGE> 72
NORDDEUTSCHE LANDESBANK
GIROZENTRALE NEW YORK BRANCH
AND/OR CAYMAN ISLANDS BRANCH
By: /s/ Irene A. Burczynski
---------------------------------------
Title: Vice President
By: /s/ Stephen K. Hunter
---------------------------------------
Title: Senior Vice President
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Donald V. Davis
---------------------------------------
Title: Vice President
THE BANK OF NEW YORK
By: /s/ Thomas C. McCrohan
---------------------------------------
Title: Vice President
THE NORTHERN TRUST COMPANY
By: /s/ Russell R. Rockenbach
---------------------------------------
Title: Second Vice President
<PAGE> 73
UNICREDITO ITALIANO S.p.A.
By: /s/ Harmon P. Butler
---------------------------------------
Title: First Vice President and
Deputy Manager
By: /s/ Gianfranco Bisagni
---------------------------------------
Title: First Vice President
BW CAPITAL MARKETS, INC.
By: /s/ Robert B. Herber
---------------------------------------
Title: Managing Director
By: /s/ Thomas A. Lowe
---------------------------------------
Title: Vice President
THE DAI-ICHI KANGYO BANK, LTD.,
NEW YORK BRANCH
By: /s/ Bob Gallagher, Jr.
---------------------------------------
Title: Vice President
WESTPAC BANKING CORPORATION
By: /s/ Kate V. Perry
---------------------------------------
Title: Vice President
<PAGE> 74
COMMITMENT SCHEDULE
<TABLE>
<S> <C>
Morgan Guaranty Trust Company of New York $183,750,000
Bank of America National Trust and Savings Association $108,750,000
The Chase Manhattan Bank $108,750,000
Commerzbank AG, New York Branch $108,750,000
ABN AMRO Bank N.V. $90,000,000
Barclays Bank Plc $90,000,000
Bankers Trust Company $90,000,000
Citibank, N.A. $90,000,000
Credit Lyonnais New York Branch $90,000,000
Credit Suisse First Boston $90,000,000
Dresdner Bank AG, New York and Grand Cayman Branches $90,000,000
The First National Bank of Chicago $90,000,000
First Union National Bank $90,000,000
Istituto Bancario San Paolo di Torino
Istituto Mobiliare Italiano, SpA $90,000,000
Marine Midland Bank $90,000,000
Mellon Bank, N.A. $90,000,000
Societe Generale $90,000,000
The Bank of Nova Scotia $90,000,000
Toronto Dominion (Texas), Inc. $90,000,000
Westdeutsche Landesbank Girozentrale $90,000,000
BankBoston, N.A. $75,000,000
Banque Nationale de Paris $75,000,000
Den Danske Bank Aktieselskab, Cayman Islands Branch $65,000,000
Fleet Bank - NH $65,000,000
KeyBank National Association $65,000,000
National Westminster Bank Plc New York and
Nassau Branches $65,000,000
Standard Chartered Bank $65,000,000
Australia and New Zealand Banking Group Limited $50,000,000
Banca Commerciale Italiana New York Branch $50,000,000
Banca Popolare di Milano New York Branch $50,000,000
BBL International, (U.K.) Ltd $50,000,000
Bank of Tokyo-Mitsubishi, Ltd. $50,000,000
Bayerische Hypo - Und Vereinsbank AG, New York Branch $50,000,000
Bayerische Landesbank Girozentrale Cayman Islands Branch $50,000,000
Cariplo - Cassa Di Risparmio Delle Provincie Lombarde S.p.A. $50,000,000
Comerica Bank $50,000,000
Credit Commercial de France New York Branch $50,000,000
</TABLE>
<PAGE> 75
<TABLE>
<S> <C>
Norddeutsche Landesbank Girozentrale New York Branch
and/or Cayman Islands Branch $50,000,000
PNC Bank, National Association $50,000,000
The Bank of New York $50,000,000
The Northern Trust Company $50,000,000
Unicredito Italiano S.p.A. $50,000,000
BW Capital Markets, Inc. $25,000,000
The Dai-Ichi Kangyo Bank, Ltd., New York Branch $25,000,000
Westpac Banking Corporation $25,000,000
---------------
Total Commitments $ 3,250,000,000
</TABLE>
<PAGE> 76
PRICING SCHEDULE
The "EURO-DOLLAR MARGIN", "CD MARGIN" and "FACILITY FEE RATE" for any
day are the respective percentages set forth below in the applicable row and
column based upon the Utilization and Status that exist on such day (provided
that for any day on or after February 11, 2000, the "Euro-Dollar Margin" and the
"CD Margin" shall be equal to the respective percentages so determined plus (x)
1.00% per annum for any day on which Level I Status, Level II Status, Level III
Status or Level IV Status exists or (y) 2.00% per annum for any day on which
Level V Status or Level VI Status exists):
<TABLE>
<CAPTION>
===============================================================================================================
Level Level Level Level Level Level
Status I II III IV V VI
===============================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Euro-Dollar Margin
Utilization [less than] 25% 0.315% 0.430% 0.535% 0.640% 0.7375% 0.800%
Utilization [greater than
or equal to] 25% 0.440% 0.555% 0.660% 0.765% 0.9875% 1.175%
===============================================================================================================
CD Margin
Utilization [less than] 25% 0.440% 0.555% 0.660% 0.765% 0.8625% 0.925%
Utilization [greater than
or equal to] 25% 0.565% 0.680% 0.785% 0.890% 1.1125% 1.300%
===============================================================================================================
Facility Fee Rate 0.060% 0.070% 0.090% 0.110% 0.1375% 0.200%
===============================================================================================================
</TABLE>
For purposes of this Schedule, the following terms have the following
meanings, subject to the concluding paragraph of this Schedule:
"LEVEL I STATUS" exists at any date if, at such date, the Borrower's
senior unsecured long-term debt is rated A or higher by S&P or A2 or higher by
Moody's.
"LEVEL II STATUS" exists at any date if, at such date, (i) the
Borrower's senior unsecured long-term debt is rated A- or higher by S&P or A3 or
higher by Moody's and (ii) Level I Status does not exist.
"LEVEL III STATUS" exists at any date if, at such date, (i) the
Borrower's senior unsecured long-term debt is rated BBB+ or higher by S&P or
Baa1 or higher by Moody's and (ii) neither Level I Status nor Level II Status
exists.
"LEVEL IV STATUS" exists at any date if, at such date, (i) (x) the
Borrower's senior unsecured long-term debt is rated BBB or higher by S&P or Baa2
or higher by Moody's and (y) the Borrower's commercial paper is rated A2 or
higher by S&P and P2 or higher by Moody's and (ii) none of Level I Status, Level
II Status and Level III Status exists.
<PAGE> 77
"LEVEL V STATUS" exists at any date, if at such date, (i) the
Borrower's senior unsecured long-term debt is rated BBB or higher by S&P or Baa2
or higher by Moody's and (ii) none of Level I Status, Level II Status, Level III
Status or Level IV Status exists.
"LEVEL VI STATUS" exists at any date if, at such date, no other Status
exists.
"STATUS" refers to the determination of which of Level I Status, Level
II Status, Level III Status, Level IV Status, Level V Status or Level VI Status
exists at any date.
"UTILIZATION" means, at any date, the percentage equivalent of a
fraction (i) the numerator of which is the aggregate outstanding principal
amount of the Loans at such date and (ii) the denominator of which is the
aggregate amount of the Commitments at such date. If for any reason any Loans
remain outstanding following termination of the Commitments, Utilization shall
be deemed to be in excess of 25%.
The credit ratings to be utilized for purposes of this Schedule are
those assigned to the senior unsecured long-term debt securities and/or
commercial paper, as the case may be, of the Borrower without third-party credit
enhancement, and any rating assigned to any other debt security of the Borrower
shall be disregarded. The rating in effect at any date is that in effect at the
close of business on such date. If the Borrower is split-rated and the ratings
differential is one notch, the higher of the two ratings will apply (e.g., A/A3
results in Level I Status). If the Borrower is split-rated and the ratings
differential is more than one notch, the average of the two ratings (or the
higher of two intermediate ratings) shall be used (e.g., A/Baa1 results in Level
II Status, as does A/Baa2).
2
<PAGE> 78
EXHIBIT A
PROMISSORY NOTE
New York, New York
, 1999
For value received, TYCO INTERNATIONAL GROUP S.A., a Luxembourg company
(the "Borrower"), promises to pay to the order of (the "Bank"), for the
account of its Applicable Lending Office, the unpaid principal amount of each
Loan made by the Bank to the Borrower pursuant to the Credit Agreement referred
to below on the maturity date provided for in the Credit Agreement. The Borrower
promises to pay interest on the unpaid principal amount of each such Loan on the
dates and at the rate or rates provided for in the Credit Agreement. All such
payments of principal and interest shall be made in lawful money of the United
States in Federal or other immediately available funds at the office of Morgan
Guaranty Trust Company of New York, 60 Wall Street, New York, New York.
All Loans made by the Bank, the respective types and maturities thereof
and all repayments of the principal thereof shall be recorded by the Bank and,
if the Bank so elects in connection with any transfer or enforcement hereof,
appropriate notations to evidence the foregoing information with respect to each
such Loan then outstanding may be endorsed by the Bank on the schedule attached
hereto, or on a continuation of such schedule attached to and made a part
hereof; provided that the failure of the Bank to make any such recordation or
endorsement shall not affect the obligations of the Borrower hereunder or under
the Credit Agreement.
This promissory note is one of the Promissory Notes referred to in the
364-Day Credit Agreement dated as of February 12, 1999 among the Borrower, the
<PAGE> 79
banks listed on the signature pages thereof and Morgan Guaranty Trust Company of
New York, as Agent (as the same may be amended from time to time, the "Credit
Agreement"). Terms defined in the Credit Agreement are used herein with the same
meanings. Reference is made to the Credit Agreement for provisions for the
prepayment hereof and the acceleration of the maturity hereof.
Except as permitted by Section 9.06 of the Credit Agreement, this
Promissory Note may not be assigned by the Bank to any other Person.
This Promissory Note shall be governed by and construed in accordance
with the laws of the State of New York.
TYCO INTERNATIONAL GROUP S.A.
By:
---------------------------------------
Name:
Title:
By:
---------------------------------------
Name:
Title:
2
<PAGE> 80
Promissory Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
- --------------------------------------------------------------------------------
Amount Type Amount of Unpaid
of of Principal Principal Maturity Notation
Date Loan Loan Repaid Amount Date Made By
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
3
<PAGE> 81
EXHIBIT B
FORM OF MONEY MARKET QUOTE REQUEST
[Date]
To: Morgan Guaranty Trust Company of New York
(the "Agent")
From: Tyco International Group S.A.
Re: 364-Day Credit Agreement (the "Credit Agreement") dated
as of February 12, 1999 among the Borrower, the Banks
listed on the signature pages thereof and the Agent
We hereby give notice pursuant to Section 2.03 of the Credit Agreement
that we request Money Market Quotes for the following proposed Money Market
Borrowing(s):
Date of Borrowing: __________________
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT* INTEREST PERIOD**
----------------- -----------------
<S> <C>
$
</TABLE>
Such Money Market Quotes should offer a Money Market [Margin] [Absolute
Rate]. [The applicable base rate is the London Interbank Offered Rate.]
Terms used herein have the meanings assigned to them in the Credit
Agreement.
TYCO INTERNATIONAL GROUP S.A.
By
-----------------------------------------
Title:
By
----------------------------------------
Title:
- ------------------------
*Amount must be $10,000,000 or a larger multiple of $1,000,000.
**Not less than one month (LIBOR Auction) or not less than 30 days
(Absolute Rate Auction), subject to the provisions of the definition of Interest
Period.
<PAGE> 82
EXHIBIT C
FORM OF INVITATION FOR MONEY MARKET QUOTES
To: [Name of Bank]
Re: Invitation for Money Market Quotes to Tyco International
Group S.A. (the "Borrower")
Pursuant to Section 2.03 of the 364-Day Credit Agreement dated as of
February 12, 1999 among the Borrower, the Banks parties thereto and the
undersigned, as Agent (the "Credit Agreement"), we are pleased on behalf of the
Borrower to invite you to submit Money Market Quotes to the Borrower for the
following proposed Money Market Borrowing(s):
Date of Borrowing: __________________
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT INTEREST PERIOD
---------------- ---------------
<S> <C>
$
</TABLE>
Such Money Market Quotes should offer a Money Market [Margin] [Absolute
Rate]. [The applicable base rate is the London Interbank Offered Rate.]
Please respond to this invitation by no later than [2:00 P.M.] [9:30
A.M.] (New York City time) on [date].
Terms used herein have the meanings assigned to them in the Credit
Agreement.
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By
-----------------------------------------
Authorized Officer
<PAGE> 83
EXHIBIT D
FORM OF MONEY MARKET QUOTE
To: Morgan Guaranty Trust Company of New York, as Agent
Re: Money Market Quote to Tyco International Group S.A. (the "Borrower")
In response to your invitation on behalf of the Borrower dated
_____________, 19__, we hereby make the following Money Market Quote on the
following terms:
1. Quoting Bank: ________________________________
2. Person to contact at Quoting Bank:
-----------------------------
3. Date of Borrowing: ____________________*
4. We hereby offer to make Money Market Loan(s) in the following
principal amounts, for the following Interest Periods and at
the following rates:
Principal Interest Money Market
<TABLE>
<CAPTION>
AMOUNT** PERIOD*** [MARGIN****] [ABSOLUTE RATE*****]
-------- --------- ------------ --------------------
<S> $ <C> <C> <C>
$
</TABLE>
[Provided, that the aggregate principal amount of Money Market Loans
for which the above offers may be accepted shall not exceed $____________.]**
----------
* As specified in the related Invitation.
** Principal amount bid for each Interest Period may not exceed
principal amount requested. Specify aggregate limitation if the sum of the
individual offers exceeds the amount the Bank is willing to lend. Bids must be
made for $5,000,000 or a larger multiple of $1,000,000.
(notes continued on following page)
<PAGE> 84
We understand and agree that the offer(s) set forth above, subject to
the satisfaction of the applicable conditions set forth in the 364-Day Credit
Agreement dated as of February 12, 1999 (the "Credit Agreement") among the
Borrower, the Banks listed on the signature pages thereof and yourselves, as
Agent, irrevocably obligates us to make the Money Market Loan(s) for which any
offer(s) are accepted, in whole or in part, in accordance with Section 2.03(f)
of the Credit Agreement.
Terms used herein have the meanings assigned to them in the Credit
Agreement.
Very truly yours,
[NAME OF BANK]
Dated: By:
--------------------- ---------------------------------
Authorized Officer
- ----------
*** Not less than one month or not less than 30 days, as specified in the
related Invitation. No more than five bids are permitted for each Interest
Period.
**** Margin over or under the London Interbank Offered Rate determined
for the applicable Interest Period. Specify percentage (to the nearest 1/10,000
of 1%) and specify whether "PLUS" or "MINUS".
***** Specify rate of interest per annum (to the nearest 1/10,000th of 1%).
2
<PAGE> 85
EXHIBIT E
FORM OF OPINION OF CHIEF CORPORATE COUNSEL
OF THE PARENT GUARANTOR
February 12, 1999
To the Banks and the Agent
Named on the Attached Distribution List
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
I am the Executive Vice President and Chief Corporate Counsel of Tyco
International Ltd., a Bermuda company (the "PARENT GUARANTOR"), which owns all
of the outstanding capital stock of Tyco International Group S.A., a Luxembourg
company (the "BORROWER"). I am rendering this opinion in connection with (i)
that certain 364-Day Credit Agreement (the "CREDIT AGREEMENT"), dated as of
February 12, 1999, among the Borrower, the banks listed on the signature pages
thereof (the "BANKS") and Morgan Guaranty Trust Company of New York, as Agent
and (ii) that certain Amended and Restated Parent Guarantee Agreement (the
"PARENT GUARANTEE"), dated as of February 13, 1998 and amended and restated as
of February 12, 1999, entered into by the Parent Guarantor pursuant to the
Credit Agreement. This opinion is being delivered to you pursuant to Section
3.01(d) of the Credit Agreement. Each term defined in the Credit Agreement and
used herein, but not otherwise defined herein, has the meaning ascribed thereto
in the Credit Agreement.
In connection with the opinion set forth herein, I have caused
attorneys employed under my supervision to review the Credit Agreement, the
Promissory Notes of the Borrower, the Parent Guarantee (collectively, the
"FINANCING DOCUMENTS") and the Extendible 364-Day Credit Agreement dated as of
February 13, 1998 among the Borrower, the banks listed therein and Morgan
Guaranty Trust Company of New York, as agent for such banks, as amended to the
Effective Date (the "EXISTING FIVE-YEAR AGREEMENT" and, as further amended by
<PAGE> 86
the Credit Agreement, the "AMENDED FIVE-YEAR AGREEMENT" and together with the
Credit Agreement, the "AGREEMENTS") and have caused attorneys employed under my
supervision to examine originals or copies, certified or otherwise identified to
my satisfaction, of such documents, records, certificates and instruments as I
have deemed relevant and necessary as a basis for the opinion hereinafter
expressed.
In connection with such examination, I have assumed the genuineness of
all signatures on original documents, the authenticity of all documents
submitted for review as originals, the conformity to the originals of all copies
submitted for review as certified, conformed or photostatic copies, and the
authenticity of the originals of such copies. As to various questions of fact
material to this opinion, I have relied, without independent investigation or
verification, upon statements, representations and certificates of officers and
other representatives of the Borrower, the Parent Guarantor and certificates of
public officials. In addition, I have assumed that (i) the Agreements have been
validly authorized, executed and delivered by all parties thereto (other than
the Borrower), (ii) each party to the Agreements (other than the Borrower) has
been duly organized and is a corporation or other entity validly existing and in
good standing (to the extent applicable) under the laws of its respective
jurisdiction of organization, with the full corporate or other organizational
power to execute and deliver the Agreements and to perform its respective
obligations thereunder, (iii) the Agreements constitute the legal, valid and
binding obligations of the respective parties thereto (other than the Borrower)
enforceable against such parties in accordance with their respective terms, (iv)
the execution and delivery of the Agreements by each party thereto (other than
the Borrower) and the performance by such parties of their respective
obligations thereunder do not violate such parties' respective articles or
certificate of incorporation or by-laws, or other organizational documents, and
(v) the execution, delivery and performance by each party to the Agreements
(other than the Borrower) and the performance by such parties of their
respective obligations thereunder do not violate any agreement, judgment,
injunction, decree, order of any governmental authority, other instrument, law
or regulation applicable to such party.
Based upon the foregoing, and subject to the qualifications and
assumptions set forth herein, it is my opinion that:
1. The execution, delivery and performance by the Borrower of the
Credit Agreement and the Promissory Notes and the performance by the Borrower of
the Amended Five-Year Agreement (a) require no action by or in respect of, or
filing with, any governmental body, agency or official, in each case, on the
part of the Borrower; and (b) do not contravene, or constitute a default by the
Borrower under, any provision of (i) applicable law or regulation, or (ii) any
agreement or
2
<PAGE> 87
instrument evidencing or governing debt of the Borrower, or any other agreement,
judgment, injunction, order, decree or other instrument binding upon the
Borrower.
2. Each of the Credit Agreement and the Amended Five-Year Agreement
constitutes a valid and binding agreement of the Borrower and each Promissory
Note constitutes a valid and binding obligation of the Borrower.
3. The execution, delivery and performance by the Parent Guarantor of
the Parent Guarantee (a) require no action by or in respect of, or filing with,
any governmental body, agency or official, in each case, on the part of the
Parent Guarantor; and (b) do not contravene, or constitute a default by the
Parent Guarantor under, any provision of (i) applicable law or regulation or
(ii) any agreement or instrument evidencing or governing debt of the Parent
Guarantor, or any other agreement, judgment, injunction, order, decree or other
instrument binding upon the Parent Guarantor.
4. The Parent Guarantee constitutes a valid and binding obligation of
the Parent Guarantor.
5. There is no action, suit or proceeding pending against, or, to the
best of my knowledge, threatened against or affecting, the Parent Guarantor or
any of its Subsidiaries before any court or arbitrator or any governmental body,
agency or official, in which there is a reasonable possibility of an adverse
decision which could, based upon the facts and circumstances in existence on the
date hereof, reasonably be expected to have a Material Adverse Effect or which
in any manner draws into question the validity of the Financing Documents.
6. Each of the Parent Guarantor's corporate Subsidiaries is a
corporation validly existing and in good standing under the laws of its
jurisdiction of incorporation, except where the failure to be so incorporated,
existing or in good standing could not, based upon the facts and circumstances
existing on the date hereof, reasonably be expected to have a Material Adverse
Effect, and has all corporate powers and all Consents required to carry on its
business as now conducted other than those powers and Consents, the failure of
which to be possessed or obtained could not, based upon the facts and
circumstances in existence on the date hereof, reasonably be expected to have a
Material Adverse Effect.
The opinion set forth herein is subject to the following qualifications
and limitations:
3
<PAGE> 88
(a) The enforceability of the Credit Agreement, the Promissory Notes,
the Parent Guarantee and the Amended Five-Year Agreement may be subject to or
limited by bankruptcy, insolvency, reorganization, arrangement, moratorium,
fraudulent conveyance or transfer or other similar laws and court decisions, now
or hereafter in effect, relating to or affecting the rights of creditors
generally.
(b) The enforceability of the Credit Agreement, the Promissory Notes,
the Parent Guarantee and the Amended Five-Year Agreement is or will be subject
to the application of and may be limited by general principles of equity
including, without limitation, concepts of materiality, reasonableness, good
faith and fair dealing (regardless of whether considered in a proceeding in
equity or at law). Such principles of equity are of general application, and in
applying such principles a court, among other things, might not allow a creditor
to accelerate maturity of a debt under certain circumstances including, without
limitation, upon the occurrence of a default deemed immaterial, or might decline
to order the Borrower, the Parent Guarantor or any of the other parties to the
Financing Documents to perform covenants. Such principles as applied by a court
might include a requirement that a creditor act with reasonableness and in good
faith. Thus, I express no opinion as to the validity or enforceability of (i)
provisions restricting access to legal or equitable remedies, such as the
specific performance of executory covenants, (ii) provisions that purport to
establish evidentiary standards, (iii) provisions relating to waivers,
severability, set-off, or delay or omission of enforcement of rights or
remedies, and (iv) provisions purporting to convey rights to persons other than
parties to the Financing Documents.
(c) The remedy of specific performance and injunctive and other forms
of equitable relief are subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
I call your attention to the fact that I am admitted to practice law
only in the State of New York and, in rendering the foregoing opinion, I do not
express any opinion as to any laws other than the laws of the State of New York
and the Federal laws of the United States of America. Insofar as the foregoing
opinion involves matters governed by the law of Luxembourg or Bermuda, I have
relied, without independent investigation or verification, upon the respective
opinions of Beghin Nothar Feider Loeff Claeys Verbeke, special Luxembourg
counsel for the Borrower, and of Appleby Spurling & Kempe, special Bermuda
counsel for the Parent Guarantor.
The opinion expressed herein is based upon the laws in effect on the
date hereof, and I assume no obligation to revise or supplement this opinion
should any such law be changed by legislative action, judicial decision, or
otherwise.
4
<PAGE> 89
This opinion is being delivered to you solely for your benefit in
connection with the Financing Documents, and neither this opinion nor any part
hereof may be delivered to, or used, referred to or relied upon, by any other
person or for any other purpose without my express prior written consent, except
that any person who is a permitted successor or assign of a Bank in accordance
with the provisions of the Credit Agreement may rely upon this opinion as if it
were specifically addressed and delivered to such person on the date hereof.
Very truly yours,
5
<PAGE> 90
DISTRIBUTION LIST
Morgan Guaranty Trust Company of New York
Bank of America National Trust and Savings Association
The Chase Manhattan Bank
Commerzbank AG, New York Branch
ABN AMRO Bank N.V.
Barclays Bank Plc
Bankers Trust Company
Citibank, N.A.
Credit Lyonnais New York Branch
Credit Suisse First Boston
Dresdner Bank AG, New York and Grand Cayman Branches
The First National Bank of Chicago
First Union National Bank
Istituto Bancario San Paolo di Torino Istituto Mobiliare Italiano, SpA
Marine Midland Bank
Mellon Bank, N.A.
Societe Generale
The Bank of Nova Scotia
Toronto Dominion (Texas), Inc.
Westdeutsche Landesbank Girozentrale
BankBoston, N.A.
Banque Nationale de Paris
Den Danske Bank Aktieselskab, Cayman Islands Branch
Fleet Bank - NH
KeyBank National Association
National Westminster Bank Plc New York and Nassau Branches
Standard Chartered Bank
Australia and New Zealand Banking Group Limited
Banca Commerciale Italiana New York Branch
Banca Popolare di Milano New York Branch
BBL International, (U.K.) Ltd
Bank of Tokyo-Mitsubishi, Ltd.
Bayerische Hypo - Und Vereinsbank AG, New York Branch
Bayerische Landesbank Girozentrale Cayman Islands Branch
Cariplo - Cassa Di Risparmio Delle Provincie Lombarde S.p.A.
Comerica Bank
Credit Commercial de France New York Branch
Norddeutsche Landesbank Girozentrale New York Branch and/or Cayman
Islands Branch
PNC Bank, National Association
The Bank of New York
The Northern Trust Company
Unicredito Italiano S.p.A.
BW Capital Markets, Inc.
The Dai-Ichi Kangyo Bank, Ltd., New York Branch
Westpac Banking Corporation
<PAGE> 91
EXHIBIT F
FORM OF OPINION OF SPECIAL COUNSEL
FOR THE BORROWER
To the banks listed on the signature pages
of the Credit Agreement (defined below) and
Morgan Guaranty Trust Company, as Agent
60 Wall Street
New York, New York 10260
Luxembourg, February 12, 1999
TYCO INTERNATIONAL GROUP S.A.
(INCORPORATED WITH LIMITED LIABILITY UNDER THE LAWS OF
THE GRAND-DUCHY OF LUXEMBOURG)
Dear Sirs:
We have acted as your legal advisers in the Grand-Duchy of Luxembourg
("LUXEMBOURG") in connection with the 364-Day Credit Agreement dated as of
February 12, 1999 (the "CREDIT AGREEMENT") among Tyco International Group S.A.,
a Luxembourg company (the "COMPANY"), the Banks listed on the signature pages
thereof and Morgan Guaranty Trust Company of New York, as Agent (the "AGENT").
This opinion is being delivered to you pursuant to Section 3.01(d) of the Credit
Agreement.
We give this opinion on the basis of and subject to the assumptions and
qualifications set out below.
1. Basis of Opinion
(a) This opinion is confined to Luxembourg law currently in
force and applied. This opinion is to be construed in accordance with
the laws of Luxembourg.
(b) For the purpose of giving this opinion, we have examined
copies of the following documents:
(i) the Credit Agreement;
<PAGE> 92
(ii) the Extendible 364-Day Agreement dated as of
February 13, 1998 (the "FIVE-YEAR AGREEMENT") among the
Company, the banks listed therein and Morgan Guaranty Trust
Company of New York, as agent for such banks ("MORGAN"), as
amended by Amendment No.1 thereto dated as of May 4, 1998 and
Amendment No. 2 thereto dated as of September 25, 1998 (such
amendments referred to collectively as the "AMENDMENTS") (the
Five-Year Agreement as amended by the Amendments and as
further amended by the Credit Agreement, the "AMENDED FIVE-
YEAR AGREEMENT"), together with the New Borrower Agreement
Relating to the Extendible 364-Day Agreement dated as of June
30, 1998 (the "NEW BORROWER AGREEMENT") among Tyco
International (US) Inc., a Massachusetts corporation, the
Company and Morgan pursuant to which the Company became a
party to the Five-Year Agreement;
(iii) the Amendments;
(iv) the Amended and Restated Parent Guarantee
Agreement dated as of February 13, 1998 and amended and
restated as of February 12, 1999 between Tyco International
Ltd., a company incorporated under the laws of Bermuda, and
the Agent (the "PARENT GUARANTEE");
(v) the Promissory Notes executed by the Company on
February 12, 1999;
(vi) a copy of the articles of association of the
Company in their version of 30th March 1998, filed with the
Luxembourg Company Register on 22 April 1998 and published in
the Official Gazette (Memorial) C-N(degree) 474 of 29th June
1998, an amendment to the articles of association of the
Company by way of a notarial deed dated 6 July 1998 and
published in the Official Gazette (Memorial) C-N(degree) 733
of 10th October 1998, an amendment to the articles of
association of the Company by way of a notarial deed dated
22nd October 1998, not yet published, and an amendment to the
articles of association of the Company by way of a notarial
deed dated December 4, 1998, not yet published;
(vii) a copy of minutes of a meeting of the board of
directors of the Company held on February 5, 1999 approving
the execution of the Credit Agreement and the Promissory
Notes; and
2
<PAGE> 93
(viii) such other documents, records, certificates and
instruments as we have thought necessary or desirable,
including information gathered at the Luxembourg Company
Register and at the District Court of Luxembourg.
As used herein, the term "FINANCING DOCUMENTS" means the "Financing
Documents" as defined in the Credit Agreement and the "Financing Documents" as
defined in the Amended Five-Year Agreement, collectively. Terms defined in the
Credit Agreement and used herein, but not otherwise defined herein, have the
meanings ascribed thereto in the Credit Agreement.
2. Assumptions
With your consent, we have assumed and we have not verified
independently:
(a) that any copies we have examined are complete and accurate
copies of the originals;
(b) the genuineness and authority of all the signatures,
stamps and seals on all original or copy documents which we have
examined;
(c) that all documents have been duly authorized, executed and
delivered by, and are within the capacity and power of, all the parties
thereto, other than the Company;
(d) that the documents which are not governed by Luxembourg
law are legal, valid, binding and enforceable in accordance with their
terms under their chosen governing law being the laws of the State of
New York; and
(e) that none of the opinions below would be affected by the
laws (including the public policy) of any jurisdiction outside
Luxembourg.
On the above basis and subject to the assumptions and qualifications
set out above and below, and further subject to any matters, documents, or
events not disclosed to us and to undisclosed matters of fact which would affect
the conclusions set out below, we are of the opinion that:
3. Opinion
(a) The Company is a limited liability corporation duly
organized and validly existing under the laws of Luxembourg pursuant to
the articles
3
<PAGE> 94
of association provided in a notarial deed of March 30, 1998, as
amended, and was formerly incorporated under the laws of Gibraltar
under the name of Velum Limited.
(b) The Company has all company powers and all material
governmental licenses, consents and approvals required to carry on its
business as now conducted (other than such powers or consents the
failure of which to be obtained could not reasonably be expected to
have a Material Adverse Effect).
(c) The execution, delivery and performance by the Company of
the Credit Agreement and the Promissory Notes, and the performance by
the Company of the Amended Five-Year Agreement (i) are within the
Company's powers, (ii) have been duly authorized by all necessary
company action, (iii) require no action by or filing with any
governmental body, agency or official, (iv) do not contravene or
constitute a default under (A) applicable law or regulation, (B) the
Company's articles of association or (C) any agreement or instrument
governing debt of the Company or any other material agreement,
judgment, injunction, order, decree or other instrument binding upon
the Company.
(d) Each of the Credit Agreement and the Amended Five-Year
Agreement constitutes a valid and binding agreement of the Company, and
each Promissory Note constitutes a valid and binding obligation of the
Company.
(e) There is no action, suit or proceeding pending or
threatened against or affecting the Company or any of its Subsidiaries
in which there is a reasonable possibility of an adverse decision which
could reasonably be expected to have a Material Adverse Effect or which
in any manner draws into question the validity of the Financing
Documents.
(f) There is no tax, impost, deduction or withholding imposed
by Luxembourg or any political subdivision thereof on or by virtue of
the execution, delivery or enforcement of the Financing Documents or
any other agreement or instrument relating thereto.
(g) Each of the Financing Documents to which the Company is a
party is in proper legal form under the laws of Luxembourg for the
enforcement thereof against the Company under the laws of Luxembourg.
(h) To ensure the legality, validity, enforceability or
admissibility in evidence of the Financing Documents in Luxembourg, it
is not
4
<PAGE> 95
necessary that the Financing Documents or any other document be
filed or recorded with any court or other authority in Luxembourg.
(i) The choice of the laws of the State of New York to govern
the Credit Agreement, the Amended Five-Year Agreement and the
Promissory Notes is a valid and binding choice of law and will be
recognized and applied by the courts of Luxembourg.
(j) Any judgment obtained in any federal or New York State
court sitting in New York City, arising out of or in relation to the
obligations of the Company under the Financing Documents would be
enforceable in Luxembourg against the Company.
4. Qualifications
The foregoing opinion is subject to the following qualifications.
(a) Insolvency. This opinion is subject to all insolvency and
other similar laws affecting the rights of creditors vis-a-vis the
Company, including inter alia suspension of payments, bankruptcy,
reorganization or moratorium.
(b) Corporate Benefit. The Company may only validly enter the
Financing Documents to which it is a party if and to the extent that
such entry does not threaten its existence or the rights of its
creditors and that the Company can reasonably hope to draw directly or
indirectly a corporate benefit, at least in the long term, from the
Financing Documents. We have no indication and no reason to believe
that entering the Financing Documents would be other than for the
corporate benefit of the Company.
(c) Choice of Law. The Luxembourg courts (assuming that
litigation were brought to the Luxembourg courts and that Luxembourg
courts had jurisdiction) would not apply a chosen foreign law if:
(i) it were not pleaded and proven; or
(ii) if pleaded and proven, such foreign law would be
contrary to the mandatory rules of Luxembourg law or
manifestly incompatible with Luxembourg public policy.
(d) Enforcement of Judgments. The Luxembourg courts would
enforce a final and conclusive judgment against the Company rendered by
any federal or New York State court sitting in New York City in any
suit,
5
<PAGE> 96
action or proceedings arising out of or in relation to the
obligations of the Company under the Financing Documents provided,
however, that such judgment would comply with the conditions imposed by
article 678 of the Luxembourg nouveau code de procedure civile (i.e.,
the exequatur procedure) as currently interpreted by the Luxembourg
courts and doctrine; namely, the foreign judgment
(i) is final and enforceable in the jurisdiction
where it has been rendered and complies with the conditions
posed by any treaty,
(ii) has been rendered in accordance with the legal
formalities applicable in such jurisdiction,
(iii) emanates from a court having both international
(according to Luxembourg's conflict of laws rules) and
national (according to the law of the foreign jurisdiction)
competence,
(iv) applies the substantive law of the country whose
law would be applied according to Luxembourg's conflict of
laws rules; and
(v) is not contrary to Luxembourg public policy or
mandatory rules of Luxembourg law.
(e) Judgment Currency. Any obligation to pay an amount in a
currency other than Luxembourg Francs will be enforceable in Luxembourg
only in terms of Luxembourg Francs, though monetary judgments may be
expressed in a foreign currency and/or its Luxembourg Francs equivalent
at the time of payment, and any loss incurred as a result of a currency
exchange fluctuation can be recovered under Luxembourg law.
(f) Luxembourg Legal Concepts. This opinion shall be construed
in accordance with Luxembourg law and Luxembourg legal concepts are
expressed in English terms and not in their original French terms. The
concepts concerned may not be identical to the concepts described by
the same English terms as they exist under the laws of other
jurisdictions. This opinion may, therefore, only be relied upon under
the express condition that any issues of interpretation arising
thereunder will be governed by Luxembourg law and be brought before a
Luxembourg court.
6
<PAGE> 97
(g) Registration. If the Financing Documents are or must be
produced in any court proceedings in Luxembourg or before any official
authority in Luxembourg, registration thereof may be ordered in which
case an ad valorem tax at the rate of 0.24 percent of the amount
mentioned in the registered document or a fixed duty of LUF 500 for
each of the Financing Documents would then be payable upon
registration.
(h) Binding Documents. The opinion expressed under (c)(iv)(C)
is solely based upon a review of documents which have been filed by the
Company with the Luxembourg Company Register and the certificate of the
Managing Directors of the Company attached to this opinion as Appendix
A.
(i) Litigation. The opinion expressed under (e) above is
solely based on oral information received from the registrar of the
district court of Luxembourg.
(j) Set-Off. No opinion can be expressed as to whether the
provisions in the Credit Agreement or the Amended Five-Year Agreement
on set-off (so far as the Company is concerned) would be effective and
enforceable against a Luxembourg insolvency official.
(k) Penalty Clause. It is possible that a Luxembourg court (if
having jurisdiction) would consider Section 2.15 of each of the Credit
Agreement and the Amended Five-Year Agreement whereby the Borrower may
be obliged to pay additional interest on the related Euro-Dollar loan
at a rate per annum determined by the relevant Bank as a penalty clause
(clause penale).
Penalty clauses as governed by article 1152 and articles 1226
et seq. of the Luxembourg civil code are allowed to the extent that
they provide for a reasonable level of damages. The judge has however
the right to reduce (or increase) the amount thereof if it is
unreasonably high (or low).
(l) Language Differences. It is noted that there are always
irreconcilable differences between languages making it impossible to
guarantee a totally accurate translation or interpretation. In
particular, there are always some legal concepts which exist in one
jurisdiction and not in another, and in those cases it is bound to be
difficult to provide a completely satisfactory translation or
interpretation because the vocabulary is missing from the language. We
accept no responsibility for omissions or inaccuracies to the extent
they are attributable to such factors.
7
<PAGE> 98
This opinion is as of this date and we undertake no obligation to
update this opinion or advise of changes hereafter occurring.
We express no opinion as to any matters other than those expressly set
forth herein, and no opinion is, or may be, implied or inferred herefrom.
This opinion is given for your benefit as Agent for the Banks and it
may be relied upon by you, the Banks as well as your or their assignees,
successors, and your or their legal advisers. It may also be relied upon by Mark
A Belnick, Executive Vice President and Chief Corporate Counsel to the Parent
Guarantor, for the purposes of issuing the opinion required pursuant to Section
3.01(d)(i) of the Credit Agreement. It may not be relied upon by any other
person. It may not be disclosed to third parties, quoted, referred to or
otherwise used (save as required by law) without our prior written consent.
Yours faithfully,
8
<PAGE> 99
EXHIBIT G
FORM OF OPINION OF SPECIAL COUNSEL
FOR THE PARENT GUARANTOR
To the Banks and the Agent
Named on Schedule 1 to this Opinion
c/o Morgan Guaranty Trust Company of New York (as Agent)
60 Wall Street
New York, NY 10260 U.S.A.
Dear Sirs,
Re: TYCO INTERNATIONAL LTD. (THE "COMPANY")
We have been instructed by the Company, a Bermuda corporation, which
owns all of the issued shares of Tyco International Group S.A., a Luxembourg
company (the "BORROWER"), to address this opinion to you in connection with the
Amended and Restated Parent Guarantee Agreement, dated as of February 13, 1998
and amended and restated as of February 12, 1999, (the "GUARANTEE"), entered
into by the Company in connection with all principal of and interest on amounts
loaned to the Borrower under the Financing Documents.
Unless otherwise defined therein, terms defined in the Guarantee have
the same meanings when used in this opinion.
For the purposes of this opinion, we have been supplied with and have
reviewed, and relied upon the following documents:
(A) a copy of the executed US $3,250,000,000 364-Day Credit
Agreement dated as of February 12, 1999 among the Borrower, the Banks
listed on the signature pages thereof and the Agent (the "CREDIT
AGREEMENT");
(B) a copy of the Extendible 364-Day Credit Agreement dated as
of February 13, 1998 among the Borrower, the Banks listed on the
signature pages thereof, and Morgan Guaranty Trust Company of New York,
as agent for such Banks, as amended to the date hereof (the "EXISTING
FIVE-YEAR AGREEMENT");
<PAGE> 100
(C) a copy of the executed Promissory Notes (as defined in the
Credit Agreement and the Existing Five-Year Agreement);
(D) the New Borrower Agreement Relating to the Extendible
364-Day Agreement dated as of June 30, 1998 among Tyco International
(US) Inc., a Massachusetts corporation, the Borrower, and Morgan
Guaranty Trust Company of New York, as agent, pursuant to which the
Borrower became a party to the Existing Five-Year Agreement;
The Documents referred to in (A) through (D) inclusive are together
referred to as the "FINANCING DOCUMENTS".
(E) a copy of the executed Guarantee;
(F) certified copies of the Certificate of Incorporation, the
Certificate evidencing the change of name of the Company from ADT
Limited to TYCO International Ltd. and the Memorandum of Association
and the Bye-laws of the Company;
(G) a certified copy of an extract of the minutes of a meeting
of the Board of Directors of the Company held on February 9, 1999 (the
"RESOLUTIONS"); and
(H) a certified copy of the Share Certificate evidencing
ownership by the Company of the Borrower.
We also examined and relied upon:
(A) A Certificate of Compliance issued by the Registrar of
Companies in Bermuda in respect of the Company on February 10, 1999;
and
(B) Our searches of the documents of public record in relation
to the Company maintained by the Registrar of Companies in Bermuda made
on February 9, 1999 and of the Causes Book maintained by the Registrar
of the Supreme Court of Bermuda made on the same date (the "SEARCHES").
In giving this opinion, we have assumed:
(1) the capacity, power and authority of each of the
parties other than the Company to execute, deliver and perform
its obligations under and the due execution and delivery by
all parties other than the Company of the Financing Documents
and the Guarantee;
2
<PAGE> 101
(2) that each party, other than the Company, has duly
authorised, executed, delivered and taken such other action as
may be required by such party to enter into and perform the
Financing Documents and the Guarantee in the form of the
execution copies we have reviewed for the purpose of this
opinion without alteration which is material to this opinion
and that all such actions were duly authorised when taken;
(3) that no authorisation or approval by, or filing
with, any governmental or regulatory authority, other than
such authorisations, approvals and filings as each party other
than the Company has obtained or made, is necessary for such
party to duly execute and deliver, or to duly perform all of
its obligations under the Financing Documents and the
Guarantee, or for the validity and enforceability of the
Financing Documents and the Guarantee;
(4) that each of the Financing Documents and the
Guarantee constitutes the legal, valid and binding obligation
of each party to it, other than the Company, and is
enforceable against each such party in accordance with its
terms;
(5) that the Financing Documents are legal, valid and
binding under the laws by which they are expressed to be
governed and that the Guarantee is legal, valid and binding
under the laws of the State of New York by which it is
expressed to be governed;
(6) that the records which were the subject of the
Searches on February 3, 1999 were complete and accurate at the
time of such searches and disclosed all information which is
material for the purposes of this opinion and such information
has not since such date been materially altered;
(7) that there is no provision of the law of any
jurisdiction, other than Bermuda, which would have any
implication in relation to the opinions herein expressed;
(8) the genuineness of all signatures on the
documents which we have examined;
(9) the conformity to original documents of all
documents produced to us as copies and the authenticity of all
original documents which, or copies of which, have been
submitted to us;
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<PAGE> 102
(10) the accuracy and completeness of all factual
representations made in the Financing Documents, the
Guarantee, the Resolutions, and any certificates or other
documents which we have examined and upon which we have
relied;
(11) that the Resolutions are in full force and
effect and have not been rescinded or altered in any way
material to this opinion; and
(12) that the Company is entering into its
obligations under the Guarantee in good faith and for the
purpose of carrying on its commercial business in the ordinary
course thereof and that there are reasonable grounds for
believing that the transactions contemplated by the Financing
Documents will benefit the Company.
Based upon and subject to the foregoing, and subject to the
reservations set out below, to matters not disclosed to us and matters of fact
which would affect the conclusion set out below and having regard to such legal
considerations as we deem relevant, we are of the opinion that:
(i). The Company is a company duly incorporated, duly organised and
validly existing under the laws of Bermuda. The Memorandum of Association of the
Company has been duly filed in the office of the Registrar of Companies of
Bermuda and no other filing, recording, publishing or other act is necessary or
appropriate in Bermuda in connection with the transaction as described in the
Guarantee except those which have been duly made or performed.
(ii). The Company has the corporate power and authority to enter into
and perform the Guarantee and has taken all corporate action required on its
part to authorise the execution, delivery and performance of the Guarantee.
(iii). The execution, delivery and performance of the Guarantee by the
Company (i) does not and will not violate the Certificate of Incorporation,
Memorandum of Association or Bye-laws of the Company; (ii) conflict with The
Companies Act 1981 or any other law or governmental rule or regulation published
by the Bermuda Government which is applicable to the Company; and (iii) as far
as can be ascertained from the Searches (which are not conclusive) does not and
will not violate or conflict with any judgment, order, decree, injunction or
award of any authority, agency or court in Bermuda to which the Company is
subject.
4
<PAGE> 103
(iv). The obligations of the Company as set out in the Guarantee
constitute, legal, valid and binding obligations of the Company.
(v). The Company having been designated as non-resident for the
purposes of the Exchange Control Act 1972, it is not necessary for the consent
of any authority or agency in Bermuda to be obtained to enable the Company to
enter into and perform its obligations set out in the Guarantee.
(vi). The obligations of the Company under the Guarantee will rank at
least pari passu in priority of payment with all other unsecured unsubordinated
indebtedness of the Company other than indebtedness which is preferred by virtue
of any provision of Bermuda law of general application.
(vii). As far as can be ascertained from the Searches (which are not
conclusive), no litigation, arbitration or administrative proceedings of or
before any court, arbitrator or governmental instrumentality of or in Bermuda
is, to the best of our knowledge, pending with respect to the Company in
connection with the Guarantee or the transactions contemplated thereby.
(viii). The Company will be permitted to make all payments under the
Guarantee free of any deduction or withholding therefrom in Bermuda and such
payments will not be subject to any tax imposed by the Government of Bermuda or
any taxing authority thereof or therein.
(ix). The entry into, performance and enforcement of the Guarantee will
not give rise to any registration fee or to any stamp, excise or other similar
tax imposed by the Government of Bermuda or any taxing authority thereof or
therein.
(x). Subject to paragraph (xii) and reservation (f) below, it is not
necessary or advisable under the laws of Bermuda in order to ensure the
validity, effectiveness or enforceability or admissibility in evidence of the
Guarantee that the Guarantee be filed, registered or recorded with any Court,
public office or other Bermuda regulatory authority.
(xi). The choice of the laws of the State of New York to govern the
Guarantee is a proper, valid and binding choice of law and will be recognised
and applied by the courts of Bermuda provided that the point is specifically
pleaded and that such choice of law is a valid and binding choice of law under
the laws of the State of New York.
(xii). A final and conclusive judgment obtained in the Courts of the
State of New York or Federal Courts of the United States of America against the
5
<PAGE> 104
Company based upon the Guarantee under which a sum of money is payable (other
than a sum of money payable in respect of taxes or other charges of a like
nature or in respect of a fine or other penalty or in respect of Multiple
Damages as defined in the Protection of Trading Interest Act, 1981) may be the
subject of enforcement proceedings in the Supreme Court of Bermuda, without
re-examination of the merits, under the Common Law Doctrine of Obligation. A
final opinion as to the availability of this remedy should be sought when the
facts surrounding the foreign judgment are known but, on general principles, we
would expect such an application to be successful provided that:
(A) the Court which gave the judgment was competent to hear
the action in accordance with private international law principles as
applied in Bermuda;
(B) the judgment has not been obtained by fraud;
(C) the judgment is not and its enforcement would not be
contrary to public policy of Bermuda;
(D) the judgment has not been obtained in proceedings contrary
to natural justice; and
(E) the correct procedures under the laws of Bermuda are duly
complied with.
Neither the Company nor any of its property or assets (or any portion
thereof) enjoys, under the laws of Bermuda, immunity from suit, execution,
attachment or other legal process in any proceedings in Bermuda in connection
with the Guarantee.
Our reservations are as follows:
(a) We are admitted to practise law in the Islands of Bermuda and we
express no opinion as to any law other than Bermuda law and none of the opinions
expressed herein relates to compliance with or matters governed by the laws of
any jurisdiction except Bermuda.
(b) Where an obligation is to be performed in a jurisdiction other than
Bermuda, the Courts of Bermuda may refuse to enforce it to the extent that such
performance would be illegal or contrary to public policy under the laws of such
other jurisdiction.
6
<PAGE> 105
(c) We express no opinion as to the availability of equitable remedies,
such as specific performance or injunctive relief, or as to matters which are
within the discretion of the Courts of Bermuda such as the award of costs or
questions relating to forum non-conveniens. Further, we express no opinion as to
the validity or binding effect of any waiver of or obligation to waive any
provision of law (whether substantive or procedural) or any right or remedy
arising through circumstances not known at the time of entering into the
Financing Documents and the Guarantee.
(d) We express no opinion as to the validity or the binding effect of
any obligations of the Borrower in the Financing Documents which provide for the
payment by the Borrower of a higher rate of interest on overdue amounts than on
amounts which are current. A Bermuda Court, even if it were applying the laws of
the State of New York might not give effect to such provision as being contrary
to public policy if it could be established that the amount expressed as being
payable was such that the provision was in the nature of a penalty; that is to
say a requirement for a stipulated sum to be paid irrespective of, or
necessarily greater than, the loss likely to be sustained. The Court will
determine and award what it considers to be reasonable damages. Section 9 of The
Interest and Credit Charges (Regulations) Act 1975 provides that the Bermuda
Courts have discretion as to the amount of interest if any payable on the amount
of a judgment after the date of judgment. If the Court does not exercise that
discretion, then interest will accrue at the statutory rate which is currently
7% per annum.
(e) The obligations of the Company under the Guarantee will be subject
to any laws from time to time in effect relating to bankruptcy, insolvency or
liquidation or any other laws or other legal procedures affecting generally the
enforcement of creditors' rights and may also be the subject of the statutory
limitation of the time within which such proceedings may be brought.
(f) To the extent that the Financing Documents, the Guarantee or the
transactions contemplated thereunder, create or give rise to the creation of any
charge over any assets of the Company, such charge will be registerable under
Part V of The Companies Act 1981 of Bermuda. The fee payable for registration of
a charge is $425.00. Registration is not compulsory and there is no time limit
within which it must be effected. Any charge which is registerable, and which is
registered, under Section 55 of The Companies Act will have priority based on
the date that it is registered and not on the date of its creation (to the
extent that priority of competing charges are to be determined by reference to
Bermuda law) and will have such priority over any unregistered charge.
Accordingly, it is advisable to register any such charge.
7
<PAGE> 106
(g) Any provision in the Financing Documents or the Guarantee that
certain calculations and/or certificates will be conclusive and binding will not
be effective if such calculations are fraudulent or erroneous on their face and
will not necessarily prevent enquiry into the merits of any claim by an
aggrieved party.
(h) Where a party is vested with a discretion or may determine a matter
in its opinion, such discretion may have to be exercised reasonably or such an
opinion may have to be based on reasonable grounds.
(i) Searches in the register of companies at the office of the
Registrar of Companies and in the Supreme Court Causes Book at the Registry of
the Supreme Court are not conclusive and it should be noted that the register of
companies and the Supreme Court Causes Book do not reveal:
(i) whether an application to the Supreme Court for the
appointment of a receiver or manager has been presented;
(ii) details of matters which have been lodged for
registration but have not actually been registered or to the extent
they have been registered have not been disclosed or appear in the
public records at the date the search is concluded;
(iii) details of matters which should have been lodged for
registration but have not been lodged for registration at the date the
search is concluded; or
(iv) whether a receiver or manager has been appointed
privately out of the Supreme Court pursuant to the provisions of a
debenture or other security, unless notice of the fact has been entered
in the register of charges in accordance with the provisions of the
Act.
(j) A Bermuda Court may refuse to give effect to any provisions of the
Financing Documents or Guarantee in respect of costs of unsuccessful litigation
brought before the Court or where that Court has itself made an order for costs.
This opinion is issued on the basis that it will be governed by and
construed in accordance with the provisions of Bermuda law and it is limited to
and is given on the basis of the current law and practice in Bermuda and will
not give rise to action in any other jurisdiction. It is issued solely for your
benefit for the purpose of the transactions described in the Guarantee and it is
not to be relied upon by any other person (other than permitted assigns and
transferees under the Financing Documents), or for any other purpose, without
our written prior consent. Mr. Mark A Belnick, Executive Vice President and
Chief Corporate
8
<PAGE> 107
Counsel of the Company, may rely on our opinion as to matters of Bermuda law for
the purpose of issuing his opinion of even date herewith.
Yours faithfully,
9
<PAGE> 108
SCHEDULE 1
Morgan Guaranty Trust Company of New York
Bank of America National Trust and Savings Association
The Chase Manhattan Bank
Commerzbank AG, New York Branch
ABN AMRO Bank N.V.
Barclays Bank Plc
Bankers Trust Company
Citibank, N.A.
Credit Lyonnais New York Branch
Credit Suisse First Boston
Dresdner Bank AG, New York and Grand Cayman Branches
The First National Bank of Chicago
First Union National Bank
Istituto Bancario San Paolo di Torino Istituto Mobiliare Italiano, SpA
Marine Midland Bank
Mellon Bank, N.A.
Societe Generale
The Bank of Nova Scotia
Toronto Dominion (Texas), Inc.
Westdeutsche Landesbank Girozentrale
BankBoston, N.A.
Banque Nationale de Paris
Den Danske Bank Aktieselskab, Cayman Islands Branch
Fleet Bank - NH
KeyBank National Association
National Westminster Bank Plc New York and Nassau Branches
Standard Chartered Bank
Australia and New Zealand Banking Group Limited
Banca Commerciale Italiana New York Branch
Banca Popolare di Milano New York Branch
BBL International, (U.K.) Ltd
Bank of Tokyo-Mitsubishi, Ltd.
Bayerische Hypo - Und Vereinsbank AG, New York Branch
Bayerische Landesbank Girozentrale Cayman
Islands Branch Cariplo - Cassa Di Risparmio Delle Provincie Lombarde S.p.A.
Comerica Bank
Credit Commercial de France New York Branch
Norddeutsche Landesbank Girozentrale New York Branch and/or
Cayman Islands Branch
PNC Bank, National Association
The Bank of New York
The Northern Trust Company
Unicredito Italiano S.p.A.
BW Capital Markets, Inc.
The Dai-Ichi Kangyo Bank, Ltd., New York Branch
Westpac Banking Corporation
<PAGE> 109
EXHIBIT H
OPINION OF
DAVIS POLK & WARDWELL, SPECIAL COUNSEL
FOR THE AGENT
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
We have participated in the preparation of the 364-Day Credit Agreement
dated as of February 12, 1999 among Tyco International Group S.A., a Luxembourg
company (the "Borrower"), the banks listed on the signature pages thereof (the
"Banks") and Morgan Guaranty Trust Company of New York, as Agent (the "Agent"),
and have acted as special counsel for the Agent for the purpose of rendering
this opinion pursuant to Section 3.01(e) of the Credit Agreements. Terms defined
in the Credit Agreement are used herein as therein defined.
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of such documents, corporate records, certificates of
public officials and other instruments and have conducted such other
investigations of fact and law as we have deemed necessary or advisable for
purposes of this opinion.
Upon the basis of the foregoing, we are of the opinion that the Credit
Agreement constitutes a valid and binding agreement of the Borrower, that each
Promissory Note delivered on the date hereof constitutes a valid and binding
obligation of the Borrower and that the Parent Guarantee constitutes a valid and
binding obligation of the Parent Guarantor, in each case enforceable in
accordance with its terms, except as the same may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and by general
principles of equity.
We are members of the Bar of the State of New York and the foregoing
opinion is limited to the laws of the State of New York and the federal laws of
the United States of America. In giving the foregoing opinion, (i) we express no
opinion as to the effect (if any) of any law of any jurisdiction (except the
State of
<PAGE> 110
New York) in which any Bank is located which limits the rate of interest that
such Bank may charge or collect and (ii) insofar as the foregoing opinion
involves matters governed by the laws of Luxembourg or Bermuda, we have relied,
without independent investigation, upon the respective opinions of Beghin Nothar
Feider Loeff Claeys Verbeke, special Luxembourg counsel for the Borrower, and of
Appleby, Spurling & Kempe, special Bermuda counsel for the Parent Guarantor,
copies of which have been delivered to you.
This opinion is rendered solely to you in connection with the above
matter. This opinion may not be relied upon by you for any other purpose or
relied upon by any other person without our prior written consent, except that
any person who is a permitted successor or assign of a Bank in accordance with
the provisions of the Credit Agreement may rely upon this opinion as if it were
specifically addressed and delivered to such person on the date hereof.
Very truly yours,
2
<PAGE> 111
EXHIBIT I
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of _________, ____ among [ASSIGNOR] (the
"Assignor"), [ASSIGNEE] (the "Assignee"), TYCO INTERNATIONAL GROUP S.A. (the
"Borrower") and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent (the
"Agent").
W I T N E S S E T H
WHEREAS, this Assignment and Assumption Agreement (the "Agreement")
relates to the 364-Day Credit Agreement dated as of February 12, 1999 among the
Borrower, the Assignor and the other Banks party thereto, as Banks, and the
Agent (the "Credit Agreement");
WHEREAS, as provided under the Credit Agreement, the Assignor has a
Commitment to make Loans to the Borrower in an aggregate principal amount at any
time outstanding not to exceed $__________;
WHEREAS, Committed Loans made to the Borrower by the Assignor under the
Credit Agreement in the aggregate principal amount of $__________ are
outstanding at the date hereof; and
WHEREAS, the Assignor proposes to assign to the Assignee all of the
rights of the Assignor under the Credit Agreement in respect of a portion of its
Commitment thereunder in an amount equal to $__________ (the "Assigned Amount"),
together with a corresponding portion of its outstanding Committed Loans, and
the Assignee proposes to accept assignment of such rights and assume the
corresponding obligations from the Assignor on such terms;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
SECTION 1. Definitions. All capitalized terms not otherwise defined
herein shall have the respective meanings set forth in the Credit Agreement.
<PAGE> 112
SECTION 2. Assignment. The Assignor hereby assigns and sells to the
Assignee all of the rights of the Assignor under the Credit Agreement to the
extent of the Assigned Amount, and the Assignee hereby accepts such assignment
from the Assignor and assumes all of the obligations of the Assignor under the
Credit Agreement to the extent of the Assigned Amount, including the purchase
from the Assignor of the corresponding portion of the principal amount of the
Committed Loans made by the Assignor outstanding at the date hereof. Upon the
execution and delivery hereof by the Assignor, the Assignee, [the Borrower and
the Agent] and the payment of the amounts specified in Section 3 required to be
paid on the date hereof (i) the Assignee shall, as of the date hereof, succeed
to the rights and be obligated to perform the obligations of a Bank under the
Credit Agreement with a Commitment in an amount equal to the Assigned Amount,
and (ii) the Commitment of the Assignor shall, as of the date hereof, be reduced
by a like amount and the Assignor released from its obligations under the Credit
Agreement to the extent such obligations have been assumed by the Assignee. The
assignment provided for herein shall be without recourse to the Assignor.
SECTION 3. Payments. As consideration for the assignment and sale
contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on the
date hereof in Federal funds the amount heretofore agreed between them.* It is
understood that facility fees in respect of the Assigned Amount accrued to the
date hereof are for the account of the Assignor and such fees accruing from and
including the date hereof are for the account of the Assignee. Each of the
Assignor and the Assignee hereby agrees that if it receives any amount under the
Credit Agreement which is for the account of the other party hereto, it shall
receive the same for the account of such other party to the extent of such other
party's interest therein and shall promptly pay the same to such other party.
[SECTION 4. Consent of the Borrower and the Agent. This Agreement is
conditioned upon the consent of the Borrower and the Agent pursuant to Section
9.06(c) of the Credit Agreement. The execution of this Agreement by the Borrower
and the Agent is evidence of this consent. Pursuant to Section 9.06(c) the
Borrower agrees to execute and deliver a Note payable to the order of the
Assignee to evidence the assignment and assumption provided for herein.]
SECTION 5. Non-Reliance on Assignor. The Assignor makes no
representation or warranty in connection with, and shall have no responsibility
- -------------------
*Amount should combine principal together with accrued interest and
breakage compensation, if any, to be paid by the Assignee, net of any portion of
any upfront fee to be paid by the Assignor to the Assignee. It may be preferable
in an appropriate case to specify these amounts generically or by formula rather
than as a fixed sum.
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<PAGE> 113
with respect to, the solvency, financial condition, or statements of the
Borrower, or the validity and enforceability of the obligations of the Borrower
in respect of the Credit Agreement or any Note. The Assignee acknowledges that
it has, independently and without reliance on the Assignor, and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and will continue to be
responsible for making its own independent appraisal of the business, affairs
and financial condition of the Borrower.
SECTION 6. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 7. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
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<PAGE> 114
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered by their duly authorized officers as of the
date first above written.
[ASSIGNOR]
By:
----------------------------------------
Title:
[ASSIGNEE]
By:
----------------------------------------
Title:
TYCO INTERNATIONAL GROUP S.A.
By:
----------------------------------------
Title:
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By:
----------------------------------------
Title:
4
<PAGE> 115
EXHIBIT K
EXISTING FIVE-YEAR AGREEMENT
PRICING SCHEDULE
The "Euro-Dollar Margin", "CD Margin" and "Facility Fee Rate" for any
day are the respective percentages set forth below in the applicable row and
column based upon the Utilization and Status that exist on such day:
<TABLE>
<CAPTION>
=======================================================================================================================
Level Level Level Level Level Level
Status I II III IV V VI
=======================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Euro-Dollar Margin
Utilization [less than] 25% 0.295% 0.410% 0.515% 0.6125% 0.725% 0.750%
Utilization [greater than
or equal to] 25% 0.420% 0.535% 0.640% 0.7375% 0.975% 1.125%
=======================================================================================================================
CD Margin
Utilization [less than] 25% 0.420% 0.535% 0.640% 0.7375% 0.850% 0.875%
Utilization [greater than
or equal to] 25% 0.545% 0.660% 0.765% 0.8625% 1.100% 1.250%
=======================================================================================================================
Facility Fee Rate 0.080% 0.090% 0.110% 0.1375% 0.150% 0.250%
=======================================================================================================================
</TABLE>
For purposes of this Schedule, the following terms have the following
meanings, subject to the concluding paragraph of this Schedule:
"LEVEL I STATUS" exists at any date if, at such date, the Borrower's
senior unsecured long-term debt is rated A or higher by S&P or A2 or higher by
Moody's.
"LEVEL II STATUS" exists at any date if, at such date, (i) the
Borrower's senior unsecured long-term debt is rated A- or higher by S&P or A3 or
higher by Moody's and (ii) Level I Status does not exist.
"LEVEL III STATUS" exists at any date if, at such date, (i) the
Borrower's senior unsecured long-term debt is rated BBB+ or higher by S&P or
Baa1 or higher by Moody's and (ii) neither Level I Status nor Level II Status
exists.
"LEVEL IV STATUS" exists at any date if, at such date, (i) (x) the
Borrower's senior unsecured long-term debt is rated BBB or higher by S&P or Baa2
or higher by Moody's and (y) the Borrower's commercial paper is rated A2 or
higher by S&P and P2 or higher by Moody's and (ii) none of Level I Status, Level
II Status and Level III Status exists.
"LEVEL V STATUS" exists at any date, if at such date, (i) the
Borrower's senior unsecured long-term debt is rated BBB or higher by S&P or Baa2
or higher by
<PAGE> 116
Moody's and (ii) none of Level I Status, Level II Status, Level III Status or
Level IV Status exists.
"LEVEL VI STATUS" exists at any date if, at such date, no other Status
exists.
"STATUS" refers to the determination of which of Level I Status, Level
II Status, Level III Status, Level IV Status, Level V Status or Level VI Status
exists at any date.
"UTILIZATION" means, at any date, the percentage equivalent of a
fraction (i) the numerator of which is the aggregate outstanding principal
amount of the Loans at such date and (ii) the denominator of which is the
aggregate amount of the Commitments at such date. If for any reason any Loans
remain outstanding following termination of the Commitments, Utilization shall
be deemed to be in excess of 25%.
The credit ratings to be utilized for purposes of this Schedule are
those assigned to the senior unsecured long-term debt securities and/or
commercial paper, as the case may be, of the Borrower without third-party credit
enhancement, and any rating assigned to any other debt security of the Borrower
shall be disregarded. The rating in effect at any date is that in effect at the
close of business on such date. If the Borrower is split-rated and the ratings
differential is one notch, the higher of the two ratings will apply (e.g., A/A3
results in Level I Status). If the Borrower is split-rated and the ratings
differential is more than one notch, the average of the two ratings (or the
higher of two intermediate ratings) shall be used (e.g., A/Baa1 results in Level
II Status, as does A/Baa2).
2
<PAGE> 117
CROSS-REFERENCE TARGET LIST
NOTE: DUE TO THE NUMBER OF TARGETS SOME TARGET NAMES MAY NOT APPEAR IN THE
TARGET PULL-DOWN LIST.
(This list is for the use of the wordprocessor only, is not a part of this
document and may be discarded.)
ARTICLE/SECTION TARGET NAME
- --------------- -----------
?.....................................................................eff.terma
?......................................................................eff.term
?.................................................................sub.contrib.b
?................................................................subrog.contrib
1.01.......................................................................defs
1.01(b).............................................................int.end.ter
1.02...........................................................types.borrowings
1.02........................................................types.of.borrowings
2.........................................................................assgn
2.01................................................................commit.lend
2.01(a)....................................................revolve.credit.loans
2.01(b)..............................................................term.loans
2.02.............................................................not.commit.brw
2.03........................................................money.market.borrow
2.03(d).....................................................sub.and.cont.of.mon
2.03(d)(i)............................................................sub.mon.i
2.03(d)(ii)..........................................................sub.mon.ii
2.03(d)(iii)........................................................sub.mon.iii
2.03(e)............................................................not.borrower
2.03(f).......................................................Accept.and.notice
2.04(b)....................................................note.bank.make.avail
2.07................................................................inter.rates
2.07(a)......................................................int.rate.base.loan
2.07(b)....................................................int.rate.adj.cd.rate
2.07(b)....................................................int.rate.adj.cd.rate
2.07(b)....................................................int.rate.adj.cd.rate
2.07(c).................................................int.rate.euro.dollar.ln
2.08(a)..........................................................facility.fee.a
2.09.........................................................op.term.red.commit
2.11.................................................................opt.prepay
2.11(c)..................................................opt.prepay.notify.bank
2.13.............................................................funding.losses
2.15..................................................................reg.d.com
2.16............................................................Method.of.elect
2.16(a).......................................................Method.of.elect.a
2.16(d).......................................................Method.of.elect.d
2.17..................................................................op.in.com
3........................................................................paymts
3.01..............................................................effectiveness
3.01(c)....................................................agt.parent.guarantee
3.01(g)...................................................agnt.evidence.satisfy
3.02..............................................................existing.agts
3.02(a).....................................................exist.agts.eff.date
3.02(b)..............................................exist.agts.eff.date.1.sent
3.03.................................................................borrowings
3.03(a)............................................................borrowings.a
3.03(b)............................................................agg.out.prin
3.03(c)............................................................borrowings.c
3.03(d)............................................................borrowings.d
4..............................................................rep.and.warrants
4.03.............................................................binding.effect
5.....................................................................covenants
5.04....................................................conduct.bus.maint.exist
5.06(c)(iv)(C)...............................................inspect.property.C
5.07................................................consol.mergers.sales.assets
5.09.........................................................transact.affiliate
5.10.......................................................subsidiary.guarntors
6......................................................................defaults
6.01.............................................................events.default
6.01(a)..................................................event.default.fail.pay
6.01(d)........................................................event.def.10days
6.02.............................................................notice.default
?...............................................................payment.by.Borr
7.08............................................................successor.agent
8.01...................................................basis.determine.int.rate
8.01(a)..........................................................dep.in.dollars
8.02.................................................................illegality
8.03..............................................increased.cost.reduced.return
8.04(a)............................................................borr.payment
8.04(d)...................................................borrower.irsform.1001
9.01....................................................................notices
9.03.................................................................exp. indem
9.03(b)...........................................................bor.agr.indem
9.05.............................................................amend.and.waiv
9.06.........................................................successors.assigns
9.06(b)............................................................particip.int
9.06(c).....................................................bank.assign.to.inst
9.06(c).....................................................bank.assign.to.inst
9.06(d)................................................................assign.d
9.06(e)................................................................assign.e
9.06(f).......................................................notwithstanding.a
9.06(g)................................................................assign.g
9.08..............................................................governing.law
9.12.......................................................judicial.proceedings
<PAGE> 1
EXHIBIT 4.2
CONFORMED COPY
AMENDED AND RESTATED
PARENT GUARANTEE AGREEMENT
dated as of
February 13, 1998
and amended and restated as of February 12, 1999
between
Tyco International Ltd.
and
Morgan Guaranty Trust Company of New York,
as Administrative Agent
<PAGE> 2
TABLE OF CONTENTS
----------
PAGE
----
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions.....................................................1
SECTION 1.02. Accounting Terms and Determinations............................10
ARTICLE 2
GUARANTEE
SECTION 2.01. The Guarantee..................................................11
SECTION 2.02. Guarantee Unconditional........................................11
SECTION 2.03. Discharge Only upon Payment in Full; Reinstatement
in Certain Circumstances.......................................12
SECTION 2.04. Waiver by the Guarantor........................................12
SECTION 2.05. Subrogation....................................................12
SECTION 2.06. Stay of Acceleration...........................................12
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE GUARANTOR
SECTION 3.01. Corporate Existence and Power..................................12
SECTION 3.02. Corporate and Governmental Authorization; No Contravention.....13
SECTION 3.03. Binding Effect.................................................13
SECTION 3.04. Financial Information..........................................13
SECTION 3.05. Litigation.....................................................14
SECTION 3.06. Compliance with ERISA..........................................14
SECTION 3.07. Environmental Matters..........................................14
SECTION 3.08. Taxes..........................................................15
SECTION 3.09. Subsidiaries...................................................15
SECTION 3.10. Not an Investment Company......................................15
SECTION 3.11. Full Disclosure................................................15
SECTION 3.12. Obligations to Be Pari Passu...................................15
SECTION 3.13. Year 2000 Compliance...........................................15
ARTICLE 4
COVENANTS
SECTION 4.01. Information....................................................16
SECTION 4.02. Payment of Obligations.........................................17
<PAGE> 3
PAGE
----
SECTION 4.03. Maintenance of Property; Insurance.............................18
SECTION 4.04. Conduct of Business and Maintenance of Existence...............18
SECTION 4.05. Compliance with Laws...........................................19
SECTION 4.06. Inspection of Property, Books and Records; Confidentiality.....19
SECTION 4.07. Limitation on Restrictions on Subsidiary Dividends and Other
Distributions..................................................20
SECTION 4.08. Debt...........................................................22
SECTION 4.09. Fixed Charge Coverage..........................................22
SECTION 4.10. Negative Pledge................................................22
SECTION 4.11. Consolidations, Mergers and Sales of Assets....................24
SECTION 4.12. Transactions with Affiliates...................................25
SECTION 4.13. Restricted Payments............................................26
SECTION 4.14. Subsidiary Guarantors..........................................26
ARTICLE 5
DEFAULTS
SECTION 5.01. Guarantor Events of Defaults...................................26
SECTION 5.02. Notice of Default..............................................29
ARTICLE 6
TAXES
SECTION 6.01. Withholding Taxes..............................................29
SECTION 6.02. Certain Other Taxes............................................29
SECTION 6.03. Reimbursement of Taxes Paid by a Bank..........................29
ARTICLE 7
MISCELLANEOUS
SECTION 7.01. Notices........................................................30
SECTION 7.02. No Waivers.....................................................30
SECTION 7.03. Expenses; Indemnification......................................30
SECTION 7.04. Judicial Proceedings...........................................31
SECTION 7.05. Judgment Currency..............................................32
SECTION 7.06. Amendments and Waivers.........................................32
SECTION 7.07. Successors and Assigns.........................................32
SECTION 7.08. GOVERNING LAW..................................................32
SECTION 7.09. Counterparts...................................................33
SECTION 7.10. No Seal........................................................33
SECTION 7.11. WAIVER OF JURY TRIAL...........................................33
ii
<PAGE> 4
PAGE
----
Exhibit A - Form of Subsidiary Guarantee
Exhibit B - Form of Subsidiary Counsel Opinion
iii
<PAGE> 5
AMENDED AND RESTATED
PARENT GUARANTEE AGREEMENT
AGREEMENT dated as of February 13, 1998 and amended and restated as of
February 12, 1999 between TYCO INTERNATIONAL LTD. and MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as Agent.
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Guarantor hereby agrees with the Agent for
the benefit of the Banks that the Parent Guarantee Agreement between them dated
as of February 13, 1998 is amended and restated to read in its entirety as
follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as used herein, have
the following meanings:
"ACQUIRED DEBT" means Debt of a Person (a) existing at the time such
Person becomes a Subsidiary or merges into a Subsidiary and (b) not created in
contemplation of such event.
"AFFILIATE" means (i) any Person that directly, or indirectly through
one or more intermediaries, controls the Guarantor (a "Controlling Person") or
(ii) any Person (other than the Guarantor or a Subsidiary) which is controlled
by or is under common control with a Controlling Person. As used herein, the
term "control" means possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract or otherwise. The fact
that an Affiliate of a Person is a member of a law firm that renders services to
such Person or its Affiliates does not mean that the law firm is an Affiliate of
such Person.
"AGENT" means Morgan Guaranty Trust Company of New York in its capacity
as administrative agent for the Banks under the Financing Documents, and its
successors in such capacity.
"BANK" means each Person from time to time a "Bank" party to either of
the Credit Agreements.
"BANK DOMESTIC TAXES" means, with respect to any Bank, any taxes,
levies, imposts, duties, charges or withholding of any nature (and any interest,
penalties, or similar liabilities with respect thereto) which are not Bank
Foreign Taxes with respect to such Bank.
<PAGE> 6
"BANK FOREIGN TAXES" means, with respect to any Bank, any taxes,
levies, imposts, duties, charges or withholdings of any nature (and any
interest, penalties or similar liabilities with respect thereto) now or
hereafter imposed by any jurisdiction or taxing authority (including any
possession or territory thereof) other than the jurisdiction of which such Bank
is a citizen or a resident or under the laws of which such Bank is organized or
any political subdivision thereof or taxing authority thereof or therein.
"BERMUDA COMPANIES LAW" means every Bermuda statute from time to time
in force concerning companies insofar as the same applies to the Guarantor.
"BORROWER" means Tyco International Group S.A., a Luxembourg company,
and its successors.
"CONSENTS" has the meaning set forth in Section 3.01.
"CONSOLIDATED ASSETS" means, at any time, the total assets of the
Guarantor and its Consolidated Subsidiaries, determined on a consolidated basis
as of such time.
"CONSOLIDATED DEBT" means, at any date, the aggregate amount of Debt of
the Guarantor and its Consolidated Subsidiaries, determined on a consolidated
basis as of such date; provided that (i) if a Permitted Receivables Transaction
is outstanding at such date and is accounted for as a sale of accounts
receivable under generally accepted accounting principles, Consolidated Debt
determined as aforesaid shall be adjusted to include the additional Debt,
determined on a consolidated basis as of such date, which would have been
outstanding at such date had such Permitted Receivables Transaction been
accounted for as a borrowing at such date and (ii) Consolidated Debt shall in
any event include all Debt of any Person other than the Guarantor or a
Consolidated Subsidiary which is Guaranteed by the Guarantor or a Consolidated
Subsidiary, except that Consolidated Debt shall not include Debt of a joint
venture, partnership or similar entity which is Guaranteed by the Guarantor or a
Consolidated Subsidiary by virtue of the joint venture, partnership or similar
arrangement with respect to such entity or by operation of applicable law (and
not otherwise) so long as the aggregate outstanding principal amount of such
excluded Debt at any date does not exceed $50,000,000.
"CONSOLIDATED EBIT" means, for any fiscal period, Consolidated Net
Income for such period plus, to the extent deducted in determining Consolidated
Net Income for such period, the aggregate amount of (i) Consolidated Interest
Expense and (ii) federal, state and local income tax expense.
"CONSOLIDATED INTEREST EXPENSE" means, for any fiscal period, (without
duplication) (i) the consolidated interest expense of the Guarantor and its
Consolidated Subsidiaries for such period minus (ii) the consolidated interest
income of the Guarantor and its Consolidated Subsidiaries for such period, if,
and only if, such consolidated interest income is equal to or less than
$5,000,000, plus (iii) if a Permitted Receivables Transaction outstanding during
such period
2
<PAGE> 7
is accounted for as a sale of accounts receivable under generally accepted
accounting principles, the additional consolidated interest expense that would
have accrued during such period had such Permitted Receivables Transaction been
accounted for as a borrowing during such period, in each case determined on a
consolidated basis.
"CONSOLIDATED NET INCOME" means, for any fiscal period, the
consolidated net income of the Guarantor and its Consolidated Subsidiaries for
such period, determined on a consolidated basis after eliminating therefrom all
Extraordinary Gains and Losses. "EXTRAORDINARY GAINS AND LOSSES" means and
includes, for any fiscal period, all extraordinary gains and losses and all
other material non-recurring non-cash items of the Guarantor and its
Consolidated Subsidiaries for such period, determined on a consolidated basis
and, in addition, includes, without limitation, gains or losses from the
discontinuance of operations and gains or losses of the Guarantor and its
Consolidated Subsidiaries for such period resulting from the sale, conversion or
other disposition of material assets of the Guarantor or any Consolidated
Subsidiary other than in the ordinary course of business.
"CONSOLIDATED NET WORTH" means, at any date, the consolidated
stockholders' equity of the Guarantor and its Consolidated Subsidiaries,
determined on a consolidated basis as of such date and adjusted so as to exclude
the effect of the currency translation adjustment as of such date.
"CONSOLIDATED SUBSIDIARY" means, at any date, with respect to any
Person, any Subsidiary or other entity the accounts of which would be
consolidated with those of such Person in its consolidated financial statements
if such statements were prepared as of such date; unless otherwise specified,
Consolidated Subsidiary means a Consolidated Subsidiary of the Guarantor.
"CONSOLIDATED TANGIBLE ASSETS" means, at any time, the total assets
less all Intangible Assets appearing on the most recently prepared balance sheet
of the Guarantor and its Consolidated Subsidiaries as of the end of a fiscal
quarter of the Guarantor, prepared on a consolidated basis in accordance with
United States generally accepted accounting principles as in effect on the date
of calculation.
"CONSOLIDATED TANGIBLE NET WORTH" means, at any date, (i) Consolidated
Net Worth as of such date minus (ii) Intangible Assets as of such date.
"CONSOLIDATED TOTAL CAPITALIZATION" means, at any date, the sum of
Consolidated Debt and Consolidated Net Worth, each determined as of such date.
"CREDIT AGREEMENTS" means (i) the 364-Day Credit Agreement dated as of
February 12, 1999 among the Borrower, the Banks listed on the signature pages
thereof and the Agent and (ii) the Extendible 364-Day Credit Agreement dated as
of February 13, 1998 among the Borrower, the Banks listed on the signature pages
thereof and the Agent, in each case as amended from time to time.
3
<PAGE> 8
"DEBT" of any Person means, at any date, without duplication, (i) the
principal amount of all obligations of such Person for borrowed money, (ii) the
principal amount of all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments (it being understood that,
subject to the proviso to this definition of "Debt," performance bonds,
performance guaranties, letters of credit, bank guaranties and similar
instruments shall not constitute Debt of such Person to the extent that the
outstanding reimbursement obligations of such Person in respect thereof are
collateralized by cash or cash equivalents, which cash or cash equivalents would
not be reflected as assets on a balance sheet of such Person prepared in
accordance with generally accepted accounting principles), (iii) all obligations
of such Person to pay the deferred purchase price of property or services
recorded on the books of such Person, except for (a) trade and similar accounts
payable and accrued expenses arising in the ordinary course of business, and (b)
employee compensation and pension obligations, and other obligations arising
from employee benefit programs and agreements or other similar employment
arrangements, (iv) all obligations of such Person as lessee which are
capitalized on the books of such Person in accordance with generally accepted
accounting principles, (v) all Debt secured by a Lien on any asset of such
Person, whether or not such Debt is otherwise an obligation of such Person, and
(vi) all Debt of others Guaranteed by such Person; provided, however, that Debt
shall not include:
(A) contingent reimbursement obligations in
respect of performance bonds, performance
guaranties, bank guaranties or letters of
credit issued in lieu of performance bonds
or performance guaranties or similar
instruments, in each case, incurred by such
Person in the ordinary course of business;
(B) contingent reimbursement obligations in
respect of trade letters of credit, or
similar instruments, in each case, incurred
by such Person in the ordinary course of
business; or
(C) contingent reimbursement obligations in
respect of standby letters of credit or
similar instruments securing self-insurance
obligations of such Person;
in each case, so long as the underlying obligation supported thereby does not
itself constitute Debt.
"ENVIRONMENTAL LAWS" means any and all statutes, laws, judicial
decisions, regulations, ordinances, rules, judgments, orders, decrees, plans,
injunctions, permits, concessions, grants, franchises, licenses, agreements and
other governmental restrictions relating to the environment, the effect of the
environment on human health or to emissions, discharges or releases of
pollutants, contaminants, Hazardous Substances or wastes into the environment
including, without limitation, ambient air, surface water, ground water, or
land, or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of
4
<PAGE> 9
pollutants, contaminants, Hazardous Substances or wastes or the clean-up or
other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
"ERISA GROUP" means any Subsidiary and all members of a controlled
group of corporations and all trades or businesses (whether or not incorporated)
under common control which, together with any Subsidiary, are treated as a
single employer under Section 414 of the Internal Revenue Code.
"EXISTING TYCO US DEBT" means publicly held and privately placed debt
securities of Tyco US outstanding at December 22, 1997.
"FINANCING DOCUMENTS" means this Agreement, the Credit Agreements and
each Subsidiary Guarantee, Promissory Note and New Borrower Agreement (each as
defined in either of the Credit Agreements).
"GUARANTEE" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt of any
other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt (whether arising by virtue of partnership arrangements, by agreement to
keep-well, to purchase assets, goods, securities or services, to take-or-pay, or
to maintain financial statement conditions or otherwise) or (ii) entered into
for the purpose of assuring in any other manner the holder of such Debt of the
payment thereof or to protect such holder against loss in respect thereof (in
whole or in part), provided that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.
"GUARANTOR" means Tyco International Ltd., a Bermuda company, and its
successors.
"GUARANTOR DEFAULT" means any condition or event which constitutes a
Guarantor Event of Default or which with the giving of notice or lapse of time
or both would, unless cured or waived, become a Guarantor Event of Default.
"GUARANTOR EVENT OF DEFAULT" has the meaning set forth in Section 5.01.
"GUARANTOR'S 1998 FORM 10-K" means the Guarantor's transition report on
Form 10-K for the twelve months ended September 30, 1998, as filed with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934.
5
<PAGE> 10
"HAZARDOUS SUBSTANCES" means any toxic, radioactive, caustic or
otherwise hazardous substance, including petroleum, its derivatives, by-products
and other hydrocarbons, or any substance having any constituent elements
displaying any of the foregoing characteristics.
"INDEMNITEE" has the meaning set forth in Section 7.03(b).
"INDENTURE" means the Indenture dated as of April 23, 1998 among the
Borrower, the Guarantor and The Bank of New York, as Trustee, as amended or
supplemented from time to time.
"INTANGIBLE ASSETS" means, at any date, the amount (if any) which would
be stated under the heading "Costs in Excess of Net Assets of Acquired
Companies" or under any other heading relating to intangible assets separately
listed, in each case, on the face of a balance sheet of the Guarantor and its
Consolidated Subsidiaries prepared on a consolidated basis as of such date.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For the purposes of this Agreement, the Guarantor or any Subsidiary shall be
deemed to own subject to a Lien any asset which it has acquired or holds subject
to the interest of a vendor or lessor under any conditional sale agreement,
capital lease or other title retention agreement (other than an operating lease)
relating to such asset.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the
business, consolidated financial position or consolidated results of operations
of the Guarantor and its Consolidated Subsidiaries, considered as a whole, or
(ii) the ability of the Guarantor to perform its obligations under this
Agreement.
"MATERIAL DEBT" means Debt (other than (i) any Guarantee by the
Guarantor of Debt of a Subsidiary, (ii) any Guarantee by a Subsidiary of Debt of
the Guarantor or another Subsidiary, (iii) any Debt of the Guarantor owed to a
Wholly-Owned Consolidated Subsidiary or (iv) any Debt of a Subsidiary owed to
the Guarantor or a Wholly-Owned Consolidated Subsidiary) of the Guarantor and/or
one or more of its Subsidiaries, arising in one or more related or unrelated
transactions, in an aggregate outstanding principal amount exceeding
$50,000,000.
"MATERIAL PLAN" means at any time a Plan or Plans having aggregate
Unfunded Liabilities in excess of $25,000,000.
"MULTIEMPLOYER PLAN" means at any time a multiemployer plan within the
meaning of Section 4001(a)(3) of ERISA either (i) to which any member of the
ERISA Group is then making or accruing an obligation to make contributions or
(ii) has at any time within the preceding five
6
<PAGE> 11
plan years been maintained, or contributed to, by any Person who was at such
time a member of the ERISA Group for employees of any Person who was at such
time a member of the ERISA Group.
"OBLIGOR" means, at any time, the Borrower, the Guarantor and each
Subsidiary Guarantor at such time.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"PERMITTED ACQUIRED DEBT" means Acquired Debt of a Person which:
(a) remains outstanding no more than 180 days after the date such
Person becomes a Subsidiary or merges into a Subsidiary (the "ACQUISITION
DATE"); or
(b) remains outstanding more than 180 days after the Acquisition
Date, but only if (x) 180 days after the Acquisition Date, the senior unsecured
debt of the Borrower is rated at least BBB- by S&P or Baa3 by Moody's, (y) such
Acquired Debt by its terms is not callable or redeemable prior to its stated
maturity within 180 days after the Acquisition Date and (z) such Person in good
faith has made or caused to be made an offer to acquire all such Acquired Debt,
including, without limitation, an offer to exchange such Acquired Debt for
securities of the Borrower, on terms which, in the opinion of an independent
investment banking firm of national reputation and standing, are consistent with
market practices in existence at the time for offers of a similar nature,
provided that the expiration date of any such offer shall not be later than the
180 days after the Acquisition Date, and provided further that if Acquired Debt
which becomes Permitted Acquired Debt under this clause (b) thereafter becomes
callable or redeemable prior to its stated maturity, such Acquired Debt shall
cease to be Permitted Acquired Debt under this clause (b) 90 days after it
becomes so callable or redeemable; or
(c) remains outstanding more than 180 days after the Acquisition
Date and is not Permitted Acquired Debt under clause (b), but only if and to the
extent that the aggregate outstanding principal amount of Permitted Acquired
Debt under this clause (c) at no time exceeds 5% of the Consolidated Tangible
Assets of the Guarantor.
"PERMITTED RECEIVABLES TRANSACTION" means any sale or sales of,
refinancing of and/or financing secured by, any accounts receivable of the
Guarantor and/or any of its Subsidiaries (the "RECEIVABLES") pursuant to which
the Guarantor and its Subsidiaries realize aggregate net proceeds of not more
than $500,000,000 at any one time outstanding, including, without limitation,
any revolving purchase(s) of Receivables where the maximum aggregate uncollected
purchase price (exclusive of any deferred purchase price) for such Receivables
at any time outstanding does not exceed $500,000,000.
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"PERSON" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
"PLAN" means at any time an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the ERISA Group for employees of any Person which
was at such time a member of the ERISA Group.
"PROPERTY" means any interest of any kind in any property or assets,
whether real, mixed or personal and whether tangible or intangible.
"PROSPECTS" means, at any time, results of future operations which are
reasonably foreseeable based upon the facts and circumstances in existence at
such time.
"REFINANCING" has the meaning set forth in Section 4.07 (and the term
"REFINANCED" has a correlative meaning).
"RESPONSIBLE OFFICER" means any of the following: the Chairman,
President, Vice President and Chief Financial Officer, Treasurer and Secretary
of the Guarantor.
"RESTRICTED PAYMENT" means (i) any dividend or other distribution on
any shares of the Guarantor's capital stock (except to the extent such dividends
and distributions are payable in shares of its capital stock or Stock
Equivalents) or (ii) any payment (except to the extent payable in shares of the
Guarantor's capital stock or Stock Equivalents) on account of the purchase,
redemption, retirement or acquisition of (a) any shares of the Guarantor's
capital stock or (b) any option, warrant or other right to acquire shares of the
Guarantor's capital stock.
"SIGNIFICANT SUBSIDIARY" means, at any date, (A) any Consolidated
Subsidiary which, including its consolidated subsidiaries, meets any of the
following conditions:
(i) the investments in and advances to such
Consolidated Subsidiary by the Guarantor and its other
Consolidated Subsidiaries exceed 15% of the total assets of
the Guarantor and its Consolidated Subsidiaries, determined on
a consolidated basis as of the end of the most recently
completed fiscal year; or
(ii) the proportionate share attributable to such
Consolidated Subsidiary of the total assets of the Guarantor
and its Consolidated Subsidiaries (after intercompany
eliminations) exceeds 15% of the total assets of the Guarantor
and
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the Consolidated Subsidiaries, determined on a consolidated
basis as of the end of the most recently completed fiscal
year; or
(iii) the Guarantor's and its Consolidated
Subsidiaries' equity in the income of such Consolidated
Subsidiary from continuing operations before income taxes,
extraordinary items and cumulative effect of a change in
accounting principle exceeds 15% of such income of the
Guarantor and its Consolidated Subsidiaries, determined on a
consolidated basis for the most recently completed fiscal
year; and
(B) any other Subsidiary which is an Obligor.
"STOCK EQUIVALENTS" means, with respect to any Person, options,
warrants, calls or other rights entered into or issued by such Person to acquire
any capital stock or equity securities of, or other ownership interests in, or
securities convertible into or exchangeable for, capital stock or equity
securities of, or other ownership interests in, such Person.
"SUBSIDIARY" means, with respect to any Person, any corporation or
other entity of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions are at the time directly or indirectly owned by
such Person; unless otherwise specified, Subsidiary means a Subsidiary of the
Guarantor.
"SUBSIDIARY GUARANTEE" means a Guarantee entered into by a Subsidiary
substantially in the form of Exhibit A hereto.
"SUBSIDIARY GUARANTOR" means, at any time, a Subsidiary which at or
prior to such time shall have delivered to the Agent (i) a Subsidiary Guarantee
duly executed by such Subsidiary, which Subsidiary Guarantee has not terminated
in accordance with its terms, (ii) an opinion of counsel for such Subsidiary
(which counsel may be an employee of the Guarantor or such Subsidiary)
reasonably satisfactory to the Agent with respect to such Subsidiary Guarantee,
substantially in the form of Exhibit B hereto and covering such additional
matters relating to such Subsidiary Guarantee as the Agent may reasonably
request and (iii) all documents the Agent may reasonably request relating to the
existence of such Subsidiary, the corporate authority for and the validity of
such Subsidiary Guarantee, and any other matters reasonably determined by the
Agent to be relevant thereto, all in form and substance reasonably satisfactory
to the Agent.
"TYCO US" means Tyco International (US) Inc., a Massachusetts
corporation, and its successors.
"TYCOLUX DEBT SECURITIES" means any unsecured debt securities issued by
the Borrower pursuant to the Indenture.
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"UNFUNDED LIABILITIES" means, with respect to any Plan at any time, the
amount (if any) by which (i) the value of all benefit liabilities under such
Plan, determined on a plan termination basis using the assumptions prescribed by
the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the fair market
value of all Plan assets allocable to such liabilities under Title IV of ERISA
(excluding any accrued but unpaid contributions), all determined as of the then
most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of a member of the ERISA Group to the
PBGC or to any other Person under Title IV of ERISA
"WHOLLY-OWNED CONSOLIDATED SUBSIDIARY" means any Consolidated
Subsidiary all of the shares of capital stock or other ownership interests of
which (except directors' qualifying shares and investments by foreign nationals
mandated by applicable law) are at the time beneficially owned, directly or
indirectly, by the Guarantor.
SECTION 1.02. Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with United
States generally accepted accounting principles as in effect from time to time,
applied on a basis consistent (except for changes concurred in by the
Guarantor's independent public accountants) with the then most recent audited
consolidated financial statements of the Guarantor and its Consolidated
Subsidiaries delivered to the Banks; provided that, if either (i) the Guarantor
notifies the Agent that the Guarantor wishes to eliminate the effect of any
change in generally accepted accounting principles on the operation of any
covenant contained in Article 4 or (ii) the Agent notifies the Guarantor that it
wishes to effect such an elimination, then the Guarantor's compliance with such
covenant shall be determined on the basis of generally accepted accounting
principles in effect immediately before the relevant change in generally
accepted accounting principles became effective, until either (A) such notice is
withdrawn by the party giving such notice or (B) such covenant is amended in a
manner satisfactory to the Guarantor and the Agent to reflect such change in
generally accepted accounting principles.
ARTICLE 2
GUARANTEE
SECTION 2.01. The Guarantee. The Guarantor hereby guarantees the full
and punctual payment (whether at stated maturity, upon acceleration or
otherwise) of all principal of and interest on amounts loaned to the Borrower
under the Financing Documents and all other amounts payable by the Borrower
under the Financing Documents. This is a guarantee of payment and not merely of
collection. Upon failure by the Borrower to pay punctually any such amount, the
Guarantor shall forthwith on demand pay the amount not so paid at the place and
in the manner specified in the applicable Financing Document.
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SECTION 2.02. Guarantee Unconditional. The obligations of the Guarantor
hereunder shall be unconditional and absolute, and, without limiting the
generality of the foregoing, shall not be released, discharged or otherwise
affected, at any time by:
(i) any extension, renewal, settlement, compromise,
waiver or release in respect of any obligation of the Borrower under
any Financing Document, by operation of law or otherwise;
(ii) any modification or amendment of or supplement to any
Financing Document;
(iii) any release, impairment, non-perfection or invalidity
of any direct or indirect security for any obligation of the Borrower
under any Financing Document;
(iv) any change in the corporate existence, structure or
ownership of the Borrower, or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting the Borrower or
its assets or any resulting release or discharge of any obligation of
the Guarantor or the Borrower contained in any Financing Document;
(v) the existence of any claim, set-off or other rights
which the Guarantor may have at any time against the Borrower, the
Agent, any Bank or any other Person, whether in connection herewith or
any unrelated transactions, provided that nothing herein shall prevent
the assertion of any such claim by separate suit or compulsory
counterclaim;
(vi) any invalidity or unenforceability relating to or
against the Borrower for any reason of any Financing Document, or any
provision of applicable law or regulation purporting to prohibit the
payment by the Borrower of any amount payable by it under any Financing
Document; or
(vii) any other act or omission to act or delay of any kind
by the Borrower, the Agent, any Bank or any other Person or any other
circumstance whatsoever which might, but for the provisions of this
paragraph, constitute a legal or equitable discharge of or defense to
the Guarantor's obligations hereunder.
SECTION 2.03. Discharge Only upon Payment in Full; Reinstatement in
Certain Circumstances. This Agreement shall remain in full force and effect
until the commitments of the Banks under the Credit Agreements shall have
terminated and the principal of and interest on the Promissory Notes (as defined
in either Credit Agreement) and all other amounts payable by the Borrower under
the Financing Documents shall have been paid in full. If at any time any payment
of principal of or interest on any Promissory Note (as defined in either Credit
Agreement) or any other amount payable by the Borrower under the Financing
Documents is rescinded or must be otherwise restored or returned upon the
insolvency, bankruptcy or reorganization of the Borrower or otherwise, the
Guarantor's obligations hereunder with respect
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<PAGE> 16
to such payment shall be reinstated at such time as though such payment had been
due but not made at such time.
SECTION 2.04. Waiver by the Guarantor. The Guarantor irrevocably waives
acceptance hereof, presentment, demand, protest and any notice not provided for
herein, as well as any requirement that at any time any action be taken by any
Person against the Borrower or any other Person.
SECTION 2.05. Subrogation. Upon making any payment hereunder with
respect to the Borrower, the Guarantor shall be subrogated to the rights of the
payee against the Borrower with respect to such payment; provided that the
Guarantor shall not enforce any payment by way of subrogation until all amounts
of principal of and interest on the Promissory Notes (as defined in either
Credit Agreement) and all other amounts payable by the Borrower under the
Financing Documents have been paid in full.
SECTION 2.06. Stay of Acceleration. In the event that acceleration of
the time for payment of any amount payable by the Borrower under any Financing
Document is stayed upon insolvency, bankruptcy or reorganization of the
Borrower, all such amounts otherwise subject to acceleration under the terms of
this Agreement shall nonetheless be payable by the Guarantor hereunder forthwith
on demand by the Agent.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE GUARANTOR
The Guarantor represents and warrants to the Agent that:
SECTION 3.01. Corporate Existence and Power. The Guarantor is a company
limited by shares duly incorporated and validly existing under the laws of
Bermuda. The Guarantor has all corporate powers and all governmental licenses,
authorizations, consents and approvals (collectively, the "Consents") required
in order to carry on its business as now conducted, other than those powers and
Consents, the failure of which to be possessed or obtained could not, based upon
the facts and circumstances in existence at the time this representation and
warranty is made or deemed made, reasonably be expected to have a Material
Adverse Effect.
SECTION 3.02. Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by the Guarantor of this
Agreement: (a) are within the Guarantor's corporate powers; (b) have been duly
authorized by all necessary corporate action on the part of the Guarantor; (c)
require no action by or in respect of, or filing with, any governmental body,
agency or official, in each case, on the part of the Guarantor; and (d) do not
contravene, or constitute a default by the Guarantor under, any provision of (i)
applicable law or regulation, (ii) the Memorandum of Association or Bye-Laws of
the Guarantor, or (iii) any agreement or instrument evidencing or governing Debt
of the Guarantor or any other material agreement, judgment, injunction, order,
decree or other instrument binding upon the Guarantor.
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SECTION 3.03. Binding Effect. This Agreement constitutes a valid and
binding agreement of the Guarantor.
SECTION 3.04. Financial Information.
(a) The consolidated balance sheet of the Guarantor and its
Consolidated Subsidiaries as of September 30, 1998 and the related consolidated
statements of income, of shareholders' equity and of cash flows for the
nine-month period then ended, reported on by PriceWaterhouseCoopers LLP and set
forth in the Guarantor's 1998 Form 10-K, a copy of which has been delivered to
each of the Banks, fairly present, in conformity with generally accepted
accounting principles, the consolidated financial position of the Guarantor and
its Consolidated Subsidiaries as of such date and their consolidated results of
operations and cash flows for such period.
(b) The supplemental consolidated balance sheet of the Guarantor
and its Consolidated Subsidiaries as of September 30, 1998 and the related
supplemental consolidated statements of operations, shareholders' equity and
cash flows for the fiscal year then ended, reported on by PriceWaterhouseCoopers
LLP and set forth in the Guarantor's Form 8-K filed with the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934 on December
10, 1998, a copy of which has been delivered to each of the Banks, fairly
present, in conformity with generally accepted accounting principles, the
consolidated financial position of the Guarantor and its Consolidated
Subsidiaries as of such date and their consolidated results of operations and
cash flows for such period, in each case giving retroactive effect to the merger
with United States Surgical Corporation consummated on October 1, 1998 and
accounted for as a pooling of interests.
(c) Since September 30, 1998 there has been no material adverse
change in the business, financial position, results of operations or Prospects
of the Guarantor and its Consolidated Subsidiaries, considered as a whole.
SECTION 3.05. Litigation. There is no action, suit or proceeding
pending against, or to the knowledge of the Guarantor threatened against or
affecting, the Guarantor or any of its Subsidiaries before any court or
arbitrator or any governmental body, agency or official in which there is a
reasonable possibility of an adverse decision which could, based upon the facts
and circumstances in existence at the time this representation and warranty is
made or deemed made, reasonably be expected to have a Material Adverse Effect or
which in any manner draws into question the validity of the Financing Documents.
SECTION 3.06. Compliance with ERISA. Each member of the ERISA Group has
fulfilled its obligations under the minimum funding standards of ERISA and the
Internal Revenue Code with respect to each Plan and is in compliance, except
where the failure to so comply could not, based upon the facts and circumstances
in existence at the time this representation and warranty is made or deemed
made, reasonably be expected to have a Material Adverse Effect, with the
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<PAGE> 18
presently applicable provisions of ERISA and the Internal Revenue Code with
respect to each Plan. No member of the ERISA Group has (i) sought a waiver of
the minimum funding standard under Section 412 of the Internal Revenue Code in
respect of any Plan, (ii) failed to make any required contribution or payment to
any Plan or Multiemployer Plan, or made any amendment to any Plan, which has
resulted in or could, based upon the facts and circumstances in existence at the
time this representation and warranty is made or deemed made, reasonably be
expected to result in the imposition of a Lien or the posting of a bond or other
security under ERISA or the Internal Revenue Code or (iii) incurred any
liability under Title IV of ERISA (other than a liability to the PBGC for
premiums under Section 4007 of ERISA), which could, based upon the facts and
circumstances existing at the time this representation and warranty is made or
deemed made, reasonably be expected to have a Material Adverse Effect.
SECTION 3.07. Environmental Matters. In the ordinary course of its
business, the Guarantor conducts an ongoing review of the effect of
Environmental Laws on the business, operations and properties of the Guarantor
and its Subsidiaries, in the course of which it identifies and evaluates
associated liabilities and costs (including, without limitation, any capital or
operating expenditures required for clean-up or closure of properties presently
or previously owned, any capital or operating expenditures required to achieve
or maintain compliance with environmental protection standards imposed by law or
as a condition of any license, permit or contract, any related constraints on
operating activities, including any periodic or permanent shutdown of any
facility or reduction in the level of or change in the nature of operations
conducted thereat, any costs or liabilities in connection with off-site disposal
of wastes or Hazardous Substances, and any actual or potential liabilities to
third parties, including employees, and any related costs and expenses). On the
basis of this review, the Guarantor has reasonably concluded that such
associated liabilities and costs, including the costs of compliance with
Environmental Laws, could not, based upon the facts and circumstances existing
at the time this representation and warranty is made or deemed made, reasonably
be expected to have a Material Adverse Effect.
SECTION 3.08. Taxes. The Guarantor and its Significant Subsidiaries
have filed all material tax returns which are required to be filed by them and
have paid all taxes shown on such returns or pursuant to any assessment received
by the Guarantor or any Subsidiary, except those assessments which are being
contested in good faith by appropriate proceedings. The charges, accruals and
reserves on the books of the Guarantor and its Subsidiaries in respect of taxes
or other governmental charges are, in the opinion of the Guarantor, adequate.
SECTION 3.09. Subsidiaries. Each of the Guarantor's corporate
Consolidated Subsidiaries is a corporation duly incorporated, validly existing
and in good standing under the laws of its jurisdiction of incorporation, except
where the failure to be so incorporated, existing or in good standing could not,
based upon the facts and circumstances existing at the time this representation
and warranty is made or deemed made, reasonably be expected to have a Material
Adverse Effect. Each such Subsidiary has all corporate powers and all Consents
required to carry on its business as now conducted, other than those powers and
Consents, the failure of which to
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be possessed or obtained could not, based upon the facts and circumstances in
existence at the time this representation and warranty is made or deemed made,
reasonably be expected to have a Material Adverse Effect.
SECTION 3.10. Not an Investment Company. The Guarantor is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
SECTION 3.11. Full Disclosure. All information heretofore furnished by
or on behalf of the Obligors to the Agent in connection with this Agreement,
does not contain any untrue statement of material fact or omit to state any
material fact necessary to make the statements contained herein or therein, in
light of the circumstances under which they were made, not misleading.
SECTION 3.12. Obligations to Be Pari Passu. The Guarantor's obligations
under this Agreement rank PARI PASSU as to priority of payment and in all other
respects with all other unsecured and unsubordinated obligations of the
Guarantor.
SECTION 3.13. Year 2000 Compliance. The Guarantor has (i) initiated a
review and assessment of all areas within the business and operations of the
Guarantor and its Subsidiaries that could be adversely affected by the "YEAR
2000 PROBLEM" (that is, the risk that computer applications used by it or any of
its Subsidiaries may be unable to recognize and perform properly date-sensitive
functions involving certain dates prior to and any date after December 31,
1999), (ii) developed a plan and timeline for addressing the Year 2000 Problem
on a timely basis and (iii) to date, implemented such plan in accordance with
such timetable. The Guarantor reasonably believes that all computer applications
that are material to the business or operations of the Guarantor or any of its
Subsidiaries will on a timely basis be able to perform properly date-sensitive
functions for all dates before and from and after January 1, 2000, except to the
extent that a failure to do so could not reasonably be expected to have a
Material Adverse Effect.
ARTICLE 4
COVENANTS
The Guarantor agrees that:
SECTION 4.01. Information. The Guarantor will deliver to each of the
Banks:
(a) as soon as available and in any event within 120 days after
the end of each fiscal year of the Guarantor, consolidated and consolidating
balance sheets of the Guarantor and its Consolidated Subsidiaries as of the end
of such fiscal year and the related consolidated and consolidating statements of
income, of shareholders' equity and of cash flows for such fiscal year, setting
forth, in each case in comparative form, the figures for the previous fiscal
year, such
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consolidated statements to be reported on by PriceWaterhouseCoopers LLP or other
independent public accountants of internationally recognized standing in a
manner complying with the applicable rules and regulations promulgated by the
Securities and Exchange Commission;
(b) as soon as available and in any event within 60 days after the
end of each of the first three quarters of each fiscal year of the Guarantor,
consolidated and consolidating balance sheets of the Guarantor and its
Consolidated Subsidiaries as of the end of such quarter, the related
consolidated statements of income for such quarter, and the related consolidated
statements of income and of cash flows and consolidating statements of income
for the portion of the Guarantor's fiscal year ended at the end of such quarter,
setting forth in the case of such statements of income and of cash flows in
comparative form the figures for the corresponding quarter (in the case of
consolidated statements of income) and for the corresponding portion of the
Guarantor's previous fiscal year, all certified (subject to normal year-end
adjustments) as to fairness of presentation, generally accepted accounting
principles and consistency on behalf of the Guarantor by the chief financial
officer, the chief accounting officer or the treasurer of the Guarantor;
(c) simultaneously with the delivery of each set of financial
statements referred to in subsections (a) and (b) above, a certificate on behalf
of the Guarantor signed by the chief financial officer, the chief accounting
officer or the treasurer of the Guarantor (i) setting forth in reasonable detail
the calculations required to establish whether the Guarantor was in compliance
with the requirements of Sections 4.08, 4.09, 4.10 and 4.13 on the date of such
financial statements and (ii) stating whether any Guarantor Default exists on
the date of such certificate and, if any Guarantor Default then exists, setting
forth, in reasonable detail, the nature thereof and the action which the
Guarantor is taking or proposes to take with respect thereto;
(d) simultaneously with the delivery of each set of financial
statements referred to in subsection (a) above, a statement of the firm of
independent public accountants which reported on such financial statements
stating that, in making the audit necessary for the certification of such
financial statements, such firm of accountants has obtained no knowledge of any
Guarantor Default, or if it has obtained knowledge of such Guarantor Default,
specifying the nature and period of existence thereof; provided such firm of
accountants shall not be liable to any Person by reason of such firm's failure
to obtain knowledge of any Guarantor Default which would not be disclosed in the
course of an audit conducted in accordance with generally accepted accounting
principles;
(e) within five business days after any Responsible Officer
obtains knowledge of any Guarantor Default, if such Guarantor Default is then
continuing, a certificate on behalf of the Guarantor signed by the chief
financial officer, the chief accounting officer or the treasurer of the
Guarantor setting forth, in reasonable detail, the nature thereof and the action
which the Guarantor is taking or proposes to take with respect thereto;
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(f) promptly following the mailing thereof to the shareholders of
the Guarantor generally, copies of all financial statements, reports and proxy
statements so mailed;
(g) promptly upon the filing thereof, copies of all final
registration statements (other than the exhibits thereto and any registration
statements on Form S-8 or its equivalent) and final reports on Forms 10-K, 10-Q
and 8-K (or their equivalents) which the Guarantor shall have filed with the
Securities and Exchange Commission;
(h) promptly upon any Responsible Officer of the Guarantor
obtaining knowledge of the commencement of any action, suit or proceeding before
any court, arbitrator or other governmental body against the Guarantor or any of
its Subsidiaries that, if adversely determined, could reasonably be expected to
have a Material Adverse Effect, a certificate on behalf of the Guarantor
specifying the nature of such action, suit or proceeding and what action the
Guarantor is taking or proposes to take with respect thereto; and
(i) from time to time, upon reasonable notice, such additional
information regarding the financial position or business of the Guarantor and
its Subsidiaries as the Agent, at the request of any Bank, may reasonably
request.
Information required to be delivered pursuant to subsections (a), (b),
(f) or (g) above shall be deemed to have been delivered on the date on which the
Guarantor provides notice to the Banks that such information has been posted on
the Guarantor's website on the Internet at the website address listed on the
signature pages hereof, at sec.gov/edaux/searches.htm or at another website
identified in such notice and accessible by the Banks without charge; provided
that (i) such notice may be included in a certificate delivered pursuant to
subsection 4.01(c) and (ii) the Guarantor shall deliver paper copies of the
information referred to in subsections (a), (b), (f) or (g) to any Bank which
requests such delivery.
SECTION 4.02. Payment of Obligations. The Guarantor will pay and
discharge, and will cause each Subsidiary to pay and discharge, at or before
maturity, all their respective material obligations and liabilities, including,
without limitation, tax liabilities, except where (i) any such failure to so pay
or discharge could not, based upon the facts and circumstances in existence at
the time, reasonably be expected to have a Material Adverse Effect or (ii) such
liabilities or obligations may be contested in good faith by appropriate
proceedings. The Guarantor will maintain, and will cause each Subsidiary to
maintain, in accordance with generally accepted accounting principles,
appropriate reserves for the accrual of any of such liabilities or obligations.
SECTION 4.03. Maintenance of Property; Insurance. (a) Except as
permitted by Section 4.04 or 4.09, the Guarantor will keep, and will cause each
Subsidiary to keep, all property necessary in its business in good working order
and condition, ordinary wear and tear excepted, unless the failure to so keep
could not, based upon the facts and circumstances existing at the time,
reasonably be expected to have a Material Adverse Effect.
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(b) The Guarantor will maintain, and will cause each Subsidiary to
maintain, with financially sound and reputable insurers, insurance with respect
to its assets and business against such casualties and contingencies, of such
types (including, without limitation, loss or damage, product liability,
business interruption, larceny, embezzlement or other criminal misappropriation)
and in such amounts as is customary in the case of similarly situated
corporations of established reputations engaged in the same or a similar
business, unless the failure to maintain such insurance could not, based upon
the facts and circumstances existing at the time, reasonably be expected to have
a Material Adverse Effect.
SECTION 4.04. Conduct of Business and Maintenance of Existence. The
Guarantor (a) will not engage in any business other than the holding of stock
and other investments in its Subsidiaries and activities reasonably related
thereto, (b) will cause each Subsidiary to engage in business of the same
general type as now conducted by the Guarantor's Subsidiaries and reasonably
related extensions thereof, and (c) will preserve, renew and keep in full force
and effect, and will cause each Subsidiary to preserve, renew and keep in full
force and effect (x) their respective corporate existence and (y) their
respective rights, privileges and franchises necessary or desirable in the
normal conduct of business, unless in the case of either the failure of the
Guarantor to comply with subclause (c) (y) of this Section 4.04 or the failure
of a Subsidiary to comply with clause (b) or (c) of this Section 4.04, such
failure could not, based upon the facts and circumstances existing at the time,
reasonably be expected to have a Material Adverse Effect; provided that nothing
in this Section 4.04 shall prohibit (i) the merger or consolidation of a
Subsidiary with or into the Guarantor or a Wholly-Owned Consolidated Subsidiary,
(ii) the sale, lease, transfer, assignment or other disposition by a Subsidiary
of all or any part of its assets to the Guarantor or to a Wholly-Owned
Consolidated Subsidiary, (iii) the merger or consolidation of a Subsidiary with
or into a Person other than the Guarantor or a Wholly-Owned Consolidated
Subsidiary, if the Person surviving such consolidation or merger is a Subsidiary
and immediately after giving effect thereto, no Guarantor Default shall have
occurred and be continuing, (iv) the sale, lease, transfer, assignment or other
disposition by a Subsidiary of all or any part of its assets to a Person other
than the Guarantor or a Wholly-Owned Consolidated Subsidiary, if the Person to
which such sale, lease, transfer, assignment or other disposition is made is a
Subsidiary and immediately after giving effect thereto, no Guarantor Default
shall have occurred and be continuing, (v) any transaction permitted pursuant to
Section 4.11 or (vi) the termination of the corporate existence of any
Subsidiary if the Guarantor in good faith determines that such termination is in
the best interest of the Guarantor and is not materially disadvantageous to the
Banks.
SECTION 4.05. Compliance with Laws. The Guarantor will comply, and
cause each Subsidiary to comply, in all material respects with all applicable
laws, ordinances, rules, regulations, and requirements of governmental
authorities (including, without limitation, Environmental Laws and ERISA and the
rules and regulations thereunder) except where (a) noncompliance therewith could
not, based upon the facts and circumstances in existence at the time, reasonably
be expected to have a Material Adverse Effect or (b) the necessity of compliance
therewith is contested in good faith by appropriate proceedings.
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SECTION 4.06. Inspection of Property, Books and Records;
Confidentiality. (a) The Guarantor will keep, and will cause each Subsidiary to
keep, proper books of record and account in which true and correct entries shall
be made of its business transactions and activities so that financial statements
that fairly present its business transactions and activities can be properly
prepared in accordance with generally accepted accounting principles.
(b) The Guarantor will permit, and will cause each Subsidiary to
permit, representatives of any Bank at such Bank's expense to visit and inspect
any of their respective properties, to examine and make abstracts from any of
their respective books and records and to discuss their respective affairs,
finances and accounts with their respective officers, employees and independent
public accountants, all upon reasonable notice to the Guarantor, at such
reasonable times and as often as may reasonably be requested by any Bank.
(c) Each Bank and the Agent shall, by its receipt of Confidential
Information (as defined below) pursuant to or in connection with this Agreement
or its exercise of any of its rights hereunder, be deemed to have agreed (on
behalf of itself and each of its affiliates, directors, officers, employees and
representatives) to (i) keep such information confidential, (ii) (except as
permitted by clause (iii) of this Section 4.06(c)) not disclose such information
to any Person other than an officer, director, employee, legal counsel,
independent auditor or authorized agent or advisor of the Agent or such Bank
needing to know such information (it being understood that any such officer,
director, employee, legal counsel, independent auditor or authorized agent or
advisor shall be informed by the Agent or such Bank of the confidential nature
of such information), (iii) not disclose such information to any Assignee or
Participant (or prospective Assignee or Participant), unless such Assignee or
Participant (or prospective Assignee or Participant) shall agree in writing to
be bound by the provisions of this Section 4.06(c) and (iv) not use any such
information except for purposes relating to this Agreement or the Notes. The
term "Confidential Information" shall mean non-public information furnished by
or on behalf of the Guarantor or any of its Subsidiaries to the Agent, any Bank
or other Person exercising rights hereunder or required to be bound hereby
(collectively "Recipients"), but shall not include any such information which
(1) has become or hereafter becomes available to the public other than as a
result of a disclosure by a Recipient, or (2) has become or hereafter becomes
available to a Recipient, on a non-confidential basis, from a source other than
the Guarantor or any of its Subsidiaries (or any of their respective
representatives or agents) or any Recipient, which source, to the knowledge of
the Recipient, is not prohibited from disclosing such information by a
confidentiality agreement with, or other legal or fiduciary obligation to, the
Guarantor or its Subsidiaries.
The restrictions set forth in the immediately preceding paragraph shall
not prevent the disclosure by a Recipient of any such information:
(A) with the prior written consent of the
Guarantor,
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(B) at the request of a bank regulatory agency
or in connection with an examination by bank examiners, or
(C) upon order of any court or administrative
agency of competent jurisdiction, to the extent required by
such order and not effectively stayed on appeal or otherwise,
or as otherwise required by law; provided that in the case of
any intended disclosure under this clause (C), the Recipient
shall (unless otherwise required by applicable law) give the
Guarantor not less than five business days prior notice (or
such shorter period as may, in the good faith discretion of
the Recipient, be reasonable under the circumstances or may be
required by any court or agency under the circumstances),
specifying the Confidential Information involved and stating
such Recipient's intention to disclose such Confidential
Information (including the manner and extent of such
disclosure) in order to allow the Guarantor an opportunity to
seek an appropriate protective order.
Each Recipient shall agree that, in addition to all other remedies
available, the Guarantor shall be entitled to specific performance and
injunctive and other equitable relief as a remedy for any breach of this Section
4.06(c) by such Recipient.
SECTION 4.07. Limitation on Restrictions on Subsidiary Dividends and
Other Distributions. The Guarantor will not, and will not permit any Subsidiary
to, directly or indirectly, create or otherwise cause or suffer to exist or
become effective any encumbrance or restriction on the ability of any Subsidiary
to (a) pay dividends or make any other distributions on its capital stock or any
other interest or participation in its profits, owned by the Guarantor or any
Subsidiary, or pay any Debt owed to the Guarantor or any Subsidiary, (b) make
loans or advances to the Guarantor or any Subsidiary or (c) transfer any of its
properties or assets to the Guarantor or any Subsidiary, except for such
encumbrances or restrictions existing under or by reason of
(i) applicable law, agreements with foreign governments
with respect to assets located in their jurisdiction, or condemnation
or eminent domain proceedings,
(ii) any of the Financing Documents,
(iii) (A) customary provisions restricting subletting or
assignment of any lease governing a leasehold interest of the Guarantor
or a Subsidiary, or (B) customary restrictions imposed on the transfer
of copyrighted or patented materials or provisions in agreements that
restrict the assignment of such agreements or any rights thereunder,
(iv) provisions contained in the instruments evidencing or
governing Debt or other obligations or agreements, in each case
existing on February 12, 1999,
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(v) provisions contained in documents evidencing or
governing any Permitted Receivables Transaction,
(vi) provisions contained in instruments evidencing or
governing Debt or other obligations or agreements of any Person, in
each case, at the time such Person (A) shall be merged or consolidated
with or into the Guarantor or any Subsidiary, (B) shall sell, transfer,
assign, lease or otherwise dispose of all or substantially all of such
Person's assets to the Guarantor or a Subsidiary, or (C) otherwise
becomes a Subsidiary, provided that in the case of clause (A), (B) or
(C), such Debt, obligation or agreement was not incurred or entered
into, or any such provisions adopted, in contemplation of such
transaction,
(vii) provisions contained in instruments amending,
restating, supplementing, extending, renewing, refunding, refinancing,
replacing or otherwise modifying, in whole or in part (collectively,
"REFINANCING"), instruments referred to in clauses (ii), (iv) and (vi)
of this Section 4.07, so long as such provisions are, in the good faith
determination of the Guarantor's board of directors, not materially
more restrictive than those contained in the respective instruments so
Refinanced,
(viii) provisions contained in any instrument evidencing or
governing Debt or other obligations of a Subsidiary Guarantor,
(ix) any encumbrances and restrictions with respect to a
Subsidiary imposed in connection with an agreement which has been
entered into for the sale or disposition of such Subsidiary or its
assets, provided such sale or disposition otherwise complies with this
Agreement,
(x) the subordination (pursuant to its terms) in right
and priority of payment of any Debt owed by any Subsidiary (the
"Indebted Subsidiary") to the Guarantor or any other Subsidiary, to any
other Debt of such Indebted Subsidiary, provided (A) such Debt is
permitted under this Agreement and (B) the Guarantor's board of
directors has determined, in good faith, at the time of the creation of
such encumbrance or restriction, that such encumbrance or restriction
could not, based upon the facts and circumstances in existence at the
time, reasonably be expected to have a Material Adverse Effect,
(xi) provisions governing preferred stock issued by a
Subsidiary, provided that such preferred stock is permitted under
Section 4.08, and
(xii) provisions contained in debt instruments, obligations
or other agreements of any Subsidiary which are not otherwise permitted
pursuant to clauses (i) through (xi) of this Section 4.07, provided
that the aggregate investment of the Guarantor in all such Subsidiaries
(determined in accordance with generally accepted accounting
principles)
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shall at no time exceed the greater of (a) $300,000,000 or (b) 10% of
Consolidated Tangible Net Worth.
The provisions of this Section 4.07 shall not prohibit (x) Liens not prohibited
by Section 4.10 or (y) restrictions on the sale or other disposition of any
property securing Debt of any Subsidiary, provided such Debt is otherwise
permitted by this Agreement.
SECTION 4.08. Debt. Consolidated Debt will at no time exceed (x) prior
to June 30, 1999, 62.5% and (y) on and after June 30, 1999, 52.5% of
Consolidated Total Capitalization. The total Debt of all Consolidated
Subsidiaries (excluding (i) Debt of a Consolidated Subsidiary owed to the
Borrower, to the Guarantor or to a Wholly-Owned Consolidated Subsidiary, (ii)
Debt of the Borrower or a Subsidiary Guarantor, (iii) Permitted Acquired Debt
and (iv) Existing Tyco US Debt) will at no time exceed in aggregate outstanding
principal amount 5% of the Consolidated Tangible Assets of the Guarantor. For
purposes of this Section any preferred stock of a Consolidated Subsidiary held
by a Person other than the Guarantor or a Wholly-Owned Consolidated Subsidiary
shall be included, at the higher of its voluntary or involuntary liquidation
value, in "Consolidated Debt" and in the "Debt" of such Consolidated Subsidiary.
SECTION 4.09. Fixed Charge Coverage. The ratio of Consolidated EBIT to
Consolidated Interest Expense will not, for any period of four consecutive
fiscal quarters, be less than 2.5 to 1.
SECTION 4.10. Negative Pledge. The Guarantor will not, and will not
permit any Subsidiary to, create, assume or suffer to exist any Lien on any
asset now owned or hereafter acquired by it, except:
(a) any Lien existing on any asset on February 12, 1999 securing
Debt outstanding on such date;
(b) any Lien existing on any asset of, or capital stock of, or
other ownership interest in, any Person (such capital stock and other ownership
interests are collectively referred to herein as "Stock") at the time such
Person becomes a Subsidiary, which Lien was not created in contemplation of such
event;
(c) any Lien on any asset securing the payment of all or part of
the purchase price of such asset upon the acquisition thereof by the Guarantor
or a Subsidiary or securing Debt (including any obligation as lessee incurred
under a capital lease) incurred or assumed by the Guarantor or a Subsidiary
prior to, at the time of or within one year after such acquisition (or in the
case of real property, the completion of construction (including any
improvements on an existing property) or the commencement of full operation of
such asset or property, whichever is later), which Debt is incurred or assumed
for the purpose of financing all or part of the cost of acquiring such asset or,
in the case of real property, construction or improvements thereon; provided,
that in the case of any such acquisition, construction or improvement, the Lien
shall
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not apply to any asset theretofore owned by the Guarantor or a Subsidiary, other
than assets so acquired, constructed or improved;
(d) any Lien existing on any asset or Stock of any Person at the
time such Person is merged or consolidated with or into the Guarantor or a
Subsidiary which Lien was not created in contemplation of such event;
(e) any Lien existing on any asset or Stock of any Person at the
time of acquisition thereof by the Guarantor or a Subsidiary, which Lien was not
created in contemplation of such acquisition;
(f) any Lien arising out of the refinancing of any Debt secured by
any Lien permitted by any of the subsections (a) through (e) of this Section
4.10, provided the principal amount of Debt is not increased and is not secured
by any additional assets, except as provided in the last sentence of this
Section 4.10;
(g) any Lien to secure Debt of a Subsidiary to the Guarantor or to
a Wholly-Owned Consolidated Subsidiary;
(h) any Lien created pursuant to a Permitted Receivables
Transaction;
(i) any Lien in favor of any country (or any department, agency,
instrumentality or political subdivision of any country) securing obligations
arising in connection with partial, progress, advance or other payments pursuant
to any contract, statute, rule or regulation or securing obligations incurred
for the purpose of financing all or any part of the purchase price (including
the cost of installation thereof or, in the case of real property, the cost of
construction or improvement or installation of personal property thereon) of the
asset subject to such Lien (including, but not limited to, any Lien incurred in
connection with pollution control, industrial revenue or similar financings);
(j) Liens arising in the ordinary course of its business which (i)
do not secure Debt, (ii) do not secure any single obligation in an amount
exceeding $50,000,000 and (iii) do not in the aggregate materially detract from
the value of its assets or materially impair the use thereof in the operation of
its business; and
(k) Liens not otherwise permitted by the foregoing clauses (a)
through (j) of this Section 4.10 securing Debt (without duplication) in an
aggregate principal amount at any time outstanding not to exceed an amount equal
to the greater of (i) $300,000,000 or (ii) 10% of Consolidated Tangible Net
Worth.
It is understood that any Lien permitted to exist on any asset pursuant to the
foregoing provisions of this Section 4.10 may attach to the proceeds of such
asset and, with respect to Liens permitted pursuant to subsections (a), (b),
(d), (e), (f) (but only with respect to the refinancing of a Debt
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secured by a Lien permitted pursuant to subsections (a), (b), (d) or (e)) or (g)
of this Section 4.10, may attach to an asset acquired in the ordinary course of
business as a replacement of such former asset.
SECTION 4.11. Consolidations, Mergers and Sales of Assets. (a) The
Guarantor will not (i) consolidate or merge with or into any other Person or
(ii) sell, lease or otherwise transfer all or substantially all of its assets to
any other Person, unless
(A) the Guarantor or a Subsidiary is the
surviving corporation;
(B) the Person (if other than the Guarantor)
formed by such consolidation or into which the Guarantor is
merged, or the Person which acquires by sale or other
transfer, or which leases, all or substantially all of the
assets of the Guarantor (any such Person, the "Successor"),
shall be organized and existing under the laws of Bermuda or
of the United States, any state thereof or the District of
Columbia and shall expressly assume, in a writing executed and
delivered to the Agent for delivery to each of the Banks, in
form reasonably satisfactory to the Agent, the due and
punctual payment of the principal of and interest on the
Promissory Notes and the performance of the other obligations
under this Agreement and the Promissory Notes on the part of
the Guarantor to be performed or observed, as fully as if such
Successor were originally named as the Guarantor in this
Agreement;
(C) immediately after giving effect to such
transaction, no Guarantor Default shall have occurred and be
continuing; and
(D) the Guarantor has delivered to the Agent a
certificate on behalf of the Guarantor signed by a Responsible
Officer and an opinion of counsel, each stating that all
conditions provided in this Section 4.11 relating to such
transaction have been satisfied.
The foregoing provisions of this Section 4.11 shall not restrict the
merger or consolidation of any Subsidiary with and into the Guarantor.
(b) The Guarantor will not, and will not permit any Subsidiary to,
sell, lease or otherwise transfer, in any transaction or series of related
transactions, to any Person (other than the Guarantor or a Subsidiary) any
Property (including, without limitation, the stock of any Subsidiary) having a
net book value in excess of 15% of Consolidated Assets determined as of the end
of the fiscal quarter of the Guarantor most recently ended at the time of such
sale or other transaction, or Property (including without limitation, stock of a
Subsidiary) which contributed in excess of 15% of Consolidated EBIT for the
fiscal year of the Guarantor most recently ended at the time of such sale or
other transaction.
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SECTION 4.12. Transactions with Affiliates. The Guarantor will not, and
will not permit any Subsidiary to, directly or indirectly, pay any funds to or
for the account of, make any investment (whether by acquisition of stock or
indebtedness, by loan, advance, transfer of property, guarantee or other
agreement to pay, purchase or service, directly or indirectly, any Debt, or
otherwise) in, lease, sell, transfer or otherwise dispose of any assets,
tangible or intangible, to, or participate in, or effect any transaction in
connection with any joint enterprise or other joint arrangement with, any
Affiliate (collectively, "AFFILIATE TRANSACTIONS"); provided, however, that the
foregoing provisions of this Section 4.12 shall not prohibit the Guarantor or
any of its Subsidiaries from (a) making Restricted Payments (including, for this
purpose, transactions expressly excluded from the definition of a Restricted
Payment) permitted by Section 4.13, (b) making sales to or purchases from any
Affiliate and, in connection therewith, extending credit or making payments, or
from making payments for services rendered by any Affiliate, if such sales or
purchases are made or such services are rendered in the ordinary course of
business and on terms and conditions at least as favorable to the Guarantor or
such Subsidiary as the terms and conditions which the Guarantor would reasonably
expect to be obtained in a similar transaction with a Person which is not an
Affiliate at such time, (c) making payments of principal, interest and premium
on any Debt of the Guarantor or such Subsidiary held by an Affiliate if the
terms of such Debt are at least as favorable to the Guarantor or such Subsidiary
as the terms which the Guarantor would reasonably expect to have been obtained
at the time of the creation of such Debt from a lender which was not an
Affiliate, (d) participating in, or effecting any transaction in connection
with, any joint enterprise or other joint arrangement with any Affiliate if the
Guarantor or such Subsidiary participates in the ordinary course of its business
and on a basis no less advantageous than the basis on which such Affiliate
participates, (e) paying or granting reasonable compensation and benefits to any
director, officer, employee or agent of the Guarantor or any Subsidiary, (f)
paying reasonable legal fees and expenses to a law firm of which an Affiliate is
a member or (g) engaging in any Affiliate Transaction not otherwise addressed in
subsections (a) - (f) of this Section 4.12, the terms of which are not less
favorable to the Guarantor or such Subsidiary than those that the Guarantor
would reasonably expect to be obtained in a comparable transaction at such time
with a Person which is not an Affiliate.
SECTION 4.13. Restricted Payments. The Guarantor will not, and will not
permit any Subsidiary to, declare or make any Restricted Payment unless, after
giving effect thereto, the aggregate of all Restricted Payments declared or made
subsequent to the date hereof does not exceed an amount equal to the sum of (a)
$3,100,000,000 plus (b) 50% of Consolidated Net Income (or minus 100% of
Consolidated Net Income, in the event of a net loss for such period) for the
period from October 1, 1998 through the end of the then most recently ended
fiscal quarter of the Guarantor (treated for this purpose as a single accounting
period), plus (c) the aggregate cash proceeds (net of underwriting commissions)
received by the Guarantor (other than from a Subsidiary) from the issuance or
sale after September 30, 1998 of capital stock or Stock Equivalents of the
Guarantor (other than the proceeds of any capital stock or Stock Equivalent
which by its terms is subject to redemption otherwise than at the sole option of
the Guarantor). Nothing in this Section 4.13 shall prohibit the payment of any
dividend or distribution within 60 days after the declaration thereof if such
declaration was not prohibited by this Section 4.13.
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SECTION 4.14. Subsidiary Guarantors. If any Subsidiary becomes a
guarantor of TycoLux Debt Securities under the Indenture, the Guarantor will
cause such Person to become a Subsidiary Guarantor concurrently therewith.
ARTICLE 5
DEFAULTS
SECTION 5.01. Guarantor Events of Defaults. The following events shall
constitute "GUARANTOR EVENTS OF DEFAULT" for purposes of the Financing
Documents:
(a) the Guarantor shall fail to observe or perform any covenant
contained in Section 4.08, 4.09, 4.13 or 4.14;
(b) the Guarantor shall fail to observe or perform any covenant
contained in Section 4.07 or Sections 4.10 to 4.12, inclusive, and such failure
shall not be remedied within five days after any Responsible Officer obtains
actual knowledge thereof;
(c) the Guarantor shall fail to observe or perform any covenant or
agreement contained in this Agreement (other than those covered by clause (a) or
(b) of this Section 5.01) for 10 days after notice thereof has been given to the
Guarantor by the Agent at the request of any Bank;
(d) any representation, warranty, certification or statement made
in writing by the Guarantor or any Subsidiary Guarantor in the Financing
Documents or in any certificate, financial statement or other document required
to be delivered to the Agent or any of the Banks pursuant to the Financing
Documents shall prove to have been incorrect in any material respect when made
(or deemed made);
(e) the Guarantor or any Subsidiary shall fail to make any payment
in respect of any Material Debt when due (after giving effect to any applicable
grace period);
(f) any event or condition shall occur that results in the
acceleration of the maturity of any Material Debt or that entitles the holder or
holders of any Material Debt or any Person acting on behalf of such holder or
holders to accelerate the maturity thereof;
(g) (i) any corporate action is taken authorizing the winding up,
liquidation, any arrangement or the taking of any other similar action of or
with respect to the Guarantor or authorizing any corporate action to be taken to
facilitate any such winding up, liquidation, arrangement, reorganization or
amalgamation or other similar action or any members' voluntary winding up of the
Guarantor as provided under the Bermuda Companies Law shall be commenced;
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(ii) (A) any petition shall be filed seeking the
liquidation, any arrangement or the taking of any other similar action
of or with respect to the Guarantor by the Registrar of Companies in
Bermuda, or by any other Person or Persons, or (B) any petition shall
be presented for the winding up of the Guarantor to a court of Bermuda
as provided with the Bermuda Companies Law, or (C) any creditors'
winding up of the Guarantor as provided under the Bermuda Companies Law
shall be commenced, or (D) any receiver shall be appointed by a
creditor of the Guarantor or by a court of Bermuda on the application
of a creditor of the Guarantor as provided under any instrument giving
rights for the appointment of a receiver thereto, and in the case of
any such petition, winding up, appointment, order or other matter, such
petition, winding up, appointment, order or other matter, shall remain
undismissed and unstayed for a period of 60 days;
(iii) the Guarantor or any Significant Subsidiary shall (A)
commence a voluntary case or other proceeding seeking liquidation,
winding up, reorganization or other relief with respect to itself or
its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or substantially
all of its property, or (B) consent to any such relief or to the
appointment of or taking possession by any such official in an
involuntary case or other similar proceeding commenced against it, or
(C) make a general assignment for the benefit of creditors, or (D) fail
generally to pay its debts as they become due, or (E) take any
corporate action to authorize any of the foregoing; or
(iv) (A) an involuntary case or other proceeding shall be
commenced against the Guarantor or any Significant Subsidiary seeking
liquidation, winding up, reorganization or other relief with respect to
it or its debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or
substantially all of its property, and such involuntary case or other
proceeding shall remain in effect and undismissed and unstayed for a
period of 60 days; or (B) an order for relief shall be entered against
the Guarantor or any Significant Subsidiary under the bankruptcy laws
of any jurisdiction as now or hereafter in effect;
(h) a judgment or order for the payment of money in excess of
$30,000,000 (after deducting amounts covered by insurance, except to the extent
that the insurer providing such insurance has declined such coverage) shall be
rendered against the Guarantor or any Subsidiary and, within 60 days after entry
thereof, such judgment or order is not discharged or execution thereof stayed
pending appeal, or within 60 days after the expiration of any such stay, such
judgment or order is not discharged;
(i) any person or group of persons (within the meaning of Section
13 or 14 of the Securities Exchange Act of 1934, as amended) shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 promulgated by the
Securities and Exchange Commission under said Act) of 40% or more of the
outstanding shares of common stock of the Guarantor; or, on the last
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day of any period of twelve consecutive calendar months, a majority of members
of the board of directors of the Guarantor shall no longer be composed of
individuals (i) who were members of said board of directors on the first day of
such twelve consecutive calendar month period or (ii) whose election or
nomination to said board of directors was approved by individuals referred to in
clause (i) above constituting at the time of such election or nomination at
least a majority of said board of directors;
(j) the Guarantor or any Subsidiary shall fail to make any payment
owing by it in respect of any performance bond, performance guaranty or bank
guaranty issued in lieu of a performance bond or performance guaranty (other
than a payment which is disputed by the Guarantor or such Subsidiary in good
faith), and the aggregate of all such defaulted payments shall exceed
$50,000,000 at any one time for the Guarantor and its Subsidiaries; or
(k) any member of the ERISA Group shall fail to pay when due an
amount or amounts aggregating in excess of $5,000,000 which it shall have become
liable to pay under Title IV of ERISA; or notice of intent to terminate a
Material Plan shall be filed under Title IV of ERISA by any member of the ERISA
Group, any plan administrator or any combination of the foregoing; or the PBGC
shall institute proceedings under Title IV of ERISA to terminate, to impose
liability (other than for premiums under Section 4007 of ERISA) in respect of,
or to cause a trustee to be appointed to administer any Material Plan; or a
condition shall exist by reason of which the PBGC would be entitled to obtain a
decree adjudicating that any Material Plan must be terminated; or there shall
occur a complete or partial withdrawal from, or a default, within the meaning of
Section 4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans
which could cause one or more members of the ERISA Group to incur a current
payment obligation in excess of $25,000,000.
SECTION 5.02. Notice of Default. The Agent shall give notice to the
Guarantor under Section 5.01(b) promptly upon being requested to do so by any
Bank and shall thereupon notify all the Banks thereof.
ARTICLE 6
TAXES
SECTION 6.01. Withholding Taxes. Each payment by the Guarantor
hereunder to or for the account of any Bank (a "Payment") shall be made without
any deduction or withholding for any Bank Foreign Taxes with respect to such
Bank; provided that if the Guarantor shall be required by law to make any such
deduction or withholding from any Payment, the Guarantor will:
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(i) pay such amounts in addition to such Payment as may
be necessary so that the amount received by the payee, after all such
withholdings and deductions, will be equal to the full amount provided
for in this Agreement;
(ii) pay the full amount deducted or withheld to the
relevant taxation or other authorities within the time allowed under
applicable law; and
(iii) furnish within 45 days thereafter to the Agent, the
official receipt or receipts from the relevant taxation or other
authorities for the full amount so deducted or withheld.
SECTION 6.02. Certain Other Taxes. The Guarantor will pay (i) all Bank
Foreign Taxes imposed (otherwise than by deduction or withholding) on any Bank
which constitute Bank Foreign Taxes with respect to such Bank and (ii) all Bank
Domestic Taxes imposed on any Bank which constitute Bank Domestic Taxes with
respect to such Bank to the extent any such Bank Foreign Taxes or Bank Domestic
Taxes result from Bank Foreign Taxes or Bank Domestic Taxes paid or reimbursed
by the Guarantor pursuant to this Article 6.
SECTION 6.03. Reimbursement of Taxes Paid by a Bank. If any Bank
Foreign Taxes or Bank Domestic Taxes to be paid by the Guarantor pursuant to
this Article 6 are imposed on and paid by any Bank, the Guarantor shall, upon
request of such Bank and whether or not such Bank Foreign Taxes or Bank Domestic
Taxes shall have been correctly or legally imposed, reimburse such Bank
therefor, together with any interest, penalties and expenses in connection
therewith, plus interest thereof at the rate specified in the first sentence of
Section 2.07(a) of each Credit Agreement. To the extent that any Bank which is
reimbursed by the Guarantor as provided in this Section thereafter receives any
payment allocated to Bank Foreign Taxes or Bank Domestic Taxes in respect of
which such Bank was so reimbursed from a governmental taxing authority because
such Bank Foreign Taxes or Bank Domestic Taxes were incorrectly or illegally
imposed, such Bank shall return to the Guarantor (without interest) any such
payment.
ARTICLE 7
MISCELLANEOUS
SECTION 7.01. Notices. All notices, requests and other communications
to any party provided for hereunder shall be in writing (including, without
limitation, bank wire, telex, facsimile transmission or similar writing) and
shall be given to such party at its address or facsimile or telex number set
forth on the signature pages hereof or such other address or facsimile or telex
number as such party may hereafter specify for the purpose by notice to the
other party. Each such notice, request or other communication shall be effective
(i) if given by telex, when such telex is transmitted to the telex number
specified in this Section and the appropriate answerback is received, (ii) if
given by facsimile, when such facsimile is transmitted to the facsimile number
specified on the signature pages hereof and electronic, telephonic or other
appropriate confirmation of receipt is received by the sender, (iii) if given by
mail, 72 hours
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after such communication is deposited in the mails with first class postage
prepaid, addressed as aforesaid or (iv) if given by any other means, when
delivered at the address specified on the signature pages hereof.
SECTION 7.02. No Waivers. No failure or delay by the Agent or any Bank
in exercising any right, power or privilege hereunder or under any other
Financing Document shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
and therein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 7.03. Expenses; Indemnification. (a) The Guarantor shall pay
(i) all reasonable out-of-pocket expenses of the Agent, including reasonable
fees and disbursements of special counsel for the Agent, in connection with the
preparation and administration of this Agreement, any waiver or consent
hereunder or any amendment thereof or any default or alleged default hereunder
and (ii) if an Event of Default (as defined in any Credit Agreement) occurs, all
reasonable out-of-pocket expenses incurred by the Agent and each Bank, including
reasonable fees and disbursements of counsel, in connection with such Event of
Default and collection, bankruptcy, insolvency and other enforcement proceedings
in respect of this Agreement resulting therefrom.
(b) The Guarantor agrees to indemnify the Agent and each Bank,
their respective Affiliates and the respective directors, officers, agents and
employees of the foregoing (each an "Indemnitee") and hold each Indemnitee
harmless from and against any and all liabilities, losses, damages, costs and
expenses, including, without limitation, the reasonable fees and disbursements
of counsel, which may be incurred by such Indemnitee (whether or not such
Indemnitee shall be designated a party thereto) arising out of any
investigative, administrative or judicial proceeding (brought or threatened)
relating to or arising out of this Agreement, the arrangement, administration,
performance or enforcement thereof; provided that no Indemnitee shall have the
right to be indemnified hereunder for such Indemnitee's own gross negligence or
willful misconduct as determined by a court of competent jurisdiction; provided
further that no Indemnitee shall have the right to be indemnified hereunder in
connection with any proceedings between it and another Indemnitee which does not
relate to the Guarantor.
(c) If any proceeding or claim shall be brought or asserted
against any Indemnitee in respect of which indemnity may be sought pursuant to
the preceding subsection, such Indemnitee shall promptly notify the Guarantor.
The Guarantor shall not be liable for any costs or expenses in connection with
any settlement entered into without its consent.
SECTION 7.04. Judicial Proceedings. (a) Consent to Jurisdiction. The
Guarantor irrevocably submits to the non-exclusive jurisdiction of any federal
or New York State court sitting in New York City over any suit, action or
proceeding arising out of or relating to this Agreement. The Guarantor
irrevocably waives, to the fullest extent permitted by law, any
30
<PAGE> 35
objection which it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding brought in such court and any claim that any
suit, action or proceeding brought in such court has been brought in an
inconvenient forum. The Guarantor agrees that a final judgment in any such suit,
action or proceeding brought in such a court shall be conclusive and binding
upon it and will be given effect in Bermuda to the fullest extent permitted by
applicable law and may be enforced in any federal or New York State court
sitting in New York City (or any other courts to the jurisdiction of which the
Guarantor is or may be subject) by a suit upon such judgment, provided that
service of process is effected upon it in one of the manners specified herein or
as otherwise permitted by law.
(b) Appointment of Agent for Service of Process. The Guarantor
hereby irrevocably designates and appoints CT Corporation System having an
office on the date hereof at 1633 Broadway, New York, New York 10019 as its
authorized agent, to accept and acknowledge on its behalf, service or any and
all process which may be served in any suit, action or proceeding of the nature
referred to in subsection (a) above in any federal or New York State court
sitting in New York City. The Guarantor represents and warrants that such agent
has agreed in writing to accept such appointment and that a true copy of such
designation and acceptance has been delivered to the Agent. Such designation and
appointment shall be irrevocable until all principal and interest and all other
amounts payable hereunder shall have been paid in full in accordance with the
provisions hereof. If such agent shall cease so to act, the Guarantor covenants
and agrees to designate irrevocably and appoint without delay another such agent
satisfactory to the Agent and to deliver promptly to the Agent evidence in
writing of such other agent's acceptance of such appointment.
(c) Service of Process. The Guarantor hereby consents to process
being served in any suit, action, or proceeding of the nature referred to in
subsection (a) above in any federal or New York State court sitting in New York
City by service of process upon the agent of the Guarantor, as the case may be,
for service of process in such jurisdiction appointed as provided in subsection
(b) above; provided that, to the extent lawful and possible, written notice of
said service upon such agent shall be mailed by registered airmail, postage
prepaid, return receipt requested, to the Guarantor at its address specified on
the signature pages hereof or to any other address of which the Guarantor shall
have given written notice to the Agent. The Guarantor irrevocably waives, to the
fullest extent permitted by law, all claim of error by reason of any such
service and agrees that such service shall be deemed in every respect effective
service of process upon the Guarantor in any such suit, action or proceeding and
shall, to the fullest extent permitted by law, be taken and held to be valid and
personal service upon and personal delivery to the Guarantor.
(d) No Limitation on Service or Suit. Nothing in this Section 7.04
shall affect the right of the Agent or any Bank to serve process in any other
manner permitted by law or limit the right of the Agent or any Bank to bring
proceeding against the Guarantor in the courts of any jurisdiction or
jurisdictions.
31
<PAGE> 36
SECTION 7.05. Judgment Currency. If, under any applicable law and
whether pursuant to a judgment being made or registered against the Guarantor or
for any other reason, any payment under or in connection with this Agreement, is
made or satisfied in a currency (the "Other Currency") other than that in which
the relevant payment is due (the "Required Currency") then, to the extent that
the payment (when converted into the Required Currency at the rate of exchange
on the date of payment or, if it is not practicable for the party entitled
thereto (the "Payee") to purchase the Required Currency with the other Currency
on the date of payment, at the rate of exchange as soon thereafter as it is
practicable for it to do so) actually received by the Payee falls short of the
amount due under the terms of this Agreement, the Guarantor shall, to the extent
permitted by law, as a separate and independent obligation, indemnify and hold
harmless the Payee against the amount of such short-fall. For the purpose of
this Section, "rate of exchange" means the rate at which the Payee is able on
the relevant date to purchase the Required Currency with the Other Currency and
shall take into account any premium and other costs of exchange.
SECTION 7.06. Amendments and Waivers. Any provision of this Agreement
or the Promissory Notes may be amended or waived if, but only if, such amendment
or waiver is in writing and is signed by the Guarantor and the Agent with the
prior written consent of the Required Banks under (and as defined in) each of
the Credit Agreements.
SECTION 7.07. Successors and Assigns. The provisions of this Agreement
shall be binding upon the Guarantor and its successors and shall inure to the
benefit of the Agent and the Banks and their respective successors and assigns.
SECTION 7.08. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 7.09. Counterparts. This Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
SECTION 7.10. No Seal. As contemplated by the Bye-Laws of the
Guarantor, this Agreement shall not be required to be issued under the seal of
the Guarantor.
SECTION 7.11. WAIVER OF JURY TRIAL. EACH OF THE GUARANTOR AND THE AGENT
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
32
<PAGE> 37
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
TYCO INTERNATIONAL LTD.
By: /s/ Mark Swartz
---------------------------------------------
Title: Executive Vice President and Chief
Financial Officer
Gibbons Building
10 Queen Street
Suite 301
Hamilton HM11
Bermuda
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Agent
By: /s/ Sovonna L. Day
---------------------------------------------
Title: Vice President
60 Wall Street
New York, New York 10260-0060
Attention: SoVonna L. Day
Telex number: 177615
Facsimile number: 212-648-5018
<PAGE> 38
EXHIBIT A
SUBSIDIARY GUARANTEE
Dated as of ____________
WHEREAS, Tyco International Group S.A., a Luxembourg company, has
entered into a 364-Day Credit Agreement dated as of February 12, 1999 and an
Extendible 364-Day Credit Agreement dated as of February 13, 1998 (collectively,
as the same may be amended from time to time, the "Credit Agreements") each
among the Borrower, the banks listed on the signature pages thereof, and Morgan
Guaranty Trust Company of New York, as Agent, pursuant to which the Borrower is
or may be entitled, subject to certain conditions, to borrow up to
$4,500,000,000;
WHEREAS, in conjunction with the transactions contemplated by the
Credit Agreements and in consideration of the financial and other support that
the Borrower has provided, and such financial and other support as the Borrower
may in the future provide, to the undersigned (together with its successors, the
"Guarantor") and in order to induce the Banks and the Agent to enter into the
Credit Agreements and to make Loans thereunder, the Guarantor is willing to
guarantee the obligations of the Borrower under the Credit Agreements and the
Promissory Notes issued thereunder;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Guarantor hereby agrees as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. Terms defined in the Credit Agreements and
not otherwise defined herein are used herein as therein defined (e.g., a "Loan"
is a Loan made pursuant to either Credit Agreement and a "Promissory Note" is a
Promissory Note issued pursuant to either Credit Agreement). In addition the
following terms, as used herein, have the following meanings:
"Guaranteed Obligations" means (i) all obligations of the Borrower in
respect of principal of and interest on the Loans and the Promissory Notes, (ii)
all other amounts payable by the Borrower under either Credit Agreement or any
Promissory Note and (iii) all renewals or extensions of the foregoing, in each
case whether now outstanding or hereafter arising. The Guaranteed Obligations
shall include, without limitation, any interest, costs, fees and expenses which
accrue on or with respect to any of the foregoing and are payable by the
Borrower pursuant
Exh. A-1
<PAGE> 39
to either Credit Agreement or any Promissory Note, whether before or after the
commencement of any case, proceeding or other action relating to the bankruptcy,
insolvency or reorganization of any one or more than one of the Obligors, and
any such interest, costs, fees and expenses that would have accrued thereon or
with respect thereto and would have been payable by the Borrower pursuant to
such Credit Agreement or Promissory Note but for the commencement of such case,
proceeding or other action.
ARTICLE 2
GUARANTEE
SECTION 2.01. The Guarantees. Subject to Section 2.03, the Guarantor
hereby unconditionally and irrevocably guarantees to the Banks and the Agent and
to each of them, the due and punctual payment of all Guaranteed Obligations as
and when the same shall become due and payable, whether at maturity, by
declaration or otherwise, according to the terms thereof. This is a guarantee of
payment and not merely of collection. In case of failure by the Borrower
punctually to pay the indebtedness guaranteed hereby, the Guarantor, subject to
Section 2.03, hereby unconditionally agrees to cause such payment to be made
punctually as and when the same shall become due and payable, whether at
maturity or by declaration or otherwise, and as if such payment were made by the
Borrower.
SECTION 2.02. Guarantee unconditional. The obligations of the Guarantor
under this Article 2 shall be unconditional and absolute and, without limiting
the generality of the foregoing, shall not be released, discharged or otherwise
affected by:
(a) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of any other Obligor under any Financing
Document, by operation of law or otherwise;
(b) any modification or amendment of or supplement to any
Financing Document (other than as specified in an amendment or waiver of this
Subsidiary Guarantee effected in accordance with Section 2.03);
(c) any modification, amendment, waiver, release, non-perfection
or invalidity of any direct or indirect security, or of any guaranty or other
liability of any third party, for any obligation of any other Obligor under any
Financing Document;
(d) any change in the corporate existence, structure or ownership
of any other Obligor, or any insolvency, bankruptcy, reorganization or other
similar proceeding affecting any other Obligor or its assets or any resulting
release or discharge of any obligation of any other Obligor contained in any
Financing Document;
Exh. A-2
<PAGE> 40
(e) the existence of any claim, set-off or other rights which the
Guarantor may have at any time against any other Obligor, the Agent, any Bank or
any other Person, whether or not arising in connection with the Financing
Documents; provided that nothing herein shall prevent the assertion of any such
claim by separate suit or compulsory counterclaim;
(f) any invalidity or unenforceability relating to or against any
other Obligor for any reason of any Financing Document, or any provision of
applicable law or regulation purporting to prohibit the payment by any other
Obligor of the principal of or interest on any Promissory Note or any other
amount payable by any other Obligor under any Financing Document; or
(g) any other act or omission to act or delay of any kind by any
other Obligor, the Agent, any Bank or any other Person or any other circumstance
whatsoever that might, but for the provisions of this paragraph, constitute a
legal or equitable discharge of the obligations of the Guarantor under this
Article 2.
SECTION 2.03. Limit of Liability. The Guarantor shall be liable under
this Subsidiary Guarantee only for amounts aggregating up to the largest amount
that would not render its obligations hereunder subject to avoidance under
Section 548 of the United States Bankruptcy Code or any comparable provisions of
any other applicable law.
SECTION 2.04. Discharge; Reinstatement in Certain Circumstances.
Subject to Section 4.06, the Guarantor's obligations under this Article 2 shall
remain in full force and effect until the Commitments are terminated and the
principal of and interest on the Promissory Notes and all other amounts payable
by the Borrower under the Financing Documents shall have been paid in full. If
at any time any payment of the principal of or interest on any Promissory Note
or any other amount payable by the Borrower under any Financing Document is
rescinded or must be otherwise restored or returned upon the insolvency,
bankruptcy or reorganization of any other Obligor or otherwise, the Guarantor's
obligations under this Article 2 with respect to such payment shall be
reinstated at such time as though such payment had become due but had not been
made at such time.
SECTION 2.05. Waiver. The Guarantor irrevocably waives acceptance
hereof, presentment, demand, protest and any notice not provided for herein, as
well as any requirement that at any time any action be taken by any Person
against any other Obligor or any other Person.
SECTION 2.06. Subrogation and Contribution. (a) The Guarantor
irrevocably waives any and all rights to which it may be entitled, by operation
of law or otherwise, upon making any payment hereunder (i) to be subrogated to
the rights of the payee against the Borrower with respect to such payment or
otherwise to be reimbursed, indemnified or exonerated by any other Obligor in
respect thereof or (ii) to receive any payment, in the nature of contribution or
for any other reason, from any other Obligor with respect to such payment
Exh. A-3
<PAGE> 41
(b) Notwithstanding the provision of subsection (a) of this
Section 2.06, the Guarantor shall have and be entitled to (i) all rights of
subrogation or contribution otherwise provided by law in respect of any payment
it may make or be obligated to make under this Subsidiary Guarantee and (ii) all
claims (as defined under Chapter 11 of Title 11 of the United States Code, as
amended, or any successor statute (the "Bankruptcy Code")) it would have against
the Borrower or any other Guarantor (each an "Other Party") in the absence of
subsection (a) of this Section 2.06 and to assert and enforce the same, in each
case on and after, but at no time prior to, the date (the "Subrogation Trigger
Date") which is one year and five days after the Termination Date if, but only
if, (x) no Default or Event of Default of the type described in Section 5.01(g)
of the Parent Guarantee with respect to the relevant Other Party has existed at
any time on and after the date of this Subsidiary Guarantee to and including the
Subrogation Trigger Date and (y) the existence of such Guarantor's rights under
this clause (b) would not make such Guarantor a creditor (as defined in the
Bankruptcy Code) of such Other Party in any insolvency, bankruptcy,
reorganization or similar proceeding commenced on or prior to the Subrogation
Trigger Date.
SECTION 2.07. Stay of Acceleration. If acceleration of the time for
payment of any amount payable by the Borrower under the Financing Documents is
stayed upon the insolvency, bankruptcy or reorganization of the Borrower, all
such amounts otherwise subject to acceleration under the terms of the Financing
Documents shall nonetheless be payable by the Guarantor hereunder forthwith on
demand by the Agent made at the request of the Required Banks.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
The Guarantor represents and warrants to the Agent and the Banks that:
SECTION 3.01. Corporate Existence and Power. The Guarantor is a
corporation duly incorporated, validly existing and in good standing under the
laws of ___________.
SECTION 3.02. Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by the Guarantor of this
Subsidiary Guarantee:
(a) are within the Guarantor's corporate powers;
(b) have been duly authorized by all necessary corporate action on
the part of the Guarantor;
(c) require no action by or in respect of, or filing with, any
governmental body, agency or official, in each case, on the part of the
Guarantor; and
Exh. A-4
<PAGE> 42
(d) do not contravene, or constitute a default by the Guarantor
under, any provision of (i) applicable law or regulation, (ii) the certificate
of incorporation or by-laws of the Guarantor, or (iii) any agreement or
instrument evidencing or governing Debt of the Guarantor or any other material
agreement, judgment, injunction, order, decree or other instrument binding upon
the Guarantor.
SECTION 3.03. Binding Effect. This Subsidiary Guarantee constitutes a
valid and binding obligation of the Guarantor.
SECTION 3.04. Not an Investment Company. The Guarantor is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
ARTICLE 4
MISCELLANEOUS
SECTION 4.01. Notices. All notices, requests and other communications
to be made to or by the Guarantor hereunder shall be in writing (including,
without limitation, bank wire, telex, facsimile transmission or similar writing)
and shall be given: (a) if to the Guarantor, to it at its address or facsimile
number set forth on the signature pages hereof or such other address or
facsimile number as the Guarantor may hereafter specify for the purpose by
notice to the Agent and (b) if to any party to either Credit Agreement, to it at
its address or telex or facsimile number for notices specified in or pursuant to
such Credit Agreement. Each such notice, request or other communication shall be
effective (i) if given by telex, when such telex is transmitted to the telex
number specified in this Section 4.01 and the appropriate answerback is
received, (ii) if given by facsimile, when such facsimile is transmitted to the
facsimile transmission number specified in this Section 4.01 and electronic,
telephonic or other appropriate confirmation of receipt thereof is received by
the sender, (iii) if given by mail, 72 hours after such communication is
deposited in the mails with first class postage prepaid, addressed as aforesaid
or (iv) if given by any other means, when delivered at the address specified in
this Section 4.01.
SECTION 4.02. No Waiver. No failure or delay by the Agent or any Bank
in exercising any right, power or privilege under this Subsidiary Guarantee or
any other Financing Document shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein and therein provided shall be cumulative and not exclusive of
any rights or remedies provided by law.
SECTION 4.03. Amendments and Waivers. Any provision of this Subsidiary
Guarantee may be amended or waived if, and only if, such amendment or waiver is
in writing and is signed by the Guarantor and the Agent with the prior written
consent of the Required Banks under the Credit Agreements.
Exh. A-5
<PAGE> 43
SECTION 4.04. Successors and Assigns. This Subsidiary Guarantee is for
the benefit of the Banks and the Agent and their respective successors and
assigns and in the event of an assignment of the Loans, the Promissory Notes or
other amounts payable under the Financing Documents, the rights hereunder, to
the extent applicable to the indebtedness so assigned, shall be transferred with
such indebtedness. All the provisions of this Subsidiary Guarantee shall be
binding upon the Guarantor and its successors and assigns.
SECTION 4.05. Taxes. All payments by the Guarantor hereunder shall be
made free and clear of Taxes in accordance with Section 8.04 of the Credit
Agreements. If the Guarantor is organized under the laws of, or has its
principal place of business in, a jurisdiction outside the United States, this
Section 4.05 shall be modified in a manner satisfactory to the Agent and the
Guarantor to indemnify for any foreign taxes which may be applicable.
SECTION 4.06. Effectiveness; Termination. (a) This Subsidiary Guarantee
shall become effective when the Agent shall have received a counterpart hereof
signed by the Guarantor.
(b) The Guarantor may at any time elect to terminate this
Subsidiary Guarantee and its obligations hereunder, provided that, after giving
effect thereto, no Default shall have occurred and be continuing; and provided
further that this Subsidiary Guarantee may not be so terminated in respect of
any Guarantor which is at the time a guarantor of TycoLux Debt Securities under
the Indenture. If the Guarantor so elects to terminate this Subsidiary
Guarantee, it shall give the Agent notice to such effect, which notice shall be
accompanied by a certificate of a Responsible Officer to the effect that, after
giving effect to such termination, no Default shall have occurred and be
continuing. The Agent may if it so elects conclusively rely on such certificate.
Upon receipt of such notice and such certificate, unless the Agent determines
that a Default shall have occurred and be continuing, the Agent shall promptly
deliver to the Guarantor the counterpart of this Subsidiary Guarantee delivered
to the Agent pursuant to Section 4.06(a), and upon such delivery this Subsidiary
Guarantee shall terminate and the Guarantor shall have no further obligations
hereunder.
SECTION 4.07. GOVERNING LAW; SUBMISSION TO JURISDICTION. (a) THIS
SUBSIDIARY GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK. THE GUARANTOR HEREBY SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY FOR PURPOSES
OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS SUBSIDIARY GUARANTEE
OR THE TRANSACTIONS CONTEMPLATED HEREBY. THE GUARANTOR IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT
AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM.
Exh. A-6
<PAGE> 44
(b) If the Guarantor is not organized under the laws of the United
States of America or a State thereof:
(i) Appointment of Agent for Service of Process. The
Guarantor hereby irrevocably designates and appoints CT Corporation
System having an office on the date hereof at 1633 Broadway, New York,
New York 10019 as its authorized agent, to accept and acknowledge on
its behalf, service or any and all process which may be served in any
suit, action or proceeding of the nature referred to in subsection (a)
above in any federal or New York State court sitting in New York City.
The Guarantor represents and warrants that such agent has agreed in
writing to accept such appointment and that a true copy of such
designation and acceptance has been delivered to the Agent. Such
designation and appointment shall be irrevocable until all principal
and interest and all other amounts payable hereunder shall have been
paid in full in accordance with the provisions hereof. If such agent
shall cease so to act, the Guarantor covenants and agrees to designate
irrevocably and appoint without delay another such agent satisfactory
to the Agent and to deliver promptly to the Agent evidence in writing
of such other agent's acceptance of such appointment.
(ii) Service of Process. The Guarantor hereby consents to
process being served in any suit, action, or proceeding of the nature
referred to in subsection (a) above in any federal or New York State
court sitting in New York City by service of process upon the agent of
the Guarantor, as the case may be, for service of process in such
jurisdiction appointed as provided in subsection (b)(i) above; provided
that, to the extent lawful and possible, written notice of said service
upon such agent shall be mailed by registered airmail, postage prepaid,
return receipt requested, to the Guarantor at its address specified on
the signature pages hereof or to any other address of which the
Guarantor shall have given written notice to the Agent. The Guarantor
irrevocably waives, to the fullest extent permitted by law, all claim
of error by reason of any such service and agrees that such service
shall be deemed in every respect effective service of process upon the
Guarantor in any such suit, action or proceeding and shall, to the
fullest extent permitted by law, be taken and held to be valid and
personal service upon and personal delivery to the Guarantor.
(iii) No Limitation on Service or Suit. Nothing in this
Section 4.07 shall affect the right of the Agent or any Bank to serve
process in any other manner permitted by law or limit the right of the
Agent or any Bank to bring proceeding against the Guarantor in the
courts of any jurisdiction or jurisdictions.
SECTION 4.08. WAIVER OF JURY TRIAL. THE GUARANTOR HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS SUBSIDIARY GUARANTEE OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
Exh. A-7
<PAGE> 45
SECTION 4.09. Judgment Currency. If, under any applicable law and
whether pursuant to a judgment being made or registered against the Guarantor or
for any other reason, any payment under or in connection with this Subsidiary
Guarantee, is made or satisfied in a currency (the "Other Currency") other than
that in which the relevant payment is due (the "Required Currency") then, to the
extent that the payment (when converted into the Required Currency at the rate
of exchange on the date of payment or, if it is not practicable for the party
entitled thereto (the "Payee") to purchase the Required Currency with the other
Currency on the date of payment, at the rate of exchange as soon thereafter as
it is practicable for it to do so) actually received by the Payee falls short of
the amount due under the terms of this Subsidiary Guarantee, the Guarantor
shall, to the extent permitted by law, as a separate and independent obligation,
indemnify and hold harmless the Payee against the amount of such short-fall. For
the purpose of this Section, "rate of exchange" means the rate at which the
Payee is able on the relevant date to purchase the Required Currency with the
Other Currency and shall take into account any premium and other costs of
exchange.
Exh. A-8
<PAGE> 46
IN WITNESS WHEREOF, the Guarantor has caused this instrument to be duly
executed by its authorized officer as of the date first above written.
[GUARANTOR]
By
--------------------------------
Title:
[Address]
Facsimile Number:
Exh. A-9
<PAGE> 47
EXHIBIT B
[Form of Opinion of Counsel for the Subsidiary Guarantor]
To the Banks and the Agent
Named on the Attached Distribution List
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
I am the [Associate] General Counsel of Tyco International Group S.A.,
a Luxembourg company (the "Borrower"), and have acted as counsel for [name of
Subsidiary Guarantor] (the "Guarantor"), and am rendering this opinion in
connection with that certain Subsidiary Guarantee (the "Subsidiary Guarantee"),
dated as of __________, entered into by the Guarantor, pursuant to that certain
364-Day Credit Agreement dated as February 12, 1999 and that certain Extendible
364-Day Credit Agreement dated as of February 13, 1998 (collectively, the
"Credit Agreements"), each among the Borrower, the banks listed on the signature
pages thereof (the "Banks") and Morgan Guaranty Trust Company of New York, as
Agent. Each term defined in the Subsidiary Guarantee and used herein, but not
otherwise defined herein, has the meaning ascribed thereto in the Subsidiary
Guarantee. This opinion is being delivered to you pursuant to the Credit
Agreements.
In connection with the opinion set forth herein, I have reviewed the
Credit Agreements, the Promissory Notes and the Subsidiary Guarantee and have
examined originals or copies, certified or otherwise identified to my
satisfaction, of (i) the [Certificate of Incorporation] and By-laws of the
Guarantor, each as in effect on the date hereof and (ii) such other documents,
records, certificates and instruments as I have deemed relevant and necessary as
a basis for the opinion hereinafter expressed.
In my examination, I have assumed the genuineness of all signatures on
original documents, the authenticity of all documents submitted to me as
originals, the conformity to the originals of all copies submitted to be as
certified, conformed or photostatic copies, and the authenticity of the
originals of such copies. As to various questions of fact material to this
opinion, I have relied, without independent investigation or verification, upon
statements,
Exh. B-1
<PAGE> 48
representations and certificates of officers and other representatives of the
Guarantor and certificates of public officials.
Based upon the foregoing, and subject to the qualifications and
assumptions set forth herein, it is my opinion that:
(1) The Guarantor is a corporation duly incorporated, validly
existing and in good standing under the laws of _________________.
(2) The execution, delivery and performance by the Guarantor of
the Subsidiary Guarantee (a) are within the Guarantor's corporate powers; (b)
have been duly authorized by all necessary corporate action on the part of the
Guarantor; (c) require no action by or in respect of, or filing on the part of
the Guarantor with, any governmental body, agency or official, in each case, on
the part of the Guarantor; and (d) do not contravene, or constitute a default by
the Guarantor under, any provision of (i) applicable law or regulation, (ii) the
certificate of incorporation or by-laws of the Guarantor or, (iii) any agreement
or instrument evidencing or governing Debt of the Guarantor, or any other
material agreement, judgment, injunction, order, decree or other instrument
binding upon the Guarantor.
(3) The Subsidiary Guarantee constitutes a valid and binding
obligation of the Guarantor.
(4) The Guarantor is not an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
The opinion set forth herein is subject to the following qualifications
and limitations:
(a) The enforceability of the Subsidiary Guarantee may be subject
to or limited by bankruptcy, insolvency, reorganization, arrangement,
moratorium, fraudulent conveyance or transfer or other similar laws and court
decisions, now or hereafter in effect, relating to or affecting the rights of
creditors generally.
(b) The enforceability of the Subsidiary Guarantee is or will be
subject to the application of and may be limited by general principles of equity
including, without limitation, concepts of materiality, reasonableness, good
faith and fair dealing (regardless of whether considered in a proceeding in
equity or at law). Such principles of equity are of general application, and in
applying such principles a court, among other things, might not allow a creditor
to accelerate maturity of a debt under certain circumstances including, without
limitation, upon the occurrence of a default deemed immaterial, or might decline
to order the Guarantor to perform covenants. Such principles as applied by a
court might include a requirement that a creditor act with reasonableness and in
good faith. Thus, I express no opinion as to the validity or enforceability of
(i) provisions restricting access to legal or equitable remedies, such as the
specific performance of executory covenants, (ii) provisions that purport to
Exh. B-2
<PAGE> 49
establish evidentiary standards, (iii) provisions relating to waivers,
severability, set-off, or delay or omission of enforcement of rights or
remedies, and (iv) provisions purporting to convey rights to persons other than
parties to the Subsidiary Guarantee.
(c) The remedy of specific performance and injunctive and other
forms of equitable relief are subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
(d) I have not been requested to render, and with your permission
I do not express, any opinion as to the applicability to any provisions of the
Subsidiary Guarantee, of Section 548 of the Federal Bankruptcy Code, Article 10
of the New York Debtor & Creditor Law, or any other fraudulent conveyance,
insolvency or transfer laws or any court decisions with respect to any of the
foregoing.
I call your attention to the fact that I am admitted to practice law
only in the State of New York and the Commonwealth of Massachusetts, and, in
rendering the foregoing opinion, I do not express any opinion as to any laws
other than the laws of [the jurisdiction of incorporation of the Guarantor], the
State of New York, the Commonwealth of Massachusetts and the Federal laws of the
United States of America.
The opinion expressed herein is based upon the laws in effect on the
date hereof, and I assume no obligation to revise or supplement this opinion
should any such law be changed by legislative action, judicial decision, or
otherwise.
This opinion is being delivered to you solely for your benefit in
connection with the Subsidiary Guarantee, and neither this opinion nor any part
hereof may be delivered to, or used, referred to or relied upon, by any other
person or for any other purpose without my express prior written consent, except
that any person who is a permitted successor or assign of a Bank in accordance
with the provisions of the Credit Agreement may rely upon this opinion as if it
were specifically addressed and delivered to such person on the date hereof.
Very truly yours,
Exh. B-3
<PAGE> 50
CROSS-REFERENCE TARGET LIST
NOTE: DUE TO THE NUMBER OF TARGETS SOME TARGET NAMES MAY NOT APPEAR IN THE
TARGET PULL-DOWN LIST.
(This list is for the use of the wordprocessor only, is not a part of this
document and may be discarded.)
ARTICLE/SECTION TARGET NAME
- --------------- -----------
1.01........................................................................defs
1.01.................................................................definitions
1.02...........................................................acct.terms.determ
2...................................................................art.guaranty
2.01..................................................................guarantees
2.02.....................................................guarantee.unconditional
2.02(a)...............................................................unc.guar.a
2.02(b)...............................................................unc.guar.b
2.02(c)...............................................................unc.guar.c
2.02(d)...............................................................unc.guar.d
2.02(e)...............................................................unc.guar.e
2.02(f)...............................................................unc.guar.f
2.02(g)...............................................................unc.guar.g
2.03.............................................................limit.liability
2.06...............................................................stay.of.accel
2.06..............................................................subrog.contrib
2.06(b).......................................................subrog.contribut.b
3.01..............................................................corp.existence
3.02...........................................................corp.gov.authoriz
3.03..............................................................binding.effect
3.04.................................................................finan.infor
3.04(a).............................................................cons.bal.adt
3.05..................................................................litigation
3.07..............................................................envirn.matters
3.08.......................................................................taxes
3.09................................................................subsidiaries
3.10................................................................nt.invest.co
3.11..................................................................full.discl
4.01.................................................................information
4.01................................................................misc.notices
4.01(a).................................................................inform.a
4.01(b).................................................................inform.b
4.01(c).................................................................inform.c
4.02...............................................................payment.oblig
4.03............................................................maint.prop.insur
4.03(a)............................................maint.prop.insur.wrking.order
4.03(b)...................................................maint.prop.reput.insur
4.04.....................................................conduct.bus.maint.exist
4.04(a)............................................conduct.bus.maint.engage.same
4.04(c).....................................................conduct.bus.preserve
4.05...................................................................misc.txes
4.05.............................................................compliance.laws
4.05(a)................................................compliance.non.compliance
4.05(b).....................................................compliance.necessity
4.06....................................................................eff.term
4.06............................................................inspect.property
4.06(a)................................................................eff.terma
4.06(a)..........................................inspect.prop.keep.proper.record
4.06(b)...................................................inspect.permit.inspect
4.06(c)...........................................................inspect.confid
4.06(c)(iv)(C)................................................inspect.property.C
4.07................................................limit.restrict.sub.dividends
4.08........................................................................debt
4.09.......................................................fixed.charge.coverage
4.10..................................................................neg.pledge
4.10(b).........................................................lien.exist.asset
4.10(e)...................................................lien.exist.time.of.acq
4.11.................................................consol.mergers.sales.assets
4.12...........................................................trans.with.affils
4.13...........................................................restrict.payments
4.14.............................................................subs.guarantors
5.01..............................................................events.default
5.01(a)...............................................event.default.fail.observe
5.01(b)..............................................event.default.fail.remedied
5.01(c).........................................................event.def.10days
5.01(d)........................................................event.def.writing
5.01(e)...................................................event.def.pay.mat.debt
5.01(f).....................................................event.def.accelerate
5.01(i)........................................................event.def.ben.own
5.01(j).......................................................event.def.fail.pay
5.01(k)..........................................................event.def.erisa
5.02..............................................................notice.default
6......................................................................art.taxes
7.01.....................................................................notices
7.02..................................................................no.waivers
7.03..................................................................exp. indem
7.03(b)............................................................bor.agr.indem
7.03(c)...........................................................exp.agent.bank
7.04................................................................jud.proceeds
7.06..............................................................amend.and.waiv
7.09................................................................counterparts
7.11................................................................waiver.trial
Exh. B-1
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AND INCOME STATEMENT OF TYCO INTERNATIONAL LTD. AS OF AND FOR THE QUARTER
ENDED DECEMBER 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> OCT-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<CASH> 834,200
<SECURITIES> 0
<RECEIVABLES> 3,051,000
<ALLOWANCES> 266,900
<INVENTORY> 1,838,800
<CURRENT-ASSETS> 7,075,100
<PP&E> 7,365,900
<DEPRECIATION> 2,864,300
<TOTAL-ASSETS> 20,417,000
<CURRENT-LIABILITIES> 5,328,900
<BONDS> 7,100,900
0
0
<COMMON> 129,700
<OTHER-SE> 7,143,300
<TOTAL-LIABILITY-AND-EQUITY> 20,417,000
<SALES> 3,819,600
<TOTAL-REVENUES> 3,819,600
<CGS> 2,350,400
<TOTAL-COSTS> 2,350,400
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 5,400
<INTEREST-EXPENSE> 103,300
<INCOME-PRETAX> 42,200
<INCOME-TAX> 68,200
<INCOME-CONTINUING> (26,000)
<DISCONTINUED> 0
<EXTRAORDINARY> (2,400)
<CHANGES> 0
<NET-INCOME> (28,400)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> (.04)
</TABLE>
