EXHIBIT 4.1
BORG-WARNER SECURITY CORPORATION
CREDIT AGREEMENT
This CREDIT AGREEMENT is dated as of October 16, 1995 and entered into
by and among BORG-WARNER SECURITY CORPORATION (formerly named Borg-Warner
Corporation), a Delaware corporation ("COMPANY"), THE FINANCIAL INSTITUTIONS
LISTED ON THE SIGNATURE PAGES HEREOF (each individually referred to herein as a
"LENDER" and collectively as "LENDERS"), NATIONSBANK, N.A. ("NATIONSBANK"), as
Documentation Agent for Lenders (in such capacity, "DOCUMENTATION AGENT") and
BANKERS TRUST COMPANY ("BANKERS"), as agent for Lenders (in such capacity,
"AGENT").
R E C I T A L S
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WHEREAS, Company is currently a party to a reducing revolving Credit
Agreement dated as of January 27, 1993, as amended (the "Existing Revolving
Credit Agreement"), with the lenders party thereto, as lenders, Bank of America
Illinois, The Bank of New York and The Bank of Nova Scotia, as lead managers,
CIBC Inc., NationsBank, N.A. "Carolinas" and Bankers, as Co-Agents, and Bankers,
as Administrative Agent, providing for the making of revolving loans and the
issuance of letters of credit of up to $178.1 million in the aggregate; to a
Credit Agreement dated as of January 27, 1993, as amended (the "Existing L/C
Agreement"), with the financial institutions party thereto and The Long-Term
Credit Bank of Japan, Ltd. ("LTCB"), as Agent, providing for the issuance of up
to $180 million in letters of credit; to a $50 million Term Loan Agreement dated
as of September 24, 1991, as amended, with LTCB (the "LTCB Term Loan"); and to
an off-balance sheet receivables purchase facility with Enterprise Funding
Corporation (the "Existing Receivables Facility"), providing for the purchase of
up to $100 million of receivables from the Company and its Subsidiaries;
WHEREAS, Company has outstanding approximately $100 million in
aggregate principal amount of 8% Senior Notes that mature April 1, 1996, issued
pursuant to the Indenture dated as of January 15, 1983 between Company and
Harris Trust and Savings Bank, as Trustee (the "Note Trustee"), as supplemented
by the Supplemental Indenture dated as of December 31, 1987 between Company and
the Note Trustee (the "Senior Notes");
WHEREAS, Company desires that Lenders extend certain credit facilities
to Company to enable Company to repay in full
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approximately $50 million in outstanding indebtedness under the LTCB Term Loan;
to redeem approximately $100 million in outstanding aggregate principal amount
of Senior Notes at par plus accrued interest; and to provide liquidity to
Company and its Subsidiaries for general corporate purposes;
WHEREAS, to induce Lenders to make available to Company the credit
facilities provided for in this Agreement, certain Subsidiaries of Company are
willing to guaranty the obligations of Company with respect to the credit
facilities provided by Lenders and are willing to pledge certain intercompany
indebtedness; and
WHEREAS, Company is willing to secure its obligations under this
Agreement by pledging the capital stock of certain of its Subsidiaries;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Company, Lenders and Agent agree as
follows:
SECTION 1. DEFINITIONS
1.1 CERTAIN DEFINED TERMS.
The following terms used in this Agreement shall have the following
meanings:
"ADJUSTED EURODOLLAR RATE" means, for any Interest Rate Determination
Date with respect to an Interest Period for a Eurodollar Rate Loan, the rate per
annum obtained by dividing (i) the offered quotation (rounded upward to the
nearest 1/100 of one percent) to first class banks in the interbank Eurodollar
market by Bankers for U.S. dollar deposits of amounts in same day funds
comparable to the principal amount of the Eurodollar Rate Loan of Bankers for
which the Adjusted Eurodollar Rate is then being determined with maturities
comparable to such Interest Period as of approximately 10:00 a.m. (New York
time) on such Interest Rate Determination Date by (ii) a percentage equal to
100% minus the stated maximum rate of all reserve requirements (including,
without limitation, any marginal, emergency, supplemental, special or other
reserves) applicable on such Interest Rate Determination Date to any member bank
of the Federal Reserve System in respect of "Eurocurrency liabilities" as
defined in Regulation D (or any successor category of liabilities under
Regulation D).
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"AFFECTED LENDER" has the meaning assigned to that term in subsection
2.6C.
"AFFILIATE", as applied to any Person, means any other Person directly
or indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or
by contract or otherwise.
"AGENT" has the meaning assigned to that term in the introduction to
this Agreement and includes any successor Agent appointed pursuant to subsection
8.5 and also means, as the context so requires, Collateral Agent.
"AGREEMENT" means this Credit Agreement dated as of October 16, 1995,
as it may be amended, supplemented or otherwise modified from time to time.
"ALARM INSTALLATION COSTS" means the costs allocated to a subscriber
installation in connection with the original installation of an alarm system,
including without limitation all charges for materials and for the labor
associated with such installation.
"ALARM SERVICES CONTRACT SECURITIZATION FACILITY" means one or more
off-balance sheet facilities providing for the sales of receivables, contracts
and/or leases by Wells Fargo Alarm Services, Inc., BW-Canada Alarm (Wells Fargo)
Corporation, and their respective wholly owned subsidiaries, the terms and
conditions of which shall be satisfactory in form and substance to Requisite
Lenders, as such Alarm Services Contract Securitization Facility may be amended,
supplemented or otherwise modified from time to time to the extent permitted
under this Agreement.
"ASSET SALE" means the sale, lease, assignment or other transfer for
value by Company or any of its Subsidiaries to any Person, whether in a single
transaction or a series of related transactions (other than to Company or any of
its Subsidiaries) of (i) any of the stock of any of Company's Subsidiaries; (ii)
all or substantially all of the assets of any division or line of business of
Company or any of its Subsidiaries; or (iii) any other assets or rights
(including, without limitation, any assets that do not constitute substantially
all of the assets or rights of any division or line of business of Company or
any of its
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Subsidiaries) having a book value or market value in excess of $50,000, other
than in each case (A) the sale in the ordinary course of business of personal
property held for resale in the ordinary course of business of Company or any of
its Subsidiaries, (B) the sale or discount of notes, accounts receivable,
contracts, leases or other receivables to the extent sold or discounted in
connection with the Existing Receivables Facility, the Receivables Bridge
Facility and the New Receivables Facility and (C) the IT Exchange.
"ASSIGNMENT AGREEMENT" means an Assignment Agreement in substantially
the form of Exhibit VIII annexed hereto.
"AUDITOR'S LETTER" means a letter, substantially in the form of
Exhibit IX annexed hereto, acknowledged and agreed to by Company and Company's
independent certified public accountants and delivered to Agent pursuant to
subsection 3.1E.
"BANKERS" has the meaning assigned to that term in the introduction to
this Agreement.
"BANKRUPTCY CODE" means Title 11 of the United States Code entitled
"Bankruptcy", as now and hereafter in effect, or any successor statute.
"BASE RATE" means, at any time, the higher of (x) the Prime Rate or
(y) the rate which is 1/2 of 1% in excess of the Federal Funds Effective Rate.
"BASE RATE LOANS" means Loans bearing interest at rates determined by
reference to the Base Rate as provided in subsection 2.2A.
"BORG-WARNER GUARANTOR SUBSIDIARIES" means the Borg-Warner
Subsidiaries identified as such on Schedule 4.1 annexed hereto, such list in any
event to include all Material Subsidiaries of Company excluding, however, any
Subsidiaries constituting Foreign Entities the guaranty of which may cause
adverse tax consequences for Company or may violate applicable laws.
"BORG-WARNER PLEDGED SUBSIDIARIES" means the Borg-Warner Subsidiaries
identified as such on Schedule 4.1 annexed hereto, such list in any event to
include all Material Subsidiaries of Company and BPS Financial Services, Inc.
excluding, however, any Subsidiaries constituting Foreign Entities to the extent
that such pledge may cause adverse tax consequences for Company or may violate
applicable laws.
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"BORG-WARNER SUBSIDIARIES" means the Subsidiaries of Company which are
listed on Schedule 4.1 annexed hereto.
"BORG-WARNER SUBSIDIARY GUARANTY" means the Guaranty Agreement to be
executed and delivered by the Borg-Warner Guarantor Subsidiaries, substantially
in the form of Exhibit XII annexed hereto, as such Borg-Warner Subsidiary
Guaranty may hereafter be amended, supplemented or otherwise modified from time
to time.
"BORG-WARNER SUBSIDIARY PLEDGE AGREEMENT" means the Pledge Agreement
dated as of January 27, 1993 by and among the Borg-Warner Guarantor Subsidiaries
and Collateral Agent, as such Borg-Warner Subsidiary Pledge Agreement may
hereafter be amended, supplemented or otherwise modified from time to time.
"BUSINESS DAY" means any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the States of New York or Illinois or
is a day on which banking institutions located in such states are authorized or
required by law or other governmental action to close.
"BW-OTHER CORPORATION GROUP" means Borg-Warner Equities Corporation,
Borg-Warner Equities Corporation of California, Borg-Warner Equities Corporation
of Monterey, Inc., NAL II, Ltd., Borg-Warner Insurance Holding Corporation and
Centaur Insurance Company and any of their direct or indirect subsidiaries.
"CAPITAL LEASE", as applied to any Person, means any lease of any
property (whether real, personal or mixed) by that Person as lessee that, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"CASH" means money, currency or a credit balance in a Deposit Account.
"CASH EQUIVALENTS" means, as at any date of determination, (i)
marketable securities (a) issued or directly and unconditionally guaranteed as
to interest and principal by the United States Government or (b) issued by any
agency of the United States the obligations of which are backed by the full
faith and credit of the United States, in each case maturing within one year
after such date; (ii) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such state or any
public instrumentality thereof, in each case maturing within one year after such
date and having, at the time of the acquisition thereof, the highest rating
obtainable from either Standard & Poor's Ratings Services, a division of the
McGraw Hill Companies
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("S&P") or Moody's Investors Service, Inc. ("MOODY'S"); (iii) commercial paper
maturing no more than one year from the date of creation thereof and having, at
the time of the acquisition thereof, a rating of at least A-1 from S&P or at
least P-1 from Moody's; (iv) certificates of deposit or bankers' acceptances
maturing within one year after such date and issued or accepted by any Lender or
by any commercial bank organized under the laws of the United States of America
or any state thereof or the District of Columbia that (a) is at least
"adequately capitalized" (as defined in the regulations of its primary Federal
banking regulator) and (b) has Tier 1 capital (as defined in such regulations)
of not less than $100,000,000; and (v) shares of any money market mutual fund
that (a) has at least 95% of its assets invested continuously in the types of
investments referred to in clauses (i) and (ii) above, (b) has net assets of not
less than $500,000,000, and (c) has the highest rating obtainable from either
S&P or Moody's.
"CASH PROCEEDS" means, with respect to any Asset Sale, Cash payments
(including any Cash received by way of deferred payment pursuant to, or
monetization of, a note receivable or otherwise, but only as and when so
received) received from such Asset Sale.
"CENTAUR" means Centaur Insurance Company, an Illinois corporation and
one of the BW-Other Corporation Group.
"CENTAUR SETTLEMENT AMOUNT" means all amounts paid or contributed by
Company to Centaur or directly or indirectly paid by Company on behalf of
Centaur, in each case on or after the Closing Date for the purpose of settling
litigation pending against Centaur or against Company but relating to Centaur,
provided that the aggregate amount of all such payments does not exceed the
amount disclosed in writing by Company to Agent and approved by Requisite
Lenders as of the Closing Date.
"CERTIFICATE RE NON-BANK STATUS" means a certificate in form and
substance satisfactory to Agent delivered by a Lender to Agent pursuant to
subsection 2.7B(iii) pursuant to which such Lender certifies that it is not (i)
a "bank" as such term is defined in Section 881(c)(3) of the Internal Revenue
Code; (ii) a 10% shareholder of Company within the meaning of Section
871(h)(3)(B) or Section 881(c)(3)(B) of the Internal Revenue Code; or (iii) a
"controlled" foreign corporation related to Company within the meaning of
Section 864(d)(4) of the Internal Revenue Code.
"CLOSING DATE" means the date on or before October 31, 1995, on which
the initial Loans are made.
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"COLLATERAL" means, collectively, (i) the capital stock of the Borg-
Warner Pledged Subsidiaries pledged under the Pledge Agreements, (ii) the
Intercompany Debt Obligations, and (iii) all other property, including proceeds,
made subject to a Lien pursuant to the Collateral Documents.
"COLLATERAL AGENT" means Bankers acting in the capacity of collateral
agent under the applicable Collateral Documents on behalf of Lenders, the
Persons party to the Intercreditor Agreement or who have signed an
acknowledgment to the Intercreditor Agreement as provided therein and any
holders (or a trustee on behalf of such holders) of Existing Indebtedness
required to be equally and ratably secured with the Obligations.
"COLLATERAL DOCUMENTS" means the Pledge Agreements and all other
instruments or documents now or hereafter delivered by Company or any Borg-
Warner Subsidiary in order to grant to Collateral Agent Liens on any Collateral.
"COMMITMENT" means the commitment of a Lender to make a Loan to
Company pursuant to subsection 2.1A, and "COMMITMENTS" means such commitments of
all Lenders in the aggregate.
"COMPANY" has the meaning assigned to that term in the introduction to
this Agreement.
"COMPANY COMMON STOCK" means the Common Stock and Non-Voting Common
Stock of Company, each series with a par value $.01 per share.
"COMPANY PLEDGE AGREEMENT" means the Pledge Agreement dated as of
January 27, 1993 by and between Company and Collateral Agent, as such Company
Pledge Agreement may hereafter be amended, supplemented or otherwise modified
from time to time.
"COMPANY SECURITIES" means the Preferred Stock, $.01 par value per
share, and Common Stock, collectively.
"COMPLIANCE CERTIFICATE" means a certificate substantially in the form
of Exhibit IV annexed hereto delivered to Agent and Lenders by Company pursuant
to subsection 5.1(iv).
"CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, the
aggregate of all expenditures (whether paid in cash or other consideration or
accrued as a liability and including that portion of Capital Leases which is
capitalized on the consolidated balance sheet of Company and its Subsidiaries)
by Company and its Subsidiaries during that period that, in conformity with
GAAP, are included in "additions to property,
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plant or equipment" or comparable items reflected in the consolidated statement
of cash flows of Company and its Subsidiaries.
"CONSOLIDATED EBITDA" means, for any period, the sum of the amounts
for such period of (i) Consolidated Net Income excluding extraordinary items,
(ii) provisions for taxes based on income, (iii) Consolidated Interest Expense,
(iv) to the extent Consolidated Net Income has been reduced thereby,
amortization expense, depreciation expense and other non-cash expenses, and (v)
other non-cash items reducing Consolidated Net Income less non-cash items
increasing Consolidated Net Income, all as determined on a consolidated basis
for Company and its Consolidated Subsidiaries in conformity with GAAP.
"CONSOLIDATED EXCESS CASH FLOW" means, for any period, the sum of (x)
Company's "net cash provided by (used in) operating activities" plus (y)
Company's "net cash provided by (used in) investing activities," such amounts to
be determined in a manner consistent with Company's practices as of the date of
this Agreement for the preparation of its consolidated statement of cash flows
as reflected on Exhibit XIV annexed hereto with such changes as may be required
in accordance with GAAP or as may be approved by Requisite Lenders, minus,
without duplication, (i) voluntary and scheduled repayments of Funded Debt made
by Company which result in a permanent reduction of Company's Indebtedness and
(ii) to the extent such amounts have been included in the foregoing clauses (x)
and (y), amounts equal to Net Cash Proceeds of Asset Sales applied to the
prepayment of Loans pursuant to subsection 2.4B(ii)(a).
"CONSOLIDATED INTEREST EXPENSE" means, for any period, total interest
expense (including that portion attributable to Capital Leases in accordance
with GAAP and capitalized interest) of Company and its Consolidated Subsidiaries
on a consolidated basis with respect to all outstanding Indebtedness of Company
and its Consolidated Subsidiaries, including, without limitation, all
commissions, discounts and other fees and charges owed with respect to letters
of credit and with respect to any sale, discount or other financing of
receivables and net costs under Interest Rate Agreements but excluding, however,
the amortization of the costs of issuance and original issuance discount related
to the 9 1/8% Subordinated Notes, any amounts referred to in subsection 2.3
payable to Agent and Lenders on or before the Closing Date and any other similar
financing costs payable in connection with the amendments to the Existing L/C
Agreement, the Existing Revolving Credit Agreement or the Receivables Facilities
which are capitalized by Company.
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"CONSOLIDATED NET INCOME" means, for any period, the net income (or
loss) of Company and its Consolidated Subsidiaries on a consolidated basis for
such period taken as a single accounting period determined in conformity with
GAAP; provided that there shall be excluded (i) the income (or loss) of any
Person (other than a Subsidiary of Company) in which any other Person (other
than Company or any of its Subsidiaries) has a joint interest, except to the
extent of the amount of dividends or other distributions actually paid to
Company or any of its Subsidiaries by such Person during such period, (ii) the
income (or loss) of any Person accrued prior to the date it becomes a Subsidiary
of Company or is merged into or consolidated with Company or any of its
Subsidiaries or that Person's assets are acquired by Company or any of its
Subsidiaries, (iii) the income of any Subsidiary of Company to the extent that
the declaration or payment of dividends or similar distributions by that
Subsidiary of that income is not at the time permitted by operation of the terms
of its charter or any agreement, instrument, judgment, decree, order, statute,
rule or governmental regulation applicable to that Subsidiary, and (iv) any
after-tax gains or losses attributable to Asset Sales or returned surplus assets
of any Pension Plan.
"CONSOLIDATED NET WORTH" means, as at any date of determination, the
sum of the capital stock and additional paid-in capital plus retained earnings
(or minus accumulated deficit) of Company and its Consolidated Subsidiaries on a
consolidated basis calculated in conformity with GAAP, excluding all effects of
foreign currency exchange adjustments under FASB No. 52.
"CONSOLIDATED SUBSIDIARIES" means all Subsidiaries of Company
consolidated in accordance with GAAP other than BW-Other Corporation Group.
"CONSOLIDATED WORKING CAPITAL" means, as of any date of determination,
the excess of current assets, excluding Cash and Cash Equivalents, over current
liabilities, excluding therefrom the current portion of Funded Debt, of Company
and its Consolidated Subsidiaries, determined on a consolidated basis in
accordance with GAAP.
"CONTINGENT OBLIGATION", as applied to any Person, means any direct or
indirect liability, contingent or otherwise, of that Person (i) with respect to
any indebtedness, lease, dividend or other obligation of another if the primary
purpose or intent thereof by the Person incurring the Contingent Obligation is
to provide assurance to the obligee of such obligation of another that such
obligation of another will be paid or discharged, or that any agreements
relating thereto will be
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complied with, or that the holders of such obligation will be protected (in
whole or in part) against loss in respect thereof, (ii) with respect to any
letter of credit issued for the account of that Person or as to which that
Person is otherwise liable for reimbursement of drawings, or (iii) under
Interest Rate Agreements. Contingent Obligations shall include, without
limitation, (a) the direct or indirect guaranty, endorsement (otherwise than
for collection or deposit in the ordinary course of business), co-making,
discounting with recourse or sale with recourse by such Person of the obligation
of another, and (b) any liability of such Person for the obligations of another
through any agreement (contingent or otherwise) (x) to purchase, repurchase or
otherwise acquire such obligation or any security therefor, or to provide funds
for the payment or discharge of such obligation (whether in the form of loans,
advances, stock purchases, capital contributions or otherwise), (y) to maintain
the solvency or any balance sheet item, level of income or financial condition
of another, or (z) to make take-or-pay or similar payments if required
regardless of non-performance by any other party or parties to an agreement, if
in the case of any agreement described under subclauses (x) or (y) of this
sentence the primary purpose or intent thereof is as described in the preceding
sentence. The amount of any Contingent Obligation shall be equal to the amount
of the obligation so guaranteed or otherwise supported.
"CONTRACTUAL OBLIGATION", as applied to any Person, means any
provision of any Security issued by that Person or of any material indenture,
mortgage, deed of trust, contract, undertaking, agreement or other instrument to
which that Person is a party or by which it or any of its properties is bound or
to which it or any of its properties is subject.
"DEPOSIT ACCOUNT" means a demand, time, savings, passbook or like
account with a bank, savings and loan association, credit union or like
organization, other than an account evidenced by a negotiable certificate of
deposit.
"DIVISION" shall mean any of the guard services, alarm services,
armored transport services or courier services business units of Company.
"DOCUMENTATION AGENT" has the meaning assigned to that term in the
introduction to this Agreement.
"DOLLARS" and the sign "$" mean the lawful money of the United States
of America.
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"DRAFT INFORMATION MEMORANDUM" means the October 7, 1995 draft
Preliminary Offering Memorandum (together with changed pages thereto dated
October 12 and 13, 1995) describing up to $120,000,000 of trade receivables
backed certificates to be issued by BPS Financial Services, Inc., a wholly-owned
limited-purpose receivables subsidiary of Company, as such Draft Information
Memorandum may be amended or supplemented by materials distributed to all
Lenders prior to the Closing Date or which are otherwise approved by Requisite
Lenders after the Closing Date, which materials are specifically identified as
amendments or supplements to such Draft Information Memorandum.
"ELIGIBLE ASSIGNEE" means (A) (i) a commercial bank organized under
the laws of the United States or any state thereof; (ii) a savings and loan
association or savings bank organized under the laws of the United States or any
state thereof; (iii) a commercial bank organized under the laws of any other
country or a political subdivision thereof; provided that (x) such bank is
acting through a branch or agency located in the United States or (y) such bank
is organized under the laws of a country that is a member of the Organization
for Economic Cooperation and Development or a political subdivision of such
country; and (iv) any other entity which is an "accredited investor" (as defined
in Regulation D under the Securities Act) which extends credit or buys loans as
one of its businesses including, but not limited to, insurance companies, mutual
funds and lease financing companies; and (B) any Lender and any Affiliate of any
Lender; provided that no Affiliate of Company shall be an Eligible Assignee.
"EMPLOYEE BENEFIT PLAN" means any "employee benefit plan" as defined
in Section 3(3) of ERISA which is, or was at any time, maintained or contributed
to by any Loan Party or any of its ERISA Affiliates.
"ENVIRONMENTAL CLAIM" means any written accusation, allegation, notice
of violation, claim, demand, abatement order or other order or direction
(conditional or otherwise) by any governmental authority or any Person for any
damage, including, without limitation, personal injury (including sickness,
disease or death), tangible or intangible property damage, contribution,
indemnity, indirect or consequential damages, damage to the environment,
nuisance, pollution, contamination or other adverse effects on the environment,
or for fines, penalties or restrictions, in each case relating to, resulting
from or in connection with Hazardous Materials and relating to Company, any of
its Subsidiaries, any of their respective Affiliates or any Facility.
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"ENVIRONMENTAL LAWS" means all statutes, ordinances, orders, rules,
regulations, plans, policies or decrees and the like relating to (i)
environmental matters, including, without limitation, those relating to fines,
injunctions, penalties, damages, contribution, cost recovery compensation,
losses or injuries resulting from the Release or threatened Release of Hazardous
Materials, (ii) the generation, use, storage, transportation or disposal of
Hazardous Materials, or (iii) occupational safety and health, industrial
hygiene, land use or the protection of human, plant or animal health or welfare,
in any manner applicable to Company or any of its Subsidiaries or any of their
respective properties, including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C. (S) 9601 et
seq.), the Hazardous Materials Transportation Act (49 U.S.C. (S) 1801 et seq.),
the Resource Conservation and Recovery Act (42 U.S.C. (S) 6901 et seq.), the
Federal Water Pollution Control Act ( 33 U.S.C. (S) 1251 et seq.), the Clean Air
Act (42 U.S.C. (S) 7401 et seq.), the Toxic Substances Control Act (15 U.S.C.
(S) 2601 et seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7
U.S.C. (S)136 et seq.), the Occupational Safety and Health Act (29 U.S.C. (S)
651 et seq.) and the Emergency Planning and Community Right-to-Know Act (42
U.S.C. (S) 11001 et seq.), each as amended or supplemented, and any analogous
future or present local, state and federal statutes and regulations promulgated
pursuant thereto, each as in effect as of the date of determination.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.
"ERISA AFFILIATE", as applied to any Person, means (i) any corporation
which is a member of a controlled group of corporations within the meaning of
Section 414(b) of the Internal Revenue Code of which that Person is a member;
(ii) any trade or business (whether or not incorporated) which is a member of a
group of trades or businesses under common control within the meaning of Section
414(c) of the Internal Revenue Code of which that Person is a member; and (iii)
any member of an affiliated service group within the meaning of Section 414(m)
or (o) of the Internal Revenue Code of which that Person, any corporation
described in clause (i) above or any trade or business described in clause (ii)
above is a member. Any former ERISA Affiliate of Company or its Subsidiaries
shall continue to be considered an ERISA Affiliate within the meaning of this
definition with respect to the period such entity was an ERISA Affiliate of
Company or its Subsidiaries and with respect to liabilities of a former ERISA
Affiliate that arise after such period and for which Company or its Subsidiaries
could be liable under the Internal Revenue Code or ERISA.
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"ERISA EVENT" means (i) a "reportable event" within the meaning of
Section 4043 of ERISA and the regulations issued thereunder with respect to any
Pension Plan (excluding those for which the provision for 30-day notice to the
PBGC has been waived by regulation); (ii) the failure to meet the minimum
funding standard of Section 412 of the Internal Revenue Code with respect to any
Pension Plan (whether or not waived in accordance with Section 412(d) of the
Internal Revenue Code) or the failure to make by its due date a required
installment under Section 412(m) of the Internal Revenue Code with respect to
any Pension Plan or the failure to make any required contribution to a
Multiemployer Plan; (iii) the provision by the administrator of any Pension Plan
pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such
plan in a distress termination described in Section 4041(c) of ERISA; (iv) the
withdrawal by a Loan Party or any of its ERISA Affiliates from any Pension Plan
with two or more contributing sponsors or the termination of any such Pension
Plan resulting in liability pursuant to Sections 4063 or 4064 of ERISA; (v) the
institution by the PBGC of proceedings to terminate any Pension Plan, or the
occurrence of any event or condition which might constitute grounds under ERISA
for the termination of, or the appointment of a trustee to administer, any
Pension Plan; (vi) the imposition of liability on a Loan Party or any of its
ERISA Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of
the application of Section 4212(c) of ERISA; (vii) the withdrawal by a Loan
Party or any of its ERISA Affiliates in a complete or partial withdrawal (within
the meaning of Sections 4203 and 4205 of ERISA) from any Multiemployer Plan if
there is any potential liability therefor, or the receipt by a Loan Party or any
of its ERISA Affiliates of notice from any Multiemployer Plan that it is in
reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA, or that
it intends to terminate or has terminated under Section 4041A or 4042 of ERISA;
(viii) the occurrence of an act or omission which could give rise to the
imposition on a Loan Party or any of its ERISA Affiliates of any material fines,
penalties, taxes or related charges under Chapter 43 of the Internal Revenue
Code or under Section 409 or 502(c), (i) or (l) or 4071 of ERISA in respect of
any Employee Benefit Plan; (ix) the assertion of a material claim (other than
routine claims for benefits) against any Employee Benefit Plan other than a
Multiemployer Plan or the assets thereof for which any Loan Party or any of its
ERISA Affiliates may be liable, or against any Loan Party or any of its ERISA
Affiliates in connection with any such plan which could reasonably be expected
to be successful; (x) receipt from the Internal Revenue Service of notice of the
failure of any Pension Plan (or any other Employee Benefit Plan intended to be
qualified under Section 401(a) of the Internal Revenue Code) to qualify under
Section 401(a) of the Internal Revenue Code, or the failure of any trust forming
part of any Pension Plan to qualify for
13
exemption from taxation under Section 501(a) of the Internal Revenue Code if the
resulting fines, penalties and related charges could reasonably be expected to
be material; or (xi) the imposition of a Lien pursuant to Section 401(a)(29) or
412(n) of the Internal Revenue Code or pursuant to ERISA with respect to any
Pension Plan.
"EURODOLLAR RATE LOANS" means Loans bearing interest at rates
determined by reference to the Adjusted Eurodollar Rate as provided in
subsection 2.2A.
"EVENT OF DEFAULT" means each of the events set forth in Section 7.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute.
"EXISTING L/C AGREEMENT" has the meaning assigned to that term in the
introduction to this Agreement, as such Existing L/C Agreement may hereafter be
amended, supplemented or otherwise modified from time to time to the extent
permitted under this Agreement.
"EXISTING INDEBTEDNESS" means outstanding Indebtedness of Company and
its Consolidated Subsidiaries listed in Schedule 6.1 annexed hereto.
"EXISTING RECEIVABLES FACILITY" has the meaning assigned to that term
in the introduction to this Agreement, as such Existing Receivables Facility may
hereafter be amended, supplemented or otherwise modified from time to time to
the extent permitted under this Agreement.
"EXISTING REVOLVING CREDIT AGREEMENT" has the meaning assigned to that
term in the introduction to this Agreement, as such Existing Revolving Credit
Agreement may hereafter be amended, supplemented or otherwise modified from time
to time to the extent permitted under this Agreement.
"FACILITY" OR "FACILITIES" means any and all real property
(including, without limitation, all buildings, fixtures or other improvements
located thereon) now, hereafter or heretofore owned, leased, operated or used by
Company or any of its Subsidiaries or any of their respective predecessors or
Affiliates.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any period, a fluctuating
interest rate equal for each day during such period to the weighted average of
the rates on overnight Federal funds
14
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day which is a Business Day, the
average of the quotations for such day on such transactions received by Agent
from three Federal funds brokers of recognized standing selected by Agent.
"FINAL PRO RATA SHARE" means, with respect to each Lender, the
percentage obtained by dividing (x) the Loan Exposure of that Lender by (y) the
aggregate Loan Exposure of all Lenders, as such percentage may be adjusted by
assignments permitted pursuant to subsection 9.1.
"FISCAL YEAR" means the fiscal year of Company and its Subsidiaries
ending on December 31 of each calendar year.
"FOREIGN ENTITY" means any Subsidiary of Company or Joint Venture of
Company either (i) more than 80% of the sales, earnings or assets (determined on
a consolidated basis) of which are located or derived from operations outside of
the United States of America or (ii) which is a "controlled foreign corporation"
within the meaning of Section 952 of the Internal Revenue Code.
"FUNDED DEBT", as applied to any Person, means all Indebtedness of
that Person which by its terms or by the terms of any instrument or agreement
relating thereto matures more than one year from, or is directly renewable or
extendable at the option of the debtor to a date more than one year from
(including an option of the debtor under a revolving credit or similar agreement
obligating the lender or lenders to extend credit over a period of one year or
more from), the date of the creation thereof.
"FUNDED PRO RATA SHARE" means, as of any date of determination, with
respect to each Lender, the percentage obtained by dividing (x) the outstanding
principal amount of the Loans of that Lender on such date by (y) the aggregate
outstanding principal amount of all Loans of all Lenders on such date.
"FUNDING AND PAYMENT OFFICE" means the office of Agent located at One
Bankers Trust Plaza, New York, New York.
"FUNDING PERCENTAGE" means the percentage set forth opposite each
Lender's name on Part A of Schedule 2.1 annexed hereto with respect to each
drawing to be made hereunder, which
15
percentage shall be used to determine the Loans to be made by each Lender to
Company with respect to such drawing, as such percentage may be adjusted by
assignments permitted pursuant to subsection 9.1.
"FUNDING DATE" means the date of the funding of a Loan.
"GAAP" means, subject to the limitations on the application thereof
set forth in subsection 1.2, generally accepted accounting principles set forth
in opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, in each case as the same are applicable to the
circumstances as of the date of determination.
"GUARANTOR" means the Borg-Warner Guarantor Subsidiaries under the
applicable Loan Guaranty.
"GOVERNMENTAL AUTHORIZATION" means any permit, license, authorization,
plan, directive, consent order or consent decree of or from any federal, state
or local governmental authority, agency or court.
"HAZARDOUS MATERIALS" means (i) any chemical, material or substance at
any time defined as or included in the definition of "hazardous substances",
"hazardous wastes", "hazardous materials", "extremely hazardous waste",
"restricted hazardous waste", "infectious waste", "toxic substances" or any
other formulations intended to define, list or classify substances by reason of
deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, toxicity, reproductive toxicity, "TCLP toxicity" or "EP
toxicity" or words of similar import under any applicable Environmental Laws or
publications promulgated pursuant thereto; (ii) any oil, petroleum, petroleum
fraction or petroleum derived substance; (iii) any drilling fluids, produced
waters and other wastes associated with the exploration, development or
production of crude oil, natural gas or geothermal resources; (iv) any flammable
substances or explosives; (v) any radioactive materials; (vi) asbestos in any
form; (vii) urea formaldehyde foam insulation; (viii) electrical equipment which
contains any oil or dielectric fluid containing levels of polychlorinated
biphenyls in excess of fifty parts per million; (ix) pesticides; and (x) any
other chemical, material or substance, exposure to which is prohibited, limited
or regulated by any governmental authority or which may or could pose a hazard
16
to the health and safety of the owners, occupants or any Persons in the vicinity
of the Facilities.
"INDEBTEDNESS", as applied to any Person, means (i) all indebtedness
for borrowed money, (ii) that portion of obligations with respect to Capital
Leases that is properly classified as a liability on a balance sheet in
conformity with GAAP, (iii) notes payable and drafts accepted representing
extensions of credit whether or not representing obligations for borrowed money,
(iv) any obligation owed for all or any part of the deferred purchase price of
property or services (excluding any such obligations incurred under ERISA),
which purchase price is (a) due more than six months from the date of incurrence
of the obligation in respect thereof or (b) evidenced by a note or similar
written instrument, and (v) all indebtedness secured by any Lien on any property
or asset owned or held by that Person regardless of whether the indebtedness
secured thereby shall have been assumed by that Person or is nonrecourse to the
credit of that Person. Obligations under Interest Rate Agreements constitute
Contingent Obligations and not Indebtedness.
"INDEMNITEE" has the meaning assigned to that term in subsection 9.3.
"INDUSTRY STANDARDS" has the meaning assigned to that term in
subsection 5.4.
"INTELLECTUAL PROPERTY" means all patents, trademarks, tradenames,
copyrights, technology, know-how and processes used in or necessary for the
conduct of the business of Company and its Subsidiaries as currently conducted
that are material to the condition (financial or otherwise), business or
operations of Company and its Subsidiaries, taken as a whole.
"INTERCOMPANY DEBT OBLIGATIONS" means (i) the obligation evidenced by
that certain promissory note issued by Borg-Warner Protective Services
Corporation (formerly BPS Guard Services, Inc.) to Company, (ii) the
intercompany promissory notes permitted pursuant to subsection 6.1(ii)(b) and
(iii) any intercompany promissory notes issued to Material Subsidiaries under
the Receivables Facilities.
"INTERCREDITOR AGREEMENT" means the Intercreditor Agreement dated as
of January 27, 1993 among Collateral Agent, the other parties signatory thereto
and such other Persons who have signed an acknowledgment to the Intercreditor
Agreement, as such Intercreditor Agreement may hereafter be amended,
supplemented or modified from time to time to the extent permitted under this
Agreement.
17
"INTEREST COVERAGE RATIO" means the ratio of Consolidated EBITDA to
Consolidated Interest Expense.
"INTEREST PAYMENT DATE" means (i) with respect to any Base Rate Loan,
each March 31, June 30, September 30 and December 31 of each year, commencing on
the first such date to occur after the Closing Date, and (ii) with respect to
any Eurodollar Rate Loan, the last day of each Interest Period applicable to
such Loan; provided that in the case of each Interest Period of longer than
three months, "Interest Payment Date" shall also include each date that is three
months, or an integral multiple thereof, after the commencement of such Interest
Period.
"INTEREST PERIOD" has the meaning assigned to that term in subsection
2.2B.
"INTEREST RATE AGREEMENT" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other similar
agreement or arrangement designed to protect Company or any of its Subsidiaries
against fluctuations in interest rates; provided that the counterparty to any
such agreement shall be a Lender, a bank under the Existing L/C Agreement, a
lender under the Existing Revolving Credit Agreement or any of their respective
Affiliates or ML & Co. or any of its Affiliates or any other Person reasonably
acceptable to Agent and Requisite Lenders; provided further that the calculation
of payments for early termination shall be made on a reasonable basis in
accordance with customary industry practices; and provided still further that
all such payments (guarantied and unguarantied) shall constitute Indebtedness.
"INTEREST RATE DETERMINATION DATE" means, with respect to any Interest
Period, the second Business Day prior to the first day of such Interest Period.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter.
"INVESTMENT" means (i) any direct or indirect purchase or other
acquisition by Company or any of its Subsidiaries of, or of a beneficial
interest in, any Securities of any other Person, (ii) any direct or indirect
redemption, retirement, purchase or other acquisition for value, by any
Subsidiary of Company from any Person other than Company or any of its
Subsidiaries, of any equity Securities of such Subsidiary, or (iii) any direct
or indirect loan, advance (other than advances to employees for moving,
entertainment and travel expenses, drawing accounts and
18
similar expenditures in the ordinary course of business) or capital contribution
by Company or any of its Subsidiaries to any other Person, including all
indebtedness and accounts receivable from that other Person that are not current
assets or did not arise from sales to that other Person in the ordinary course
of business. The amount of any Investment shall be the original cost of such
Investment plus the cost of all additions thereto, without any adjustments for
increases or decreases in value, or write-ups, write-downs or write-offs with
respect to such Investment.
"IT EXCHANGE" means the transfer to a third party of the information
technology assets, including hardware, software and communications assets of any
or all of Wells Fargo Alarm Services, Inc., Borg-Warner Protective Services
Corporation or Company, in exchange for services to be provided by such third
party or its affiliates.
"JOINT VENTURE" means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form; provided
that in no event shall any corporate Subsidiary of any Person be considered to
be a Joint Venture to which such Person is a party.
"LENDER" and "LENDERS" means the persons identified as "Lenders" and
listed on the signature pages of this Agreement, together with their successors
and permitted assigns pursuant to subsection 9.1.
"LIEN" means any lien, mortgage, pledge, assignment, security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof, and any
agreement to give any security interest) and any option, trust or other
preferential arrangement having the practical effect of any of the foregoing.
"LOAN OR LOANS" means the Loans made by Lenders
to Company pursuant to subsection 2.1A.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Loan Guaranties,
the Collateral Documents and the Intercreditor Agreement.
"LOAN EXPOSURE" means, with respect to any Lender as of any date of
determination, (i) prior to the termination of all of a Lender's Commitment,
that Lender's Commitment (or any portion thereof that has not been terminated)
plus the outstanding principal amount of the Loans of that Lender, and (ii)
after the
19
termination of all of a Lender's Commitment, the outstanding principal
amount of the Loans of that Lender.
"LOAN GUARANTIES" means the Borg-Warner Subsidiary Guaranty.
"LOAN PARTIES" means Company and the Borg-Warner Subsidiaries,
collectively.
"LTCB TERM LOAN" has the meaning assigned to that term in the
introduction to this Agreement.
"MARGIN STOCK" has the meaning assigned to that term in Regulation U
of the Board of Governors of the Federal Reserve System as in effect from time
to time.
"MATERIAL ADVERSE EFFECT" means (i) a material adverse effect upon the
business, operations, properties, assets, prospects or condition (financial or
otherwise) of Company and its Consolidated Subsidiaries taken as a whole or (ii)
the material impairment of the ability of any Loan Party to perform its
obligations under any Loan Document or of any Agent or any Lender to enforce or
collect the Obligations, including the obligation of any Loan Party to perform
its guaranty of the Obligations.
"MATERIAL SUBSIDIARY" means (i) each Subsidiary of Company identified
as a "Material Subsidiary" on Schedule 4.1 annexed hereto; (ii) any other
Subsidiary of Company now existing or hereafter acquired or formed by Company
which (x) for the most recent fiscal year of Company commencing on or after
January 1, 1994 accounted for more than 3% of the consolidated revenues of
Company, or (y) as at the end of such fiscal year, was the owner of more than 3%
of the consolidated assets, all as shown on the consolidated financial
statements of Company for such fiscal year; and (iii) any other Subsidiary so
designated by Company, by an Officers' Certificate delivered to Agent, together
with the documents required pursuant to subsection 5.11.
"ML & CO." or "ML" means Merrill Lynch & Co., Inc., a Delaware
corporation.
"MULTIEMPLOYER PLAN" means a "multiemployer plan", as defined in
Section 3(37) of ERISA, to which any Loan Party or any of its ERISA Affiliates
is contributing, or ever has contributed, or to which any Loan Party or any of
its ERISA Affiliates has, or ever has had, an obligation to contribute.
20
"NET CASH PROCEEDS" means, with respect to any Asset Sale, Cash
Proceeds of such Asset Sale net of bona fide direct costs of sale including (i)
income taxes reasonably estimated to be actually payable as a result of such
Asset Sale within two years of the date of such Asset Sale and (ii) payment of
the outstanding principal amount of, premium or penalty, if any, and interest on
any Indebtedness (other than the Loans) that is secured by a Lien on the stock
or assets in question and that is required to be repaid under the terms thereof
as a result of such Asset Sale.
"NEW RECEIVABLES FACILITY" means an off-balance sheet receivables
financing facility, the terms and conditions of which are substantially as set
forth in the Draft Information Memorandum and the proceeds of which are to be
used to refinance the Existing Receivables Facility or the Receivables Bridge
Facility; provided that notwithstanding anything to the contrary contained in
the Draft Information Memorandum, (i) the aggregate principal amount of the New
Receivables Facility shall not be less than $100 million; (ii) the interest rate
payable by Company or its Subsidiaries with respect to the New Receivables
Facility, if variable, shall not exceed the Adjusted Eurodollar Rate plus 2.75%
per annum and, if fixed, shall not exceed the lesser of the swapped equivalent
of such variable rate (determined as of the date on which a final Offering
Memorandum for the New Receivables Facility is printed) or 12% per annum; and
(iii) Pre-Bill Receivables shall not be required to be included as Eligible
Receivables (as such terms are defined in the Draft Information Memorandum), as
such New Receivables Facility may be amended, supplemented or modified from time
to time to the extent permitted under this Agreement.
"9 1/8% SUBORDINATED NOTES" means Company's $150,000,000 in initial
aggregate principal amount of 9 1/8% Senior Subordinated Notes due 2003.
"9 1/8% SUBORDINATED NOTE INDENTURE" means the indenture pursuant to
which the 9 1/8% Subordinated Notes were issued, as such indenture may be
amended from time to time to the extent permitted under this Agreement.
"NOTES" means (i) the promissory notes of Company issued pursuant to
subsection 2.1E on the Closing Date and (ii) any promissory notes issued by
Company pursuant to the last sentence of subsection 9.1B(i) in connection with
assignments of the Commitments or Loans of any Lenders, in each case,
substantially in the form of Exhibit III annexed hereto, as they may be amended,
supplemented or otherwise modified from time to time.
21
"NOTICE OF BORROWING" means a notice substantially in the form of
Exhibit I annexed hereto delivered by Company to Agent pursuant to subsection
2.1B with respect to a proposed borrowing.
"NOTICE OF CONVERSION/CONTINUATION" means a notice substantially in
the form of Exhibit II annexed hereto delivered by Company to Agent pursuant to
subsection 2.2D with respect to a proposed conversion or continuation of the
applicable basis for determining the interest rate with respect to the Loans
specified therein.
"OBLIGATIONS" means all obligations of every nature of Company and its
Subsidiaries from time to time owed to Agent, Lenders or any of them under the
Loan Documents, whether for principal, interest, fees, expenses, indemnification
or otherwise. Time is of the essence in the performance of all Obligations,
except as otherwise expressly provided in this Agreement.
"OFFICERS' CERTIFICATE" means, as applied to any corporation, a
certificate executed on behalf of such corporation by its chairman of the board
(if an officer), its chief executive officer, its president or one of its vice
presidents and by its chief financial officer, its chief accounting officer, its
treasurer or assistant treasurer; provided that every Officers' Certificate with
respect to the compliance with a condition precedent to the making of the Loans
hereunder shall include (i) a statement that the officer or officers making or
giving such Officers' Certificate have read such condition and any definitions
or other provisions contained in this Agreement relating thereto, (ii) a
statement that, in the opinion of the signers, they have made or have caused to
be made such examination or investigation as is necessary to enable them to
express an informed opinion as to whether or not such condition has been
complied with, and (iii) a statement as to whether, in the opinion of the
signers, such condition has been complied with.
"PBGC" means the Pension Benefit Guaranty Corporation (or any
successor thereto).
"PENSION PLAN" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to Section 412 of the Internal Revenue Code
or Section 302 of ERISA.
"PERMITTED ENCUMBRANCES" means the following types of Liens (other
than any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the
Internal Revenue Code or by ERISA):
22
(i) Liens for taxes, assessments or governmental charges or claims the
payment of which is not, at the time, required by subsection 5.3;
(ii) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics and materialmen and other Liens imposed by law incurred in the
ordinary course of business for sums not yet delinquent or being contested
in good faith, if such reserve or other appropriate provision, if any, as
shall be required by GAAP shall have been made therefor;
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, or to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, trade contracts, performance and return-of-money
bonds and other similar obligations (exclusive of obligations for the
payment of borrowed money);
(iv) any attachment or judgment Lien not constituting an Event of
Default under subsection 7.8;
(v) leases or subleases granted to others not interfering in any
material respect with the ordinary conduct of the business of Company or
any of its Subsidiaries;
(vi) easements, rights-of-way, restrictions, minor defects,
encroachments or irregularities in title and other similar charges or
encumbrances not interfering in any material respect with the ordinary
conduct of the business of Company and its Consolidated Subsidiaries, taken
as a whole;
(vii) any (a) interest or title of a lessor or sublessor under any
lease, (b) restriction or encumbrance that the interest or title of such
lessor or sublessor may be subject to, or (c) subordination of the interest
of the lessee or sublessee under such lease to any restriction or
encumbrance referred to in the preceding clause (b);
(viii) Liens arising from filing UCC financing statements relating
solely to leases permitted by this Agreement; and
23
(ix) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods.
"PERSON" means and includes natural persons, corporations, limited
partnerships, general partnerships, joint stock companies, Joint Ventures,
associations, companies, trusts, banks, trust companies, land trusts, business
trusts or other organizations, whether or not legal entities, and governments
and agencies and political subdivisions thereof.
"PLEDGE AGREEMENTS" means the Company Pledge Agreement and the Borg-
Warner Subsidiary Pledge Agreement; provided that none of Company or any Borg-
Warner Subsidiary shall be required to pledge more than 65% of the shares of
capital stock of any Subsidiary which is a Foreign Entity or be required to
guaranty any of the Loans or pledge the shares of capital stock of any
Subsidiary otherwise required to be pledged as collateral to the extent that
such guaranty or pledge would constitute an investment of earnings in United
States property under Section 956 (or a successor provision) of the Internal
Revenue Code that would trigger an increase in income of any United States
shareholder of the guarantor or pledgor of such collateral pursuant to Section
951 (or a successor provision) of the Internal Revenue Code.
"POTENTIAL EVENT OF DEFAULT" means a condition or event that, after
notice or lapse of time or both, would constitute an Event of Default if that
condition or event were not cured or removed within any applicable grace or cure
period.
"PRIME RATE" means the rate that Bankers announces from time to time
as its prime lending rate, as in effect from time to time. The Prime Rate is a
reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. Bankers or any other Lender may make
commercial loans or other loans at rates of interest at, above or below the
Prime Rate.
"RECEIVABLES BRIDGE COMMITMENT LETTER" means the commitment letter
dated October 13, 1995, among Bankers Trust Company, Company and BPS Financial
Services, Inc., with respect to Bankers Trust Company's commitment to provide
the Receivables Bridge Facility.
"RECEIVABLES BRIDGE FACILITY" means an off-balance sheet receivables
bridge facility, the terms and conditions of which are substantially as set
forth in the Draft Information Memorandum, with such differences as are in the
"Summary of
24
Certain Differences Between Receivables Bridge Facility and Receivables
Refinancing" annexed as Annex B to the Receivables Bridge Commitment Letter
excluding the preamble to such Summary, or such other differences as are more
favorable to the Company and its Subsidiaries, the proceeds of which are used to
refinance the Existing Receivables Facilities, as such Receivables Bridge
Facility may be amended, supplemented or modified from time to time to the
extent permitted under this Agreement.
"RECEIVABLES FACILITIES" means and includes the Existing Receivables
Facility, the Receivables Bridge Facility, the New Receivables Facility and the
Alarm Services Contract Securitization Facility, in each case as such facilities
may be amended from time to time to the extent permitted under this Agreement.
"REGISTER" has the meaning assigned to that term in subsection 2.1D.
"REGULATION D" means Regulation D of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"RELEASE" means any release, spill, emission, leaking, pumping,
pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping,
leaching or migration of Hazardous Materials into the indoor or outdoor
environment (including, without limitation, the abandonment or disposal of any
barrels, containers or other closed receptacles containing any Hazardous
Materials), or into or out of any Facility, including the movement of any
Hazardous Material through the air, soil, surface water, groundwater or
property.
"REQUISITE LENDERS" means Lenders having or holding 66 2/3% of the sum
of the aggregate Loan Exposure of all Lenders.
"RESTRICTED JUNIOR PAYMENT" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of stock
of Company now or hereafter outstanding, except a dividend payable solely in
shares of that class of stock to the holders of that class, (ii) any redemption,
retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any shares of any class of stock of Company now or
hereafter outstanding, (iii) any payment made to retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire
shares of any class of stock of Company now or hereafter outstanding, and (iv)
any payment or prepayment of principal of, premium, if any, or interest on, or
redemption, purchase, retirement, defeasance
25
(including in-substance or legal defeasance), sinking fund or similar payment
with respect to, any Subordinated Indebtedness.
"SECURITIES" means any stock, shares, partnership interests, voting
trust certificates, certificates of interest or participation in any profit-
sharing agreement or arrangement, options, warrants, bonds, debentures, notes,
or other evidences of indebtedness, secured or unsecured, convertible,
subordinated or otherwise, or in general any instruments commonly known as
"securities" or any certificates of interest, shares or participations in
temporary or interim certificates for the purchase or acquisition of, or any
right to subscribe to, purchase or acquire, any of the foregoing.
"SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time, and any successor statute.
"SENIOR NOTES" has the meaning assigned to that term in the
introduction to this Agreement.
"SENIOR NOTE REFINANCING FUNDING DATE" means the date occurring on or
after March 15, 1996 and on or prior to April 1, 1996, on which the Company
requests that Loans be made available for the purpose of redeeming or repaying
the Senior Notes in full.
"SOLVENT" means, with respect to any Person, that as of the date of
determination both (A) (i) the then fair saleable value of the property of such
Person is (y) greater than the total amount of liabilities (including contingent
liabilities) of such Person and (z) not less than the amount that will be
required to pay the probable liabilities on such Person's then existing debts as
they become absolute and matured considering all financing alternatives and
potential asset sales reasonably available to such Person; (ii) such Person's
capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (iii) such Person does not intend to
incur, or believe (nor should it reasonably believe) that it will incur, debts
beyond its ability to pay such debts as they become due; and (B) such Person is
"solvent" within the meaning given that term and similar terms under applicable
laws relating to fraudulent transfers and conveyances. For purposes of this
definition, the amount of any contingent liability at any time shall be computed
as the amount that, in light of all of the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an
actual or matured liability.
26
"STONINGTON" means Stonington Partners, L.P., a Delaware limited
partnership.
"SUBORDINATED INDEBTEDNESS" means (i) the Indebtedness of Company
evidenced by the 9 1/8% Subordinated Notes and (ii) any other Indebtedness of
Company subordinated in right of payment to the Obligations pursuant to
documentation containing maturities, amortization schedules, covenants,
defaults, remedies, subordination provisions and other material terms in form
and substance satisfactory to Agent and Requisite Lenders.
"SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, association, joint venture or other business entity of which more
than 50% of the total voting power of shares of stock or other ownership
interests entitled (without regard to the occurrence of any contingency) to vote
in the election of the Person or Persons (whether directors, managers, trustees
or other Persons performing similar functions) having the power to direct or
cause the direction of the management and policies thereof is at the time owned
or controlled, directly or indirectly, by that Person or one or more of the
other Subsidiaries of that Person or a combination thereof.
"TAX" or "TAXES" means any present or future tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature and whatever called, by
whomsoever, on whomsoever and wherever imposed, levied, collected, withheld or
assessed; provided that "TAX ON THE OVERALL NET INCOME" of a Person shall be
construed as a reference to a tax imposed by the jurisdiction in which that
Person's principal office (and/or, in the case of a Lender, its lending office)
is located or in which that Person is deemed to be doing business on all or part
of the net income, profits or gains of that Person (whether worldwide, or only
insofar as such income, profits or gains are considered to arise in or to relate
to a particular jurisdiction, or otherwise).
"TRANSACTION COSTS" means the fees, costs and expenses payable by
Company pursuant hereto and other fees, costs and expenses payable by Company or
any of its Subsidiaries in connection with the transactions contemplated hereby
and the related financings.
1.2 ACCOUNTING TERMS; UTILIZATION OF GAAP FOR PURPOSES OF CALCULATIONS UNDER
AGREEMENT.
For purposes of this Agreement, all accounting terms not otherwise
defined herein shall have the meanings assigned to them in conformity with GAAP.
Financial statements and other information required to be delivered by Company
to Lenders
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pursuant to clauses (i), (ii), (iii) and (xiii) of subsection 5.1 shall be
prepared in accordance with GAAP as in effect at the time of such preparation
(and delivered together with the reconciliation statements provided for in
subsection 5.1(v)). Calculations in connection with the definitions, covenants
and other provisions of this Agreement shall (i) utilize accounting principles
in conformity with those used to prepare the financial statements included in
Company's Report on Form 10-K for the fiscal year ended December 31, 1994 or
(ii) if any amendments to the provisions set forth in Sections 1, 5 or 6 are
made pursuant to negotiations conducted by operation of the following sentence,
accounting principles and policies in effect at the time of the effectiveness of
such amendments. Notwithstanding the foregoing, if any changes in accounting
principles from those used in the preparation of the financial statements
included in Company's Report on Form 10-K for the fiscal year ended December 31,
1994 hereafter occasioned by the promulgation of rules, regulations,
pronouncements or opinions by or required by the Financial Accounting Standards
Board or the American Institute of Certified Public Accountants (or successors
thereto or agencies with similar functions) result in a change in the method of
calculation of financial covenants, standards or terms found in Sections 1, 5 or
6 hereof, the parties hereto agree to enter into negotiations in order to amend
such provisions so as to equitably reflect such changes with the desired result
that the criteria for evaluating Company's financial condition shall be the same
after such changes as if such changes had not been made. During the period of
such negotiations, but in no event for a period longer than 30 days, Company
shall not be required to deliver the additional financial statements required
pursuant to subsection 5.1(v). After the parties agree on amendments to the
provisions of Sections 1, 5 or 6 necessitated by such changes, Company shall not
be required to deliver the additional financial statements required pursuant to
subsection 5.1(v) with respect to such changes.
1.3 OTHER DEFINITIONAL PROVISIONS.
References to "Sections" and "subsections" shall be to Sections and
subsections, respectively, of this Agreement unless otherwise specifically
provided. Any of the terms defined in subsection 1.1 may, unless the context
otherwise requires, be used in the singular or the plural, depending on the
reference.
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SECTION 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 COMMITMENTS; MAKING OF LOANS; THE REGISTER; NOTES.
A. COMMITMENTS. Subject to the terms and conditions of this Agreement and
in reliance upon the representations and warranties of Company herein set forth,
each Lender hereby severally agrees to lend to Company the amounts described
below. LTCB hereby agrees to lend to Company on the Closing Date an amount not
exceeding its Funding Percentage of the first $50,000,000 of any borrowing
requested by Company pursuant to subsection 2.1B on such date which funds shall
be used by Company for the purposes identified in the first sentence of
subsection 2.5A. Immediately upon such funding, each Lender severally agrees to
lend to Company on the Closing Date an amount not exceeding its respective
Funding Percentage of up to $40,000,000 in accordance with any borrowing
requested by Company on such date pursuant to subsection 2.1B, which funds shall
be used by Company for the purposes identified in the second sentence of
subsection 2.5A. Upon the earlier to occur of the funding of the Receivables
Bridge Facility or the New Receivables Facility, CIBC INC. agrees to lend to
Company an amount equal to its Funding Percentage of $10,000,000 as requested by
Company pursuant to subsection 2.1B after the Closing Date and prior to the
Senior Note Refinancing Funding Date for the purposes identified in the second
sentence of subsection 2.5A. Each Lender severally agrees to lend to Company on
the Senior Note Refinancing Funding Date an amount not exceeding its Funding
Percentage of up to $100,000,000 of any borrowing requested by Company pursuant
to subsection 2.1B on such date which funds shall be used by Company for the
purposes identified in the third sentence of subsection 2.5A. The amount of each
Lender's Commitment is set forth opposite its name on Part B of Schedule 2.1
annexed hereto and the aggregate amount of the Commitments is $200,000,000;
provided that the Commitments of Lenders shall be adjusted to give effect to any
assignments of the Commitments pursuant to subsection 9.1. Each Lender's
Commitment shall expire immediately and without further action (i) on October
31, 1995, if the initial Loans to be made on the Closing Date are not made on or
before October 31, 1995 and (ii) on the Senior Note Refinancing Funding Date
(but in any event on April 2, 1996) with respect to each Lender's Commitment to
fund its Funding Percentage on the Senior Note Refinancing Funding Date. Amounts
borrowed under this subsection 2.1A and subsequently repaid or prepaid may not
be reborrowed.
B. BORROWING MECHANICS. Loans made on any Funding Date shall be in an
aggregate minimum amount of $1,000,000 and integral multiples thereof in excess
of that amount; provided that Loans made on any Funding Date as Eurodollar Rate
Loans with a particular Interest Period shall be in an aggregate minimum
29
amount of $5,000,000 and integral multiples of $1,000,000 in excess of that
amount. Whenever Company desires that Lenders make Loans it shall deliver to
Agent a Notice of Borrowing no later than 12:00 Noon (New York time) at least
three Business Days in advance of the proposed Funding Date (in the case of a
Eurodollar Rate Loan) or at least one Business Day in advance of the proposed
Funding Date (in the case of a Base Rate Loan). The Notice of Borrowing shall
specify (i) the proposed Funding Date (which shall be a Business Day), (ii) the
amount of Loan requested, (iii) in the case of the Loans made on the Closing
Date, that such Loans shall be Base Rate Loans, (iv) in the case of the Loans
made on the Senior Note Refinancing Funding Date, whether such Loans shall be
Base Rate Loans or Eurodollar Rate Loans, and (v) in the case of any Loans
requested to be made as Eurodollar Rate Loans, the initial Interest Period
requested therefor. Loans may be continued as or converted into Base Rate Loans
and Eurodollar Rate Loans in the manner provided in subsection 2.2D. In lieu of
delivering the above-described Notice of Borrowing, Company may give Agent
telephonic notice by the required time of any proposed borrowing under this
subsection 2.1B; provided that such notice shall be promptly confirmed in
writing by delivery of a Notice of Borrowing to Agent on or before the
applicable Funding Date.
Neither Agent nor any Lender shall incur any liability to Company in
acting upon any telephonic notice referred to above that Agent believes in good
faith to have been given by a duly authorized officer or other person authorized
to borrow on behalf of Company or for otherwise acting in good faith under this
subsection 2.1B, and upon funding of Loans by Lenders in accordance with this
Agreement pursuant to any such telephonic notice Company shall have effected
Loans hereunder.
Company shall notify Agent prior to the funding of any Loans in the
event that any of the matters to which Company is required to certify in the
applicable Notice of Borrowing is no longer true and correct as of the
applicable Funding Date, and the acceptance by Company of the proceeds of any
Loans shall constitute a re-certification by Company, as of the applicable
Funding Date, as to the matters to which Company is required to certify in the
applicable Notice of Borrowing.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a
Notice of Borrowing for a Eurodollar Rate Loan (or telephonic notice in lieu
thereof) shall be irrevocable on and after the related Interest Rate
Determination Date, and Company shall be bound to make a borrowing in accordance
therewith.
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C. DISBURSEMENT OF FUNDS. The Loans under this Agreement shall be made
by the Lenders funding such drawing simultaneously and proportionately to their
respective Funding Percentages for such drawing as set forth on Schedule 2.1, it
being understood that no Lender shall be responsible for any default by any
other Lender in that other Lender's obligation to make a Loan requested
hereunder nor shall the Commitment of any Lender be increased or decreased as a
result of a default by any other Lender in that other Lender's obligation to
make a Loan requested hereunder. Promptly after receipt by Agent of a Notice of
Borrowing pursuant to subsection 2.1B (or telephonic notice in lieu thereof),
Agent shall notify each Lender of the proposed borrowing. Each Lender shall make
the amount of its Loan available to Agent not later than 12:00 Noon (New York
time) on the applicable Funding Date in same day funds in Dollars, at the
Funding and Payment Office. Upon satisfaction or waiver of the conditions
precedent specified in subsections 3.1 (in the case of Loans made on the Closing
Date) and 3.2 (in the case of all Loans), Agent shall make the proceeds of such
Loans available to Company on the applicable Funding Date by causing an amount
of same day funds in Dollars equal to the proceeds of all such Loans received by
Agent from Lenders to be credited to the account of Company at the Funding and
Payment Office.
Unless Agent shall have been notified by any Lender prior to the
Funding Date for any Loans that such Lender does not intend to make available to
Agent the amount of such Lender's Loan requested on such Funding Date, Agent may
assume that such Lender has made such amount available to Agent on such Funding
Date and Agent may, in its sole discretion, but shall not be obligated to, make
available to Company a corresponding amount on such Funding Date. If such
corresponding amount is not in fact made available to Agent by such Lender,
Agent shall be entitled to recover such corresponding amount on demand from such
Lender together with interest thereon, for each day from such Funding Date until
the date such amount is paid to Agent, at the customary rate set by Agent for
the correction of errors among banks for three Business Days and thereafter at
the Base Rate. If such Lender does not pay such corresponding amount forthwith
upon Agent's demand therefor, Agent shall promptly notify Company and Company
shall immediately pay such corresponding amount to Agent together with interest
thereon, for each day from such Funding Date until the date such amount is paid
to Agent, at the rate payable under this Agreement for Base Rate Loans. Nothing
in this subsection 2.1C shall be deemed to relieve any Lender from its
obligation to fulfill its Commitment hereunder or to prejudice any rights that
Company may have against any Lender as a result of any default by such Lender
hereunder.
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D. THE REGISTER.
(i) Agent shall maintain on behalf of Company and Lenders, at its
address referred to in subsection 9.8, a register for the recordation of
the names and addresses of Lenders and the Commitment and Loan of each
Lender from time to time (the "REGISTER"). The Register shall be available
for inspection by Company or any Lender at any reasonable time and from
time to time upon reasonable prior notice.
(ii) Agent shall record in the Register the Commitment and Loan from
time to time of each Lender and each repayment or prepayment in respect of
the principal amount of the Loan of each Lender. Any such recordation
shall be conclusive and binding on Company and each Lender, absent manifest
error; provided that failure to make any such recordation, or any error in
such recordation, shall not affect Company's Obligations in respect of the
applicable Loan.
(iii) Each Lender shall record on its internal records (including,
without limitation, the Note held by such Lender) the amount of the Loan
made by it and each payment in respect thereof. Any such recordation shall
be conclusive and binding on Company, absent manifest error; provided that
failure to make any such recordation, or any error in such recordation,
shall not affect Company's Obligations in respect of the applicable Loan;
and provided, further that in the event of any inconsistency between the
Register and any Lender's records, the recordations in the Register shall
govern.
(iv) Company, Agent and Lenders shall deem and treat the Persons
listed as Lenders in the Register as the holders and owners of the
corresponding Commitments and Loans listed therein for all purposes hereof,
and no assignment or transfer of any such Commitment or Loan shall be
effective, in each case unless and until an Assignment Agreement effecting
the assignment or transfer thereof shall have been accepted by Agent and
recorded in the Register as provided in subsection 9.1B(ii). Prior to such
recordation, all amounts owed with respect to the applicable Commitment or
Loan shall be owed to the Lender listed in the Register as the owner
thereof, and any request, authority or consent of any Person who, at the
time of making such request or giving such authority or consent, is listed
in the Register as a Lender shall be conclusive and binding on any
subsequent holder, assignee or transferee of the corresponding Commitment
or Loan.
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(v) Company hereby designates Bankers to serve as Company's agent
solely for purposes of maintaining the Register as provided in this
subsection 2.1D, and Company hereby agrees that, to the extent Bankers
serves in such capacity, Bankers and its officers, directors, employees,
agents and affiliates shall constitute Indemnitees for all purposes under
subsection 9.3.
E. NOTES. Company shall execute and deliver on the Closing Date (i) to
each Lender (or to Agent for that Lender) a Note substantially in the form of
Exhibit III annexed hereto to evidence that Lender's Loan, in the principal
amount of that Lender's Loan and with other appropriate insertions.
2.2 INTEREST ON THE LOANS.
A. RATE OF INTEREST. Subject to the provisions of subsections 2.6 and
2.7, each Loan shall bear interest on the unpaid principal amount thereof from
the date made through maturity (whether by acceleration or otherwise) at a rate
determined by reference to the Base Rate or the Adjusted Eurodollar Rate, as the
case may be. The applicable basis for determining the rate of interest with
respect to any Loan shall be selected by Company initially at the time a Notice
of Borrowing is given with respect to such Loan pursuant to subsection 2.1B. The
basis for determining the interest rate with respect to any Loan may be changed
from time to time pursuant to subsection 2.2D. If on any day a Loan is
outstanding with respect to which notice has not been delivered to Agent in
accordance with the terms of this Agreement specifying the applicable basis for
determining the rate of interest, then for that day that Loan shall bear
interest determined by reference to the Base Rate.
Subject to the provisions of subsections 2.2E and 2.7, the Loans shall
bear interest through maturity as follows:
(i) if a Base Rate Loan, then at the sum of the Base Rate plus 2.25%
per annum; or
(ii) if a Eurodollar Rate Loan, then at the sum of the Adjusted
Eurodollar Rate plus 3.25% per annum.
B. INTEREST PERIODS. In connection with each Eurodollar Rate Loan,
Company may, pursuant to the applicable Notice of Borrowing or Notice of
Conversion/Continuation, as the case may be, select an interest period (each an
"INTEREST PERIOD") to be applicable to such Loan, which Interest Period shall
be, at Company's option, either a one, two, three or six month period or, if
available, a nine month period; provided that:
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(i) the initial Interest Period for any Eurodollar Rate Loan shall
commence on the Funding Date in respect of such Loan, in the case of a Loan
initially made as a Eurodollar Rate Loan, or on the date specified in the
applicable Notice of Conversion/Continuation, in the case of a Loan
converted to a Eurodollar Rate Loan;
(ii) in the case of immediately successive Interest Periods applicable
to a Eurodollar Rate Loan continued as such pursuant to a Notice of
Conversion/Continuation, each successive Interest Period shall commence on
the day on which the next preceding Interest Period expires;
(iii) if an Interest Period would otherwise expire on a day that is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided that, if any Interest Period would
otherwise expire on a day that is not a Business Day but is a day of the
month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(iv) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall,
subject to clause (v) of this subsection 2.2B, end on the last Business Day
of a calendar month;
(v) no Interest Period with respect to any portion of the Loans shall
extend beyond December 31, 1998;
(vi) no Interest Period with respect to any portion of the Loans shall
extend beyond a date on which Company is required to make a scheduled
payment of principal of the Loans unless the sum of (a) the aggregate
principal amount of Loans that are Base Rate Loans plus (b) the aggregate
principal amount of Loans that are Eurodollar Rate Loans with Interest
Periods expiring on or before such date equals or exceeds the principal
amount required to be paid on the Loans on such date;
(vii) there shall be no more than four Interest Periods outstanding
at any time; and
(viii) in the event Company fails to specify an Interest Period for
any Eurodollar Rate Loan in the applicable Notice of Borrowing or Notice of
Conversion/Continuation, Company shall be deemed to have selected an
Interest Period of one month.
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C. INTEREST PAYMENTS. Subject to the provisions of subsection 2.2E,
interest on each Loan shall be payable in arrears on and to each Interest
Payment Date applicable to that Loan, upon any prepayment of that Loan (to the
extent accrued on the amount being prepaid) and at maturity (including final
maturity).
D. CONVERSION OR CONTINUATION. Subject to the provisions of subsection
2.6, Company shall have the option (i) to convert at any time all or any part of
its outstanding Loans equal to $5,000,000 and integral multiples of $1,000,000
in excess of that amount from Loans bearing interest at a rate determined by
reference to one basis to Loans bearing interest at a rate determined by
reference to an alternative basis or (ii) upon the expiration of any Interest
Period applicable to a Eurodollar Rate Loan, to continue all or any portion of
such Loan equal to $5,000,000 and integral multiples of $1,000,000 in excess of
that amount as a Eurodollar Rate Loan; provided, however, that a Eurodollar Rate
Loan may only be converted into a Base Rate Loan on the expiration date of an
Interest Period applicable thereto; and provided, further that no Loan may be
made as or converted into a Base Rate Loan during the period from December 24 of
any year to and including January 7 of the immediately succeeding year for the
purpose of investing in securities bearing interest at a rate determined by
reference to any other basis for the purpose of arbitrage or speculation.
Company shall deliver a Notice of Conversion/Continuation to Agent no
later than 1:00 P.M. (New York time) at least one Business Day in advance of the
proposed conversion date (in the case of a conversion to a Base Rate Loan) and
at least three Business Days in advance of the proposed conversion/continuation
date (in the case of a conversion to, or a continuation of, a Eurodollar Rate
Loan). A Notice of Conversion/Continuation shall specify (i) the proposed
conversion/continuation date (which shall be a Business Day), (ii) the amount
and type of the Loan to be converted/continued, (iii) the nature of the proposed
conversion/continuation, (iv) in the case of a conversion to, or a continuation
of, a Eurodollar Rate Loan, the requested Interest Period, and (v) in the case
of a conversion to, or a continuation of, a Eurodollar Rate Loan, that no
Potential Event of Default or Event of Default has occurred and is continuing.
In lieu of delivering the above-described Notice of Conversion/Continuation,
Company may give Agent telephonic notice by the required time of any proposed
conversion/continuation under this subsection 2.2D; provided that such notice
shall be promptly confirmed in writing by delivery of a Notice of Conversion/
Continuation to Agent on or before the proposed conversion/continuation date.
35
Neither Agent nor any Lender shall incur any liability to Company in
acting upon any telephonic notice referred to above that Agent believes in good
faith to have been given by a duly authorized officer or other person authorized
to act on behalf of Company or for otherwise acting in good faith under this
subsection 2.2D, and upon conversion or continuation of the applicable basis for
determining the interest rate with respect to any Loans in accordance with this
Agreement pursuant to any such telephonic notice Company shall have effected a
conversion or continuation, as the case may be, hereunder.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a
Notice of Conversion/Continuation for conversion to, or continuation of, a
Eurodollar Rate Loan (or telephonic notice in lieu thereof) shall be irrevocable
on and after the related Interest Rate Determination Date, and Company shall be
bound to effect a conversion or continuation in accordance therewith.
E. DEFAULT RATE. Upon the occurrence and during the continuation of any
Event of Default, the outstanding principal amount of all Loans and, to the
extent permitted by applicable law, any interest payments thereon not paid when
due and any fees and other amounts then due and payable hereunder, shall
thereafter bear interest (including post-petition interest in any proceeding
under the Bankruptcy Code or other applicable bankruptcy laws) payable upon
demand at a rate that is 2% per annum in excess of the interest rate otherwise
payable under this Agreement with respect to the applicable Loans (or, in the
case of any such fees and other amounts, at a rate which is 2% per annum in
excess of the interest rate otherwise payable under this Agreement for Base Rate
Loans); provided that, in the case of Eurodollar Rate Loans, upon the expiration
of the Interest Period in effect at the time any such increase in interest rate
is effective such Eurodollar Rate Loans shall thereupon become Base Rate Loans
and shall thereafter bear interest payable upon demand at a rate which is 2% per
annum in excess of the interest rate otherwise payable under this Agreement for
Base Rate Loans. Payment or acceptance of the increased rates of interest
provided for in this subsection 2.2E is not a permitted alternative to timely
payment and shall not constitute a waiver of any Event of Default or otherwise
prejudice or limit any rights or remedies of Agent or any Lender.
F. COMPUTATION OF INTEREST. Interest on the Loans shall be computed on
the basis of a 360-day year, in each case for the actual number of days elapsed
in the period during which it accrues. In computing interest on any Loan, the
date of the making of such Loan or the first day of an Interest Period
applicable to such Loan or, with respect to a Base Rate Loan being converted
from a Eurodollar Rate Loan, the date of
36
conversion of such Eurodollar Rate Loan to such Base Rate Loan, as the case may
be, shall be included, and the date of payment of such Loan or the expiration
date of an Interest Period applicable to such Loan or, with respect to a Base
Rate Loan being converted to a Eurodollar Rate Loan, the date of conversion of
such Base Rate Loan to such Eurodollar Rate Loan, as the case may be, shall be
excluded; provided that if a Loan is repaid on the same day on which it is made,
one day's interest shall be paid on that Loan.
2.3 FEES.
A. COMMITMENT FEES. Company agrees to pay to Agent, for distribution to
each Lender in proportion to the percentage which that Lender's undrawn
Commitment represents to the aggregate of all Lenders' undrawn Commitments,
commitment fees for the period from and including the Closing Date to and
excluding the Senior Note Refinancing Funding Date equal to the aggregate
undrawn Commitments multiplied by .50% per annum, such commitment fees to be
calculated on the basis of a 360-day year and the actual number of days elapsed
and to be payable quarterly in arrears on March 31, June 30, September 30 and
December 31 of each year, commencing on the first such date to occur after the
Closing Date, and on the Senior Note Refinancing Funding Date.
B. OTHER FEES. Company agrees to pay to Agent such other fees in the
amounts and at the times separately agreed upon between Company and Agent.
After receipt of such other fees from Company, Agent agrees to pay to each
Lender such portion of such other fees in the amounts and at the times as have
been separately agreed upon in writing between Agent and such Lender.
2.4 REPAYMENTS AND PREPAYMENTS; GENERAL PROVISIONS REGARDING PAYMENTS.
A. SCHEDULED PAYMENTS OF LOANS. Company shall repay the entire amount of
the Loans and all other amounts owed hereunder with respect to the Loans on
December 31, 1998.
B. PREPAYMENTS.
(i) Voluntary Prepayments. Company may, upon not less than one
Business Day's prior written or telephonic notice, in the case of Base Rate
Loans, and three Business Days' prior written or telephonic notice, in the
case of Eurodollar Rate Loans, in each case given to Agent by 1:00 P.M.
(New York time) on the date required and, if given by telephone, promptly
confirmed in writing to Agent (which original written or telephonic notice
Agent will promptly transmit by telefacsimile or telephone to each Lender),
at
37
any time and from time to time prepay any Loans on any Business Day in
whole or in part in an aggregate minimum amount of $5,000,000 and in
integral multiples of $1,000,000 in excess of that amount for Eurodollar
Rate Loans or an aggregate minimum amount of $1,000,000 and integral
multiples thereof in excess of that amount for Base Rate Loans; provided,
however, that a Eurodollar Rate Loan may only be prepaid on the expiration
of the Interest Period applicable thereto. Notice of prepayment having
been given as aforesaid, the principal amount of the Loans specified in
such notice shall become due and payable on the prepayment date specified
therein. Any such voluntary prepayment shall be applied as specified in
subsection 2.4B(iii).
(ii) Mandatory Prepayments.
(a) Prepayments from Asset Sales. No later than the second
Business Day following the date of receipt by Company or any of its
Subsidiaries of Cash Proceeds of any Asset Sale, Company shall prepay
the Loans in an amount equal to the Net Cash Proceeds of such Asset
Sale; provided however, that with respect to Net Cash Proceeds from
the sale of receivables, contracts and/or leases under the Alarm
Services Contract Securitization Facility, Company shall not be
required to make any prepayment of the Loans pursuant to this
subsection 2.4B(ii)(a) out of the Net Cash Proceeds of such Asset Sale
in excess of the first $25,000,000 of such Net Cash Proceeds and, with
respect to the first $25,000,000 of such Net Cash Proceeds, Company
shall apply such Net Cash Proceeds pro rata to the prepayment of the
Loans and the loans outstanding under the Existing Revolving Credit
Agreement; provided further that so long as no Event of Default or
Potential Event of Default shall have occurred and be continuing,
Company and its Subsidiaries shall not be required to apply the Net
Cash Proceeds of any Asset Sale to the mandatory prepayment of the
Loans pursuant to this subsection 2.4B(ii)(a) to the extent that (A)
such Net Cash Proceeds have been or will be reinvested in like assets
or in other assets used in the business of Company and its
Consolidated Subsidiaries within six months of such sale; provided
that the aggregate amount of Net Cash Proceeds excluded from
application to the mandatory prepayment of the Loans pursuant to this
clause (A) does not exceed $5,000,000 in the aggregate, or (B) such
Net Cash Proceeds are less than $1,000,000 or are proceeds from the
sale of non-earning assets; provided that the aggregate amount of Net
Cash Proceeds excluded from application to the mandatory prepayment
38
of the Loans pursuant to this clause (B) does not exceed $5,000,000 in
the aggregate. Concurrently with any prepayment of the Loans pursuant
to this subsection 2.4B(ii)(a), Company shall deliver to Agent an
Officers' Certificate demonstrating the derivation of the Net Cash
Proceeds of the correlative Asset Sale from the gross sales price
thereof. Any such mandatory prepayments shall be applied as specified
in subsection 2.4B(iii).
(b) Prepayments Due to Reversion of Surplus Assets of Pension
Plans. On the date of return to Company or any of its Subsidiaries of
any surplus assets of any pension plan of Company or any of its
Subsidiaries in excess of $1,000,000 in the aggregate for all such
returned surplus assets, net of transaction costs and expenses
incurred in obtaining such return, including incremental taxes payable
as a result thereof, Company shall prepay the Loans in an amount equal
to 100% of such net returned surplus assets (the "NET REVERSION
AMOUNT"). Any such mandatory prepayments shall be applied as
specified in subsection 2.4B(iii).
(c) Prepayments Due to Issuance of Debt Securities. Without
duplication of the amounts paid pursuant to subsection 2.4B(ii)(f), no
later than the first Business Day following the date of receipt by
Company or any of its Subsidiaries of the cash proceeds (net of
underwriting discounts, similar placement fees and commissions and
other reasonable costs and expenses associated therewith) from the
issuance of any bonds, notes, debentures or other issuances of similar
debt Securities of Company or any such Subsidiary, excluding in any
event the proceeds of any issuance of debt permitted pursuant to
subsections 6.1(i)-(xi), Company shall prepay the Loans in an amount
equal to such net cash proceeds. Any such mandatory prepayments shall
be applied as specified in subsection 2.4B(iii).
(d) Prepayments Due to Issuance of Equity Securities. Without
duplication of the amounts paid pursuant to subsection 2.4B(ii)(f), on
the date of receipt by Company of the cash proceeds (net of
underwriting discounts and commissions and other reasonable costs
associated therewith) from the issuance of any equity Securities of
Company, including without limitation additional issuances of Company
Common Stock (other than issuances to employees or directors pursuant
to the Borg-Warner Security
39
Corporation Management Stock Option Plan or 1993 Stock Option Plan, as
such plans may be amended from time to time, or any other employee or
director stock option, incentive, purchase, retirement, savings or
similar plan), Company shall prepay the Loans in an amount equal to
such net cash proceeds. Any such mandatory prepayments shall be
applied as specified in subsection 2.4B(iii).
(e) Prepayments Due to Excess Cash Flow. In the event that there
shall be Consolidated Excess Cash Flow for any Fiscal Year, within 90
days after the last day of such Fiscal Year Company shall prepay the
Loans in an amount equal to 75% of such Consolidated Excess Cash Flow.
Any such mandatory prepayments shall be applied as specified in
subsection 2.4B(iii).
(f) Prepayments Due to Financial Performance. In the event that
as of the last day of each fiscal quarter, commencing with the fiscal
quarter ended March 31, 1997, Company has not achieved an Interest
Coverage Ratio for the four consecutive fiscal quarters ending on such
date of not less than 2.5 to 1.00 and has not achieved Consolidated
EBITDA for the four consecutive fiscal quarters ending on such date of
not less than $160,000,000, no later than the 120th day after such
date Company shall prepay the Loans in an amount equal to
$150,000,000; provided however that to the extent Company makes an
asset sale or issues debt or equity Securities in order to make such
prepayment, the net cash proceeds in excess of $150,000,000 shall be
payable pursuant to subsections 2.4B(ii)(a), (c) or (d), as
applicable. Any such mandatory prepayment shall be applied as
specified in subsection 2.4B(iii).
(iii) Application of Prepayments to Base Rate Loans and Eurodollar
Rate Loans. Any prepayment of the Loans shall reduce the scheduled payment
of the Loans set forth in subsection 2.4A and shall be applied first to
Base Rate Loans to the full extent thereof before application to
Eurodollar Rate Loans, in each case in a manner which minimizes the amount
of any payments required to be made by Company pursuant to subsection 2.6D.
C. GENERAL PROVISIONS REGARDING PAYMENTS.
(i) Manner and Time of Payment. All payments by Company of principal,
interest, fees and other Obligations hereunder, under the Notes and under
the other Loan Documents shall be made in Dollars in same day funds,
40
without defense, setoff or counterclaim, free of any restriction or
condition, and delivered to Agent not later than 12:00 Noon (New York time)
on the date due at the Funding and Payment Office for the account of
Lenders; funds received by Agent after that time on such due date shall be
deemed to have been paid by Company on the next succeeding Business Day.
Company hereby authorizes Agent to charge its accounts with Agent in order
to cause timely payment to be made to Agent of all principal, interest,
fees and expenses due hereunder (subject to sufficient funds being
available in its accounts for that purpose).
(ii) Application of Payments to Principal and Interest. Except as
otherwise provided in subsection 2.2C, all payments in respect of the
principal amount of any Loan shall include payment of accrued interest on
the principal amount being repaid or prepaid, and all such payments shall
be applied to the payment of interest before application to principal.
(iii) Apportionment of Payments. Aggregate principal and interest
payments shall be apportioned among all outstanding Loans to which such
payments relate, in each case proportionately to Lenders' respective Funded
Pro Rata Shares. Agent shall promptly distribute to each Lender, at its
primary address set forth below its name on the appropriate signature page
hereof or at such other address as such Lender may request, its Funded Pro
Rata Share of all such payments received by Agent and its pro rata share of
the commitment fees when received by Agent pursuant to subsection 2.3.
Notwithstanding the foregoing provisions of this subsection 2.4C(iii), if,
pursuant to the provisions of subsection 2.6C, any Notice of Conversion/
Continuation is withdrawn as to any Affected Lender or if any Affected
Lender makes Base Rate Loans in lieu of its Funded Pro Rata Share of any
Eurodollar Rate Loans, Agent shall give effect thereto in apportioning
payments received thereafter.
(iv) Payments on Business Days. Whenever any payment to be made
hereunder shall be stated to be due on a day that is not a Business Day,
such payment shall be made on the next succeeding Business Day and such
extension of time shall be included in the computation of the payment of
interest hereunder or of the commitment fees hereunder, as the case may be.
(v) Notation of Payment. Each Lender agrees that before disposing of
the Note held by it, or any part thereof (other than by granting
participations therein), that Lender will make a notation thereon of the
Loan evidenced by that
41
Note and all principal payments previously made thereon and of the date to
which interest thereon has been paid; provided that the failure to make (or
any error in the making of) a notation of the Loan made under such Note
shall not limit or otherwise affect the obligations of Company hereunder or
under such Note with respect to such Loan or any payments of principal or
interest on such Note.
2.5 USE OF PROCEEDS.
A. LOANS. The proceeds of the first drawing made on the Closing Date
shall be applied by Company on the Closing Date to repay in full $50,000,000 in
outstanding principal amount of Indebtedness under the LTCB Term Loan. The
proceeds of the other Loans made on the Closing Date and any date other than the
Senior Note Refinancing Funding Date shall be applied by Company to reduce the
outstanding indebtedness under the Existing Revolving Credit Agreement, without
any concomitant reduction in commitments thereunder. The proceeds of the Loans
made on the Senior Note Refinancing Funding Date shall be applied on the Senior
Note Refinancing Funding Date to redeem or repay in full Company's outstanding
8% Senior Notes at par plus accrued interest thereon.
B. MARGIN REGULATIONS. No portion of the proceeds of any borrowing under
this Agreement shall be used by Company or any of its Subsidiaries in any manner
that might cause the borrowing or the application of such proceeds to violate
Regulation G, Regulation U, Regulation T or Regulation X of the Board of
Governors of the Federal Reserve System or any other regulation of such Board or
to violate the Exchange Act, in each case as in effect on the date or dates of
such borrowing and such use of proceeds.
2.6 SPECIAL PROVISIONS GOVERNING EURODOLLAR RATE LOANS.
Notwithstanding any other provision of this Agreement to the contrary,
the following provisions shall govern with respect to Eurodollar Rate Loans as
to the matters covered:
A. DETERMINATION OF APPLICABLE INTEREST RATE. As soon as practicable
after 10:00 A.M. (New York time) on each Interest Rate Determination Date, Agent
shall determine (which determination shall, absent manifest error, be final,
conclusive and binding upon all parties) the interest rate that shall apply to
the Eurodollar Rate Loans for which an interest rate is then being determined
for the applicable Interest Period and shall promptly give notice thereof (in
writing or by telephone confirmed in writing) to Company and each Lender.
42
B. INABILITY TO DETERMINE APPLICABLE INTEREST RATE. In the event that
Agent shall have determined (which determination shall be final and conclusive
and binding upon all parties hereto), on any Interest Rate Determination Date
with respect to any Eurodollar Rate Loans, that by reason of circumstances
affecting the interbank Eurodollar market adequate and fair means do not exist
for ascertaining the interest rate applicable to such Loans on the basis
provided for in the definition of Adjusted Eurodollar Rate, Agent shall on such
date give notice (by telefacsimile or by telephone confirmed in writing) to
Company and each Lender of such determination, whereupon (i) no Loans may be
made as, or converted to, Eurodollar Rate Loans until such time as Agent
notifies Company and Lenders that the circumstances giving rise to such notice
no longer exist and (ii) any Notice of Borrowing or Notice of Conversion/
Continuation given by Company with respect to the Loans in respect of which such
determination was made shall be deemed to be rescinded by Company.
C. ILLEGALITY OR IMPRACTICABILITY OF EURODOLLAR RATE LOANS. In the event
that on any date any Lender shall have determined (which determination shall be
final and conclusive and binding upon all parties hereto but shall be made only
after consultation with Company and Agent) that the making, maintaining or
continuation of its Eurodollar Rate Loans (i) has become unlawful as a result of
compliance by such Lender in good faith with any law, treaty, governmental rule,
regulation, guideline or order (or would conflict with any such treaty,
governmental rule, regulation, guideline or order not having the force of law
even though the failure to comply therewith would not be unlawful) or (ii) has
become impracticable, or would cause such Lender material hardship, as a result
of contingencies occurring after the date of this Agreement which materially and
adversely affect the interbank Eurodollar market or the position of such Lender
in that market, then, and in any such event, such Lender shall be an "AFFECTED
LENDER" and it shall promptly give notice (by telefacsimile or by telephone
confirmed in writing) to Company and Agent of such determination (which notice
Agent shall promptly transmit to each other Lender). Thereafter (a) the
obligation of the Affected Lender to make Loans as, or to convert Loans to,
Eurodollar Rate Loans shall be suspended until such notice shall be withdrawn by
the Affected Lender, (b) to the extent such determination by the Affected Lender
relates to a Eurodollar Rate Loan then being requested by Company pursuant to a
Notice of Borrowing or a Notice of Conversion/Continuation, the Affected Lender
shall make such Loan as (or convert such Loan to, as the case may be) a Base
Rate Loan, (c) the Affected Lender's obligation to maintain its outstanding
Eurodollar Rate Loans (the "AFFECTED LOANS") shall be terminated at the earlier
to occur of
43
the expiration of the Interest Period then in effect with respect to the
Affected Loans or when required by law, and (d) the Affected Loans shall
automatically convert into Base Rate Loans on the date of such termination.
Notwithstanding the foregoing, to the extent a determination by an Affected
Lender as described above relates to a Eurodollar Rate Loan then being requested
by Company pursuant to a Notice of Borrowing or a Notice of Conversion/
Continuation, Company shall have the option, subject to the provisions of
subsection 2.6D, to rescind such Notice of Borrowing or Notice of Conversion/
Continuation as to all Lenders by giving notice (by telefacsimile or by
telephone confirmed in writing) to Agent of such rescission on the date on which
the Affected Lender gives notice of its determination as described above (which
notice of rescission Agent shall promptly transmit to each other Lender).
Except as provided in the immediately preceding sentence, nothing in this
subsection 2.6C shall affect the obligation of any Lender other than an Affected
Lender to make or maintain Loans as, or to convert Loans to, Eurodollar Rate
Loans in accordance with the terms of this Agreement.
D. COMPENSATION FOR BREAKAGE OR NON-COMMENCEMENT OF INTEREST PERIODS.
Company shall compensate each Lender, upon written request by that Lender (which
request shall set forth the basis for requesting such amounts), for all
reasonable losses, expenses and liabilities (including, without limitation, any
interest paid by that Lender to lenders of funds borrowed by it to make or carry
its Eurodollar Rate Loans and any loss, expense or liability sustained by that
Lender in connection with the liquidation or re-employment of such funds) which
that Lender may sustain: (i) if for any reason (other than a default by that
Lender) a borrowing of any Eurodollar Rate Loan does not occur on a date
specified therefor in a Notice of Borrowing or a telephonic request for
borrowing, or a conversion to or continuation of any Eurodollar Rate Loan does
not occur on a date specified therefor in a Notice of Conversion/Continuation or
a telephonic request for conversion or continuation, (ii) if any prepayment or
other principal payment or any conversion of any of its Eurodollar Rate Loans
occurs on a date prior to the last day of an Interest Period applicable to that
Loan, (iii) if any prepayment of any of its Eurodollar Rate Loans is not made on
any date specified in a notice of prepayment given by Company, or (iv) as a
consequence of any other default by Company in the repayment of its Eurodollar
Rate Loans when required by the terms of this Agreement.
44
E. BOOKING OF EURODOLLAR RATE LOANS. Any Lender may make, carry or
transfer Eurodollar Rate Loans at, to, or for the account of any of its branch
offices or the office of an Affiliate of that Lender.
F. ASSUMPTIONS CONCERNING FUNDING OF EURODOLLAR RATE LOANS. Calculation
of all amounts payable to a Lender under this subsection 2.6 and under
subsection 2.7A shall be made as though that Lender had actually funded each of
its relevant Eurodollar Rate Loans through the purchase of a Eurodollar deposit
bearing interest at the rate obtained pursuant to clause (i) of the definition
of Adjusted Eurodollar Rate in an amount equal to the amount of such Eurodollar
Rate Loan and having a maturity comparable to the relevant Interest Period and
through the transfer of such Eurodollar deposit from an offshore office of that
Lender to a domestic office of that Lender in the United States of America;
provided, however, that each Lender may fund each of its Eurodollar Rate Loans
in any manner it sees fit and the foregoing assumptions shall be utilized only
for the purposes of calculating amounts payable under this subsection 2.6 and
under subsection 2.7A.
G. EURODOLLAR RATE LOANS AFTER DEFAULT. After the occurrence of and
during the continuation of a Potential Event of Default or an Event of Default,
(i) Company may not elect to have a Loan be made or maintained as, or converted
to, a Eurodollar Rate Loan after the expiration of any Interest Period then in
effect for that Loan and (ii) subject to the provisions of subsection 2.6D, any
Notice of Borrowing or Notice of Conversion/Continuation given by Company with
respect to a requested borrowing or conversion/continuation that has not yet
occurred shall be deemed to be rescinded by Company.
2.7 INCREASED COSTS; TAXES; CAPITAL ADEQUACY.
A. COMPENSATION FOR INCREASED COSTS AND TAXES. Subject to the provisions
of subsection 2.7B, in the event that any Lender shall determine (which
determination shall, absent manifest error, be final and conclusive and binding
upon all parties hereto) that any law, treaty or governmental rule, regulation
or order, or any change therein or in the interpretation, administration or
application thereof (including the introduction of any new law, treaty or
governmental rule, regulation or order), or any determination of a court or
governmental authority, in each case that becomes effective after the date
hereof, or compliance by such Lender with any guideline, request or directive
issued or made after the date hereof by any central bank or other governmental
or quasi-governmental authority (whether or not having the force of law):
45
(i) subjects such Lender (or its applicable lending office) to any
additional Tax (other than any Tax on the overall net income of such
Lender) with respect to this Agreement or any of its obligations hereunder
or any payments to such Lender (or its applicable lending office) of
principal, interest, fees or any other amount payable hereunder;
(ii) imposes, modifies or holds applicable any reserve (including
without limitation any marginal, emergency, supplemental, special or other
reserve), special deposit, compulsory loan, FDIC insurance or similar
requirement against assets held by, or deposits or other liabilities in or
for the account of, or advances or loans by, or other credit extended by,
or any other acquisition of funds by, any office of such Lender (other than
any such reserve or other requirements with respect to Eurodollar Rate
Loans that are reflected in the definition of Adjusted Eurodollar Rate); or
(iii) imposes any other condition (other than with respect to a Tax
matter) on or affecting such Lender (or its applicable lending office) or
its obligations hereunder or the interbank Eurodollar market;
and the result of any of the foregoing is to increase the cost to such Lender of
agreeing to make, making or maintaining its Loan hereunder or to reduce any
amount received or receivable by such Lender (or its applicable lending office)
with respect thereto; then, in any such case, Company shall promptly pay to such
Lender, upon receipt of the statement referred to in the next sentence, such
additional amount or amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Lender in its
sole discretion shall determine) as may be necessary to compensate such Lender
for any such increased cost or reduction in amounts received or receivable
hereunder. Such Lender shall deliver to Company (with a copy to Agent) a
written statement, setting forth in reasonable detail the basis for calculating
the additional amounts owed to such Lender under this subsection 2.7A, which
statement shall be conclusive and binding upon all parties hereto absent
manifest error.
B. WITHHOLDING OF TAXES.
(i) Payments to Be Free and Clear. All sums payable by Company under
this Agreement and the other Loan Documents shall be paid free and clear of
and (except to the extent required by law) without any deduction or
withholding on account of any Tax (other than a Tax on the overall net
46
income of any Lender) imposed, levied, collected, withheld or assessed by
or within the United States of America or any political subdivision in or
of the United States of America or any other jurisdiction from or to which
a payment is made by or on behalf of Company or by any federation or
organization of which the United States of America or any such jurisdiction
is a member at the time of payment.
(ii) Grossing-up of Payments. If Company or any other Person is
required by law to make any deduction or withholding on account of any such
Tax from any sum paid or payable by Company to Agent or any Lender under
any of the Loan Documents:
(a) Company shall notify Agent of any such requirement or any
change in any such requirement as soon as Company becomes aware of it;
(b) Company shall pay any such Tax before the date on which
penalties attach thereto, such payment to be made (if the liability to
pay is imposed on Company) for its own account or (if that liability
is imposed on Agent or such Lender, as the case may be) on behalf of
and in the name of Agent or such Lender;
(c) the sum payable by Company in respect of which the relevant
deduction, withholding or payment is required shall be increased to
the extent necessary to ensure that, after the making of that
deduction, withholding or payment, Agent or such Lender, as the case
may be, receives on the due date a net sum equal to what it would have
received had no such deduction, withholding or payment been required
or made; and
(d) within 30 days after paying any sum from which it is
required by law to make any deduction or withholding, and within 30
days after the due date of payment of any Tax which it is required by
clause (b) above to pay, Company shall deliver to Agent evidence
satisfactory to the other affected parties of such deduction,
withholding or payment and of the remittance thereof to the relevant
taxing or other authority;
provided that no such additional amount shall be required to be paid to any
Lender under clause (c) above except to the extent that any change after
the date hereof (in the case of each Lender listed on the signature pages
hereof) or after the date of the Assignment Agreement pursuant to which
such Lender became a Lender (in the case of each other Lender) in any such
requirement for a deduction, withholding or payment
47
as is mentioned therein shall result in an increase in the rate of such
deduction, withholding or payment from that in effect at the date of this
Agreement or at the date of such Assignment Agreement, as the case may be,
in respect of payments to such Lender.
(iii) Evidence of Exemption from U.S. Withholding Tax.
(a) Each Lender that is organized under the laws of any
jurisdiction other than the United States or any state or other
political subdivision thereof (for purposes of this subsection
2.7B(iii), a "NON-US LENDER") shall deliver to Agent for transmission
to Company, on or prior to the Closing Date (in the case of each
Lender listed on the signature pages hereof) or on the date of the
Assignment Agreement pursuant to which it becomes a Lender (in the
case of each other Lender), and at such other times as may be
necessary in the determination of Company or Agent (each in the
reasonable exercise of its discretion), (1) two original copies of
Internal Revenue Service Form 1001 or 4224 (or any successor forms),
properly completed and duly executed by such Lender, together with any
other certificate or statement of exemption required under the
Internal Revenue Code or the regulations issued thereunder to
establish that such Lender is not subject to deduction or withholding
of United States federal income tax with respect to any payments to
such Lender of principal, interest, fees or other amounts payable
under any of the Loan Documents or (2) if such Lender is not a "bank"
or other Person described in Section 881(c)(3) of the Internal Revenue
Code and cannot deliver either Internal Revenue Service Form 1001 or
4224 pursuant to clause (1) above, a Certificate re Non-Bank Status
together with two original copies of Internal Revenue Service Form W-8
(or any successor form), properly completed and duly executed by such
Lender, together with any other certificate or statement of exemption
required under the Internal Revenue Code or the regulations issued
thereunder to establish that such Lender is not subject to deduction
or withholding of United States federal income tax with respect to any
payments to such Lender of interest payable under any of the Loan
Documents.
(b) Each Lender required to deliver any forms, certificates or
other evidence with respect to United States federal income tax
withholding matters pursuant to subsection 2.7B(iii)(a) hereby agrees,
from time to
48
time after the initial delivery by such Lender of such forms,
certificates or other evidence, whenever a lapse in time or change in
circumstances renders such forms, certificates or other evidence
obsolete or inaccurate in any material respect, such Lender shall (1)
deliver to Agent for transmission to Company two new original copies
of Internal Revenue Service Form 1001 or 4224 or a Certificate re Non-
Bank Status and two original copies of Internal Revenue Service Form
W-8, as the case may be, properly completed and duly executed by such
Lender, together with any other certificate or statement of exemption
required in order to confirm or establish that such Lender is not
subject to deduction or withholding of United States federal income
tax with respect to payments to such Lender under the Loan Documents
or (2) immediately notify Agent and Company of its inability to
deliver any such forms, certificates or other evidence.
(c) Company shall not be required to pay any additional amount
to any Non-US Lender under clause (c) of subsection 2.7B(ii) if such
Lender shall have failed to satisfy the requirements of subsection
2.7B(iii)(a); provided that if such Lender shall have satisfied such
requirements on the Closing Date (in the case of each Lender listed on
the signature pages hereof) or on the date of the Assignment Agreement
pursuant to which it became a Lender (in the case of each other
Lender), nothing in this subsection 2.7B(iii)(c) shall relieve Company
of its obligation to pay any additional amounts pursuant to clause (c)
of subsection 2.7B(ii) in the event that, as a result of any change in
any applicable law, treaty or governmental rule, regulation or order,
or any change in the interpretation, administration or application
thereof, such Lender is no longer properly entitled to deliver forms,
certificates or other evidence at a subsequent date establishing the
fact that such Lender is not subject to withholding as described in
subsection 2.7B(iii)(a).
C. CAPITAL ADEQUACY ADJUSTMENT. If any Lender shall have determined that
the adoption, effectiveness, phase-in or applicability after the date hereof of
any law, rule or regulation (or any provision thereof) regarding capital
adequacy, or any change therein or 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 Lender
(or its applicable lending office) with any guideline, request or directive
regarding capital adequacy (whether or not having the force of law) of any such
49
governmental authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on the capital of such Lender or any
corporation controlling such Lender as a consequence of, or with reference to,
such Lender's Loan or Commitment or other obligations hereunder to a level below
that which such Lender or such controlling corporation could have achieved but
for such adoption, effectiveness, phase-in, applicability, change or compliance
(taking into consideration the policies of such Lender or such controlling
corporation with regard to capital adequacy), then from time to time, within
five Business Days after receipt by Company from such Lender of the statement
referred to in the next sentence, Company shall pay to such Lender such
additional amount or amounts as will compensate such Lender or such controlling
corporation on an after-tax basis for such reduction. Such Lender shall deliver
to Company (with a copy to Agent) a written statement, setting forth in
reasonable detail the basis of the calculation of such additional amounts, which
statement shall be conclusive and binding upon all parties hereto absent
manifest error.
2.8 OBLIGATION OF LENDERS TO MITIGATE.
Each Lender agrees that, as promptly as practicable after the officer
of such Lender responsible for administering the Loan of such Lender becomes
aware of the occurrence of an event or the existence of a condition that would
cause such Lender to become an Affected Lender or that would entitle such Lender
to receive payments under subsection 2.7, it will, to the extent not
inconsistent with the internal policies of such Lender and any applicable legal
or regulatory restrictions, use reasonable efforts (i) to make, fund or maintain
the Commitment of such Lender or the affected Loan of such Lender through
another lending office of such Lender, or (ii) take such other measures as such
Lender may deem reasonable, if as a result thereof the circumstances which would
cause such Lender to be an Affected Lender would cease to exist or the
additional amounts which would otherwise be required to be paid to such Lender
pursuant to subsection 2.7 would be materially reduced and if, as determined by
such Lender in its sole discretion, the making, funding or maintaining of such
Commitment or Loan through such other lending office or in accordance with such
other measures, as the case may be, would not otherwise materially adversely
affect such Commitment or Loan or the interests of such Lender; provided that
such Lender will not be obligated to utilize such other lending office pursuant
to this subsection 2.8 unless Company agrees to pay all incremental expenses
incurred by such Lender as a result of utilizing such other lending office as
described in clause (i) above. A certificate as to the amount of any such
expenses payable by Company pursuant to this subsection 2.8 (setting forth in
reasonable detail the basis for requesting
50
such amount) submitted by such Lender to Company (with a copy to Agent) shall be
conclusive absent manifest error.
SECTION 3. CONDITIONS TO LOANS
The obligations of Lenders to make the Loans hereunder are subject to
the satisfaction of all of the following conditions.
3.1 CONDITIONS TO LOANS MADE ON THE CLOSING DATE.
The obligations of Lenders to make the Loans to be made on the Closing
Date are, in addition to the conditions precedent specified in subsection 3.2,
subject to prior or concurrent satisfaction of the following conditions:
A. COMPANY DOCUMENTS. On or before the Closing Date, Company shall
deliver or cause to be delivered to Lenders (or to Agent for Lenders with
sufficient originally executed copies, where appropriate, for each Lender and
its counsel) the following, each, unless otherwise noted, dated the Closing
Date:
(i) Certified copies of its Certificate of Incorporation, together
with a good standing certificate from the Secretary of State of the State
of Delaware and each other state in which it is qualified as a foreign
corporation to do business and a certificate or other evidence of good
standing as to payment of any applicable franchise or similar taxes from
the appropriate taxing authority of each of such states (or in lieu of such
certificate as to the payment of such taxes, an Officers' Certificate to
such effect), each dated a recent date prior to the Closing Date;
(ii) Copies of its Bylaws, certified as of the Closing Date by its
corporate secretary or an assistant secretary;
(iii) Resolutions of its Board of Directors approving and authorizing
the execution, delivery and performance of this Agreement, the other Loan
Documents and the related amendments to the Existing Revolving Credit
Agreement and the Existing L/C Agreement, certified as of the Closing Date
by its corporate secretary or an assistant secretary as being in full force
and effect without modification or amendment;
(iv) Signature and incumbency certificates of its officers executing
this Agreement, the other Loan Documents to which it is to be a party, the
Notes and the related
51
amendments to the Existing Revolving Credit Agreement and the Existing L/C
Agreement;
(v) Executed originals of this Agreement, the Notes (duly executed in
accordance with subsection 2.1E, drawn to the order of each Lender and with
appropriate insertions), the other Loan Documents and the related
amendments to the Existing Revolving Credit Agreement and the Existing L/C
Agreement; and
(vi) Such other documents as Agent or Requisite Lenders may reasonably
request.
B. SUBSIDIARY DOCUMENTS. On or before the Closing Date, each of the
Borg-Warner Guarantor Subsidiaries that are Material Subsidiaries and each of
the other Borg-Warner Subsidiaries that are Material Subsidiaries shall execute
and deliver to Lenders (or to Agent for Lenders with sufficient originally
executed copies for each Lender and Agent's counsel), each, unless otherwise
noted, dated the Closing Date:
(i) Certified copies of its Certificate of Incorporation, together
with a good standing certificate from the Secretary of State of the State
of Delaware and each other state in which its headquarters office is
located and a certificate or other evidence of good standing as to payment
of any applicable franchise or similar taxes from the appropriate taxing
authority of each of such states (or in lieu of such certificate as to the
payment of such taxes, an Officers' Certificate to such effect), each dated
a recent date prior to the Closing Date;
(ii) Copies of its Bylaws, certified as of the Closing Date by its
corporate secretary or an assistant secretary;
(iii) Resolutions of its Board of Directors approving and authorizing
the execution, delivery and performance of the Loan Documents to which such
Material Subsidiary is a party, certified as of the Closing Date by its
corporate secretary or an assistant secretary as being in full force and
effect without modification or amendment;
(iv) Signature and incumbency certificates of its officers executing
the other Loan Documents to which it is to be a party;
(v) Executed originals of the Loan Documents to which it is a party;
and
52
(vi) Such other documents as Agent or Requisite Lenders may reasonably
request.
C. OPINIONS OF COMPANY'S COUNSEL. Lenders and their respective counsel
shall have received originally executed copies of one or more favorable written
opinions of Wachtell Lipton Rosen & Katz and of Edwin L. Lewis, counsel for
Company, in form and substance reasonably satisfactory to Agent and its counsel,
dated as of the Closing Date and setting forth substantially the matters in the
opinions designated in Exhibit V and Exhibit VI annexed hereto and as to such
other matters as Agent acting on behalf of Lenders may reasonably request.
D. OPINIONS OF AGENT'S COUNSEL. Lenders shall have received originally
executed copies of one or more favorable written opinions of O'Melveny & Myers,
counsel to Agent, dated as of the Closing Date, substantially in the form of
Exhibit VII annexed hereto and as to such other matters as Agent acting on
behalf of Lenders may reasonably request.
E. AUDITOR'S LETTER. Agent shall have received an executed Auditor's
Letter.
F. FEES. Company shall have paid to Agent, for distribution (as
appropriate) to Agent and Lenders, the fees payable on the Closing Date referred
to in subsection 2.3. Agent shall have paid to each Lender such fees as Agent
shall have agreed to pay such Lender on the Closing Date.
G. CORPORATE STRUCTURE. The corporate, capital and ownership structure
of Company and its Subsidiaries shall be satisfactory to Agent and Requisite
Lenders in all respects. Company shall have delivered to Agent an Officers'
Certificate setting forth the calculation of the tangible asset value of the
Material Subsidiaries as set forth as of June 30, 1995, in subsection 4.1D.
H. RECEIVABLES FACILITIES. On or before the Closing Date, Company and
Bankers Trust Company shall have executed and delivered the Receivables Bridge
Commitment Letter and such Receivables Bridge Commitment Letter shall be in full
force and effect.
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I. AMENDMENT OF EXISTING REVOLVING CREDIT AGREEMENT. On or prior to the
Closing Date, the Company and the requisite lenders under the Existing Revolving
Credit Agreement shall have amended the Existing Revolving Credit Agreement to
permit the transactions contemplated by this Agreement, which amendment shall be
satisfactory in form and substance to Agent and Requisite Lenders.
J. AMENDMENT OF EXISTING L/C AGREEMENT. On or prior to the Closing Date,
Company and the letter of credit banks under the Existing L/C Agreement shall
have amended the Existing L/C Agreement, including without limitation to extend
the maturity thereof to December 31, 1998, to decrease the commitment level
thereunder to $155,000,000 and to permit the transactions contemplated by this
Agreement, which amendment shall be satisfactory in form and substance to Agent
and Requisite Lenders.
K. REFINANCING OF LTCB TERM LOAN. Concurrently with the funding of the
first drawing on the Closing Date, Company shall have repaid in full all amounts
outstanding under the LTCB Term Loan. Company shall have terminated any
commitments to lend thereunder and all security therefor will be released from
all liens and pledges created under or pursuant to the LTCB Term Loan.
L. CONSENTS AND APPROVALS; REPAYMENT OF EXISTING DEBT. The Company shall
have obtained all such consents, waivers, amendments, approvals and the like as
may be required from the Company's existing lenders to permit the borrowings
under this Agreement and all related transactions and shall otherwise be in
compliance with such agreements. On or prior to the Closing Date, Company shall
have terminated its Line of Credit Agreement with Bankers Trust Company dated
June 28, 1995, as amended, and shall have repaid in full all amounts
outstanding, if any, thereunder.
M. SECURITY INTEREST. Company shall have taken or caused to be taken such
actions in such a manner so that Collateral Agent, on behalf of Lenders, has a
valid and perfected, first priority security interest in the entire Collateral
(except to the extent any such security interest cannot be granted under
applicable laws). Such actions shall include, without limitation: (1) execution
by Agent, as an Additional Obligee (as defined in the Intercreditor Agreement)
and by Pledgors of an acknowledgment to the Intercreditor Agreement and the
delivery of such acknowledgment to Collateral Agent; (2) the delivery pursuant
to the applicable Pledge Agreement by Company of a pledge amendment pledging the
shares of BPS Financial Services, Inc., together
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with certificates (which certificates shall be registered in the name of
Collateral Agent or properly endorsed in blank for transfer or accompanied by
irrevocable undated stock powers duly endorsed in blank, all in form and
substance satisfactory to Collateral Agent) representing all of the capital
stock of BPS Financial Services, Inc. and (3) the delivery pursuant to the
applicable Pledge Agreement of a pledge amendment pledging the intercompany
promissory notes referred to in subsection 6.1(vii) (which promissory notes
shall be properly endorsed in blank or to Collateral Agent, in form and
substance satisfactory to Collateral Agent).
N. NO MATERIAL ADVERSE EFFECT. Since December 31, 1994, no Material
Adverse Effect shall have occurred.
O. MAINTENANCE OF CREDIT RATINGS. On the Closing Date, Company's secured
unsubordinated long term debt ratings as published by Standard & Poor's Ratings
Services, a division of the McGraw Hill Companies and Moody's Investors Service,
Inc. shall not be less than B- and B3, respectively.
P. NO DISRUPTION OF FINANCIAL AND CAPITAL MARKETS. Between September 21,
1995 and the Closing Date, there shall have been no material adverse change to
the syndication markets for credit facilities similar in nature to this
Agreement and there shall not have occurred and be continuing a material
disruption of or material adverse change in financial, banking or capital
markets that would have an adverse effect on such syndication market, in each
case as determined by Agent in its sole discretion.
Q. DUE DILIGENCE. Agent and Lenders shall have completed their due
diligence review of Company and its Subsidiaries and the results of such
investigations shall be satisfactory in all respects to Agent and Lenders. Agent
and Lenders shall also have received any analyses necessary to conduct their due
diligence.
R. SOLVENCY. Company shall have delivered to Agent and Lenders a
Financial Condition Certificate dated the Closing Date, substantially in the
form annexed hereto as Exhibit XIII, with appropriate attachments demonstrating
that, after giving effect to the consummation of the refinancing and the
borrowings effected by this Agreement and related transactions, Company will
have a positive net worth on a pro forma basis, will be able to pay its debts as
they mature and will not have unreasonably small capital to conduct its business
and will not be insolvent or rendered insolvent by the indebtedness incurred in
connection herewith.
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S. REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF AGREEMENTS. Company
shall have delivered to Agent an Officers' Certificate, dated the Closing Date
and addressed to Agent, in form and substance satisfactory to Agent, to the
effect that (i) the representations and warranties in Section 4 hereof are true,
correct and complete in all material respects on and as of the Closing Date to
the same extent as though made on and as of that date, (ii) since December 31,
1994 through the Closing Date there has been no change in the prospects of
Company or its Subsidiaries which has been materially adverse to Company or
Company and its Subsidiaries taken as a whole, and (iii) Company has performed
in all material respects all agreements and satisfied all conditions which this
Agreement provides shall be performed or satisfied by it on or before the
Closing Date except as otherwise disclosed to and agreed to in writing by Agent
and Requisite Lenders.
T. COMPLETION OF PROCEEDINGS. All corporate and other proceedings taken
or to be taken in connection with the transactions contemplated hereby and all
documents incidental thereto not previously found acceptable by Agent, acting on
behalf of Lenders, and its counsel shall be satisfactory in form and substance
to Agent and such counsel, and Agent and such counsel shall have received all
such counterpart originals or certified copies of such documents as Agent may
reasonably request.
U. CENTAUR LETTER. On or before the Closing Date, Company shall have
executed and delivered to Agent a letter describing all amounts to be paid or
contributed by Company to Centaur or to be directly or indirectly paid by
Company on behalf of Centaur as Centaur Settlement Amounts which letter shall
have been approved by Agent.
3.2 CONDITIONS TO ALL LOANS.
The obligations of Lenders to make Loans on each Funding Date are
subject to the following further conditions precedent:
A. Agent shall have received before that Funding Date, in accordance
with the provisions of subsection 2.1B, an originally executed Notice of
Borrowing, in each case signed by the chief executive officer, the chief
financial officer, the treasurer or any assistant treasurer of Company or by any
other executive officer of Company designated by any of the above-described
officers on behalf of Company in a writing delivered to Agent.
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B. As of that Funding Date:
(i) The representations and warranties contained herein and in the
other Loan Documents shall be true, correct and complete in all material
respects on and as of that Funding Date to the same extent as though made
on and as of that date, except to the extent such representations and
warranties specifically relate to an earlier date, in which case such
representations and warranties shall have been true, correct and complete
in all material respects on and as of such earlier date;
(ii) No event shall have occurred and be continuing or would result
from the consummation of the borrowing contemplated by such Notice of
Borrowing that would constitute an Event of Default or a Potential Event of
Default;
(iii) Company shall have performed in all material respects all
agreements and satisfied all conditions which this Agreement provides shall
be performed or satisfied by it on or before that Funding Date;
(iv) No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain any Lender from
making the Loan to be made by it on that Funding Date;
(v) The making of the Loans requested on such Funding Date shall not
violate any law including, without limitation, Regulation G, Regulation T,
Regulation U or Regulation X of the Board of Governors of the Federal
Reserve System; and
(vi) There shall not be pending or, to the knowledge of Company,
threatened, any action, suit, proceeding, governmental investigation or
arbitration against or affecting Company or any of its Subsidiaries or any
property of Company or any of its Subsidiaries that has not been disclosed
by Company in writing pursuant to subsection 4.6 or 5.1(x) prior to the
making of the last preceding Loans (or, in the case of the initial Loans,
prior to the execution of this Agreement), and there shall have occurred no
development not so disclosed in any such action, suit, proceeding,
governmental investigation or arbitration so disclosed, that, in either
event, in the opinion of Agent or of Requisite Lenders, would be expected
to have a Material Adverse Effect; and no injunction or other restraining
order shall have been issued and no hearing to cause an injunction or other
restraining order to be issued shall be pending or
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noticed with respect to any action, suit or proceeding seeking to enjoin or
otherwise prevent the consummation of, or to recover any damages or obtain
relief as a result of, the transactions contemplated by this Agreement or
the making of Loans hereunder.
SECTION 4. COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agreement and to
make the Loans hereunder, Company represents and warrants to each Lender,
on the date of this Agreement and on the Closing Date, that the following
statements are true, correct and complete:
4.1 ORGANIZATION, POWERS, QUALIFICATION, GOOD STANDING, BUSINESS AND
SUBSIDIARIES.
A. ORGANIZATION AND POWERS. Each of the Loan Parties is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Each of the Loan Parties has all requisite corporate power
and authority to own and operate its properties, to carry on its business as now
conducted and as proposed to be conducted, to enter into each Loan Document to
which it is a party and to carry out the transactions contemplated hereby and
thereby, and, in the case of Company, to issue the Notes to be issued by it.
B. GOOD STANDING. Each of the Loan Parties is in good standing in every
jurisdiction wherever necessary to carry out its present business and
operations, except in jurisdictions where the failure to be in good standing has
not had and will not have a Material Adverse Effect.
C. CONDUCT OF BUSINESS. Company and its Subsidiaries are engaged only in
the businesses permitted to be engaged in pursuant to subsection 6.12.
D. SUBSIDIARIES. All of the Subsidiaries of Company as of the Closing
Date are identified in Schedule 4.1 annexed hereto, as said Schedule 4.1 may be
supplemented from time to time pursuant to the provisions of subsection
6.1(xvii). The capital stock of each of the Subsidiaries of Company identified
58
in Schedule 4.1 annexed hereto (as so supplemented) is duly authorized, validly
issued, fully paid and nonassessable and none of such capital stock constitutes
Margin Stock. As of June 30, 1995, the Material Subsidiaries own not less than
83% of the value of all tangible assets of Company and its Subsidiaries taken as
a whole. Each of the Subsidiaries of Company identified in Schedule 4.1 annexed
hereto (as so supplemented) is a corporation duly organized, validly existing
and in good standing under the laws of its respective jurisdiction of
incorporation set forth therein, has all requisite corporate power and authority
to own and operate its properties and to carry on its business as now conducted
and as proposed to be conducted, and is qualified to do business and in good
standing in every jurisdiction where its assets are located and wherever
necessary to carry out its business and operations, in each case except where
failure to be so qualified or in good standing or a lack of such corporate power
and authority has not had and will not have a Material Adverse Effect. Schedule
4.1 annexed hereto (as so supplemented) correctly sets forth, as of the Closing
Date, the ownership interest of Company in each of its Subsidiaries identified
therein and identifies (i) all Material Subsidiaries, (ii) all Borg-Warner
Guarantor Subsidiaries and (iii) all Borg-Warner Pledged Subsidiaries.
4.2 AUTHORIZATION OF BORROWING, ETC.
A. AUTHORIZATION OF BORROWING. The execution, delivery and performance
of the Loan Documents and the issuance, delivery and payment of the Notes have
been duly authorized by all necessary corporate action by each Loan Party.
B. NO CONFLICT. The execution, delivery and performance by each Loan
Party of each Loan Document to which it is respectively a party, the
consummation of the transactions contemplated by the Loan Documents and the
issuance, delivery and performance of the Notes do not and will not (i) violate
any provision of any law or any governmental rule or regulation applicable to
any Loan Party, the Certificate or Articles of Incorporation or Bylaws of any
Loan Party, or any order, judgment or decree of any court or other agency of
government binding on any Loan Party, (ii) conflict with, result in a breach of
or constitute (with due notice or lapse of time or both) a default under any
Contractual Obligation of any Loan Party, except as to the Senior Notes, (iii)
result in or require the creation or imposition of any Lien upon any of the
properties or assets of any Loan Party (other than any Liens governed by the
terms of the Intercreditor Agreement), or (iv) require any approval of
stockholders or any approval or consent of any Person under any Contractual
Obligation of any Loan Party, except for such approvals or consents which will
be obtained on or before the Closing Date and disclosed in writing to Lenders
and (b) with respect to Loan Parties, such violations, conflicts, breaches,
Liens and defaults which would not have, and such approvals the absence of which
would not have, a Material Adverse Effect.
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C. GOVERNMENTAL CONSENTS. The execution, delivery and performance by
each Loan Party of the Loan Documents to which it is a party and the
consummation of the transactions contemplated by the Loan Documents do not and
will not require any registration with, consent or approval of, or notice to, or
other action to, with or by, any federal, state or other governmental authority
or regulatory body except for filings required by federal, state or foreign
securities laws, any filings required in connection with the perfection of
security interests granted pursuant to Loan Documents and other filings,
authorizations and consents and approvals either referred to in subsection 4.9
hereof or the absence of which would not have a Material Adverse Effect. As of
the Closing Date, all consents or approvals from or notice to or filings with
any federal, state, or other regulatory authorities required to be obtained on
or before such date in connection with the transactions contemplated hereby will
have been accomplished in all material respects in compliance with all
applicable material laws and regulations.
D. BINDING OBLIGATION. Each of the Loan Documents has been duly executed
and delivered by Company and is the legally valid and binding obligation of the
applicable Loan Parties, enforceable against the applicable Loan Parties in
accordance with their respective terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or limiting
creditors' rights generally or by equitable principles relating to
enforceability.
4.3 FINANCIAL CONDITION.
Company has heretofore delivered to Lenders, at Lenders' request, the
following financial statements and information: (i) the audited consolidated
financial statements of Company as at December 31, 1994 and the related audited
statements of income, shareholders' equity and cash flows of Company for the
Fiscal Year then ended and (ii) the unaudited consolidated financial statements
of Company as at March 31, 1995 and June 30, 1995. All such statements were
prepared in conformity with GAAP and fairly present the financial position (on a
consolidated basis) of the entities described in such financial statements as at
the respective dates thereof and the results of operations and cash flows (on a
consolidated basis) of the entities described therein for each of the periods
then ended, subject, in the case of any such unaudited financial statements, to
changes resulting from audit and normal year-end adjustments. Neither Company
nor any of its Consolidated Subsidiaries, taken as a whole, has (and will not
have following the funding of the initial Loans) any Contingent Obligation,
contingent liability or liability for taxes, long-term lease or unusual forward
or long-term commitment that is not reflected in
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the foregoing financial statements or the notes thereto and which in any such
case is material in relation to the business, operations, properties, assets,
condition (financial or otherwise) or prospects of Company and of its
Subsidiaries, taken as a whole.
4.4 NO MATERIAL ADVERSE CHANGE; NO RESTRICTED JUNIOR PAYMENTS.
Since December 31, 1994, no event or change has occurred that has
caused or evidences, either in any case or in the aggregate, a Material Adverse
Effect. Neither Company nor any of its Subsidiaries has directly or indirectly
declared, ordered, paid or made, or set apart any sum or property for, any
Restricted Junior Payment or agreed to do so except as permitted by subsection
6.5 or, prior to the Closing Date, except as permitted by the Existing Revolving
Credit Agreement.
4.5 TITLE TO PROPERTIES; LIENS.
Each Loan Party and each Subsidiary thereof has (i) good, sufficient
and legal title to (in the case of fee interests in real property), (ii) valid
leasehold interests in (in the case of leasehold interests in real or personal
property), or (iii) good title to (in the case of all other personal property),
subject to Permitted Encumbrances, all of their respective material properties
and assets reflected in the most recent consolidated balance sheet referred to
in subsection 4.3 or in the most recent financial statements delivered pursuant
to subsection 5.1 and to all their material properties and assets acquired since
the date of such consolidated balance sheet or financial statements, in each
case except for assets disposed of since the date of such consolidated balance
sheet or financial statements in the ordinary course of business or as otherwise
permitted under subsection 6.7. Except as permitted by this Agreement, all such
properties and assets are free and clear of Liens.
4.6 LITIGATION; ADVERSE FACTS.
Except as set forth in Schedule 4.6 annexed hereto, there are no
actions, suits, proceedings, arbitrations or governmental investigations
(whether or not purportedly on behalf of any Loan Party or any respective
Subsidiary thereof) at law or in equity or before or by any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, pending or, to the knowledge of Company,
threatened against or affecting any Loan Party or any of their respective
Subsidiaries or any property of any Loan Party or any respective Subsidiary
thereof that, individually or in the aggregate, could reasonably be expected to
61
result in a Material Adverse Effect. Neither Company nor any of its
Subsidiaries is (i) in violation of any applicable laws that, individually or in
the aggregate, could reasonably be expected to result in a Material Adverse
Effect or (ii) subject to or in default with respect to any final judgments,
writs, injunctions, decrees, rules or regulations of any court or any federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect.
No Loan Party has received any notice of termination of any material contract,
lease or other agreement or suffered any material damage, destruction or loss
(whether or not covered by insurance) or had any employee strike, work-stoppage,
slow-down or lock-out or any substantial, nonfrivolous threat directed to it of
any imminent strike, work-stoppage, slow-down or lock-out, any of which remain
pending, that could reasonably be expected to result in any Material Adverse
Effect.
4.7 PAYMENT OF TAXES.
Except to the extent permitted by subsection 5.3, all material tax
returns and reports of each Loan Party and each Subsidiary of each Loan Party
required to be filed by any of them have been timely filed, and all material
taxes, assessments, fees and other governmental charges upon such Persons and
upon their respective properties, assets, income, businesses and franchises
which are due and payable have been paid when due and payable. Company knows of
no proposed tax assessment against such Person that would be material to the
condition (financial or otherwise) of Company and its Subsidiaries, taken as a
whole, which is not being actively contested by such Person to the extent
affected thereby, in good faith and by appropriate proceedings; provided that
such reserves or other appropriate provisions, if any, as shall be required in
conformity with GAAP shall have been made or provided therefor.
4.8 PERFORMANCE OF AGREEMENTS; MATERIALLY ADVERSE AGREEMENTS.
A. None of the Loan Parties and none of the respective Subsidiaries
of the Loan Parties is in default in the performance, observance or fulfillment
of any of the obligations, covenants or conditions contained in any Contractual
Obligation of any such Person, and no condition exists that, with the giving of
notice or the lapse of time or both, would constitute such a default, except
where the consequences, direct or indirect, of such default or defaults, if any,
would not have a Material Adverse Effect.
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B. No Loan Party is a party to or is otherwise subject to any
material agreements or instruments that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect.
4.9 GOVERNMENTAL REGULATION.
Except for state laws applicable to certain motor carrier operations
of Company's Subsidiaries, no Loan Party is subject to regulation under the
Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act or the Investment Company Act of 1940 or under any other
federal or state statute or regulation which may limit its ability to incur
Indebtedness or which may otherwise render all or any portion of the Obligations
unenforceable. The laws of various states may restrict the ability of certain
Borg-Warner Subsidiaries that are motor carriers to incur Indebtedness, but
Company believes that its has previously obtained an exemption effective with
respect to the transactions contemplated hereby from the Interstate Commerce
Commission that preempts otherwise applicable state laws. The Interstate
Commerce Act does not restrict the ability of any Loan Party to incur or
guarantee any Indebtedness.
4.10 SECURITIES ACTIVITIES.
None of the Loan Parties and none of the respective Subsidiaries of
the Loan Parties is engaged principally, or as one of its important activities,
in the business of extending credit for the purpose of purchasing or carrying
any Margin Stock.
4.11 EMPLOYEE BENEFIT PLANS.
A. Each Loan Party and each of their ERISA Affiliates is in material
compliance with all applicable provisions and requirements of Title I, II and IV
of ERISA and the Internal Revenue Code and the regulations and published
interpretations thereunder with respect to each Employee Benefit Plan, and have
performed all their obligations under each Employee Benefit Plan in all material
respects.
B. No ERISA Event (determined without regard to any materiality
standard in that definition) has occurred or is reasonably expected to occur
which could reasonably be expected to result in liability to a Loan Party or any
of its ERISA Affiliates in excess of $2,500,000.
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C. Except to the extent required under Section 4980B of the Internal
Revenue Code or except as described on Schedule 4.11 annexed hereto, no Employee
Benefit Plan provides health or welfare benefits (through the purchase of
insurance or otherwise) for any retired or former employees of a Loan Party or
any of its Subsidiaries or any of their ERISA Affiliates.
D. As of the most recent valuation date for all Pension Plans, the
excess of the aggregated accumulated benefit obligations, as defined in
Statement of Financial Accounting Standards No. 87 (the "ABO"), over the
aggregate total fair market value for all such Pension Plans (excluding for
purposes of such computation any Pension Plans with respect to which the fair
market value of the assets exceeds the ABO), does not exceed $30,000,000.
4.12 PATENTS, TRADEMARKS, ETC.
Each Loan Party owns, or is licensed to use, all patents, trademarks,
trade names, copyrights, technology, know-how and processes used in or necessary
for the conduct of its business as currently conducted that are material to the
condition (financial or other), business, operations or prospects of Company and
its Subsidiaries, taken as a whole ("Intellectual Property"). No claim has been
asserted by any Person with respect to the use of any such Intellectual
Property, or challenging or questioning the validity or effectiveness of any
such Intellectual Property and Company does not know of any valid basis for any
such claim. The use of such Intellectual Property by Loan Parties does not
infringe on the rights of any Person, subject to such claims and infringements
as do not, in the aggregate, give rise to any liability on the part of Loan
Parties that is material to Company and its Subsidiaries, taken as a whole. The
rights of Loan Parties to sell, franchise or license under such trade names then
being used may be transferred in connection with any sale of assets or stock of
the related business by Loan Parties.
4.13 CERTAIN FEES.
No broker's or finder's fee or commission will be payable with respect
to this Agreement or any of the transactions contemplated hereby, and Company
hereby indemnifies Lenders against, and agrees that it will hold Lenders
harmless from, any claim, demand or liability for any such broker's or finder's
fees alleged to have been incurred in connection herewith or therewith and any
expenses (including reasonable fees, expenses and disbursements of counsel)
arising in connection with any such claim, demand or liability.
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4.14 ENVIRONMENTAL PROTECTION.
Except as set forth in Schedule 4.14 annexed hereto:
(i) the operations of Loan Parties (including, without limitation,
all operations and conditions at or in the Facilities) comply in all
material respects with all Environmental Laws;
(ii) Loan Parties have obtained all material Governmental
Authorizations under Environmental Laws necessary to their respective
operations, and all such Governmental Authorizations are in good standing,
and Loan Parties are in material compliance with all terms and conditions
of such Governmental Authorizations;
(iii) no Loan Party has received (a) any written notice or claim to
the effect that it is or may be liable in any material respect to any
Person as a result of or in connection with any Hazardous Materials, or (b)
any letter or request for information under Section 104 of the
Comprehensive Environmental Response, Compensation, and Liability Act (42
U.S.C. (S) 9604) or comparable state laws, and, to the best of Company's
knowledge, none of the operations of any Loan Party is the subject of any
federal or state investigation relating to or in connection with any
Hazardous Materials at any Facility or at any other location which could
reasonably be expected to have a Material Adverse Effect;
(iv) none of the operations of any Loan Party is subject to any
pending judicial or administrative proceeding alleging a violation of or
liability under any Environmental Laws that could reasonably be expected to
have a Material Adverse Effect;
(v) no Loan Party is liable under any outstanding written order or
agreement with any governmental authority or private party relating to (a)
any Environmental Laws or (b) any Environmental Claims which could
reasonably be expected to have a Material Adverse Effect;
(vi) no Loan Party has any Contingent Obligation in connection with
any Release of any Hazardous Materials by any Loan Party which could
reasonably be expected to have a Material Adverse Effect;
(vii) no Loan Party or any predecessor of any Loan Party has filed
any notice under any Environmental Law indicating past or present treatment
or Release of Hazardous
65
Materials at any Facility which could reasonably be expected to have a
Material Adverse Effect;
(viii) no Hazardous Materials exist on, under or about any Facility
in a manner that has a reasonably possibility of giving rise to an
Environmental Claim having a Material Adverse Effect, and no Loan Party has
filed any notice or report of a Release of any Hazardous Materials that has
a reasonable possibility of giving rise to an Environmental Claim having a
Material Adverse Effect;
(ix) no Loan Party or any predecessor of any Loan Party has disposed
of any Hazardous Materials in a manner that has a reasonable possibility of
giving rise to an Environmental Claim having a Material Adverse Effect;
(x) no underground storage tanks or surface impoundments on or at any
Facility could reasonably be expected to give rise to an Environmental
Claim having a Material Adverse Effect; and
(xi) no Lien in favor of any Person relating to or in connection with
any Environmental Claim has been filed or has been attached to any
Facility.
The matters which would be required to be disclosed pursuant to
paragraphs (i) - (xi) above on Schedule 4.14 but which are not so disclosed by
reason of the materiality standards set forth in such paragraphs, taken as a
whole, could not reasonably be expected to have a Material Adverse Effect.
4.15 SOLVENCY.
Each Loan Party is and, upon the incurrence of any Obligations by such
Loan Party on any date on which this representation is made, will be, Solvent.
4.16 DISCLOSURE.
No representation or warranty of any Loan Party contained in any Loan
Document or in any other document, certificate or written statement furnished to
Lenders by or on behalf of any such Person for use in connection with the
transactions contemplated by this Agreement contains any untrue statement of a
material fact or omits to state a material fact (known to any such Person, in
the case of any document not furnished by it) necessary in order to make the
statements contained herein or therein not misleading in light of the
circumstances in which the same were made. Any projections and pro forma
financial information contained in such materials are
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based upon good faith estimates and assumptions believed by such Persons to be
reasonable at the time made, it being recognized by Lenders that such
projections as to future events are not to be viewed as facts and that actual
results during the period or periods covered by any such projections may differ
from the projected results. There are no facts known to any such Person (other
than matters of a general economic nature) that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect
and that have not been disclosed herein or in such other documents, certificates
and statements furnished to Lenders for use in connection with the transactions
contemplated hereby.
SECTION 5. COMPANY'S AFFIRMATIVE COVENANTS
Company covenants and agrees that, so long as the Commitments
hereunder shall remain in effect and until payment in full of all of the Loans
and other Obligations, unless Requisite Lenders shall otherwise give prior
written consent, Company shall perform, and shall cause each of its Subsidiaries
to perform, all covenants in this Section 5.
5.1 FINANCIAL STATEMENTS AND OTHER REPORTS.
Company will maintain, and cause each of its Subsidiaries to maintain,
a system of accounting established and administered in accordance with sound
business practices to permit preparation of financial statements in conformity
with GAAP. Company will deliver to Agent and Lenders:
(i) Monthly Financials: as soon as available and in any event within
45 days (in the case of the last month of each fiscal quarter) or 30 days
(in the case of all other months) after the end of each month ending after
the Closing Date in each of the Company's fiscal years, the monthly
financial reporting package distributed internally to officers of Company
(the "G-1 REPORT"), which shall include (a) the consolidated balance sheets
of Company and its Subsidiaries as at the end of such month and the related
consolidated statements of income of Company and its Subsidiaries for such
month and for the period from the beginning of the then current Fiscal Year
to the end of such month and the related consolidated statements of cash
flow in the period from the beginning of the then current Fiscal Year to
the end of such month, (b) a schedule of the outstanding Indebtedness for
borrowed money of Company describing each such debt issue or loan
outstanding, and the principal amount in respect of each such debt issue or
Loan and (c) a brief summary describing the operations of Company
67
and its Subsidiaries and a schedule containing summaries of revenues and
operating income, in each case for such month and for the period from the
beginning of the then current Fiscal Year to the end of such month by
Division, setting forth in each case in comparative form the corresponding
figures for the corresponding periods of the previous Fiscal Year and the
corresponding figures from the consolidated plan and budget for the current
Fiscal Year delivered pursuant to subsection 5.1(xiii), all in reasonable
detail and certified by the chief financial officer, chief accounting
officer or treasurer of Company that they fairly present the financial
condition of Company and its Subsidiaries as at the dates indicated and the
results of their operations and their cash flows for the periods indicated,
subject to changes resulting from audit and normal year-end adjustments;
(ii) Quarterly Financials: as soon as available and in any event
within 45 days after the end of each fiscal quarter of each Fiscal Year,
(a) a G-1 Report for the fiscal period then ended and (b) the quarterly
report of Company filed with the Securities and Exchange Commission on Form
10-Q or the Financial Statements of Company which would be required to be
filed on Form 10-Q if such Form 10-Q is not filed;
(iii) Year-End Financials: as soon as available and in any event
within 90 days after the end of each Fiscal Year, (a) the Annual Report on
Form 10-K of Company filed with the Securities and Exchange Commission or
the audited financial statements of Company which would be required to be
filed on Form 10-K if such Form 10-K is not filed; (b) in the case of such
consolidated financial statements, (1) a report thereon of independent
certified public accountants of recognized national standing selected by
Company and satisfactory to Requisite Lenders, which report shall be
unqualified as to going concern and scope of audit, and shall state that
such consolidated financial statements fairly present the consolidated
financial position of Company and its Subsidiaries as at the dates
indicated and the results of their operations and their cash flows for the
periods indicated in conformity with GAAP applied on a basis consistent
with prior years (except as otherwise disclosed in such financial
statements) and that the examination by such accountants in connection with
such consolidated financial statements has been made in accordance with
generally accepted auditing standards and (2) a letter from such
independent certified public accountants, substantially in the form of
Exhibit IX annexed hereto, with such changes as are approved by Agent,
acknowledging that Lenders have
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received such consolidated financial statements and such report and have
reviewed such financial statements and reports; and (c) certified by the
chief financial officer, chief accounting officer or treasurer of Company
that they fairly present the financial condition of Company and its
Subsidiaries as at the dates indicated and the results of their operations
and their cash flows for the periods indicated;
(iv) Officers' and Compliance Certificates: together with each
delivery of financial statements of Company and its Subsidiaries pursuant
to subdivisions (ii) and (iii) above, (a) an Officers' Certificate of
Company stating that the signers have reviewed the terms of this Agreement
and have made, or caused to be made under their supervision, a review in
reasonable detail of the transactions and condition of Company and its
Subsidiaries during the accounting period covered by such financial
statements and that such review has not disclosed the existence during or
at the end of such accounting period, and that the signers do not have
knowledge of the existence as at the date of such Officers' Certificate, of
any condition or event that constitutes an Event of Default or Potential
Event of Default, or, if any such condition or event existed or exists,
specifying the nature and period of existence thereof and what action
Company has taken, is taking and proposes to take with respect thereto, (b)
a Compliance Certificate demonstrating in reasonable detail compliance
during and at the end of the applicable accounting periods with the
restrictions contained in Section 6 and (c) an Officer's Certificate
listing Asset Sales, the aggregate amount of such Net Cash Proceeds and
demonstrating the derivation of the Net Cash Proceeds of the correlative
Asset Sale from the gross sales price thereof;
(v) Reconciliation Statements: if, as a result of any change in
accounting principles from those used in the preparation of the audited
financial statements referred to in subsection 4.3, the consolidated
financial statements of Company and its Subsidiaries delivered pursuant to
subdivisions (ii), (iii) or (xiii) of this subsection 5.1 will differ in
any material respect from the consolidated financial statements that would
have been delivered pursuant to such subdivisions had no such change in
accounting principles been made, then, subject to subsection 1.2, (a)
together with the first delivery of financial statements pursuant to
subdivision (ii), (iii) or (xiii) of this subsection 5.1 following such
change, consolidated financial statements of Company and its Subsidiaries
for the current Fiscal Year to the effective date of such change, prepared
69
on a pro forma basis as if such change had been in effect during such
period, and (b) together with each delivery of financial statements
pursuant to subdivision (ii), (iii) or (xiii) of this subsection 5.1
following such change, such financial statements prepared on a basis
consistent with the accounting principles used in the preparation of the
financial statements delivered immediately prior to such change and without
giving effect to such change;
(vi) Accountants' Certification: together with each delivery of
consolidated financial statements of Company and its Subsidiaries pursuant
to subdivision (iii) above, a written statement by Deloitte & Touche LLP or
other certified public accountants giving the report thereon (a) stating
that their audit examination has included a review of the terms of this
Agreement and the other Loan Documents as they relate to accounting
matters, (b) stating whether, in connection with their audit examination,
any condition or event that constitutes an Event of Default or Potential
Event of Default has come to their attention and, if such a condition or
event has come to their attention, specifying the nature and period of
existence thereof; provided that such accountants shall not be liable by
reason of any failure to obtain knowledge of any such Event of Default or
Potential Event of Default with respect to accounting matters that would
not be disclosed in the course of their audit examination, and (c) stating
that based on their audit examination nothing has come to their attention
that causes them to believe either or both that the information contained
in the certificates delivered therewith pursuant to subdivision (iv) above
is not correct or that the matters set forth in the Compliance Certificates
delivered therewith pursuant to clause (b) of subdivision (iv) above for
the applicable Fiscal Year are not stated in accordance with the terms of
this Agreement;
(vii) Accountants' Reports: promptly upon receipt thereof, a summary
of significant comments submitted to Company by independent certified
public accountants in connection with each annual, interim or special audit
of the financial statements of Company and its Subsidiaries made by such
accountants, including, without limitation, any comment letter submitted by
such accountants to management in connection with their annual audit;
(viii) SEC Filings and Press Releases: promptly upon their becoming
available, copies of (a) all financial statements, reports, notices and
proxy statements sent or made available generally by Company to its
security holders or by any Subsidiary of Company to its security holders
70
other than Company or another Subsidiary of Company, (b) all regular and
periodic reports and all registration statements (other than on Form S-8 or
a similar form) and prospectuses, if any, filed by Company or any of its
Subsidiaries with any securities exchange or with the Securities and
Exchange Commission or any governmental or private regulatory authority,
and (c) all press releases and other statements made available generally by
Company or any of its Subsidiaries to the public concerning material
developments in the business of Company or any of its Subsidiaries;
(ix) Events of Default, etc.: promptly upon any officer of Company
obtaining knowledge (a) of any condition or event that constitutes an Event
of Default or Potential Event of Default, or becoming aware that any Lender
or Agent has given any notice or taken any other action with respect to a
claimed Event of Default or Potential Event of Default, (b) that any Person
has given any notice to Company or any of its Subsidiaries or taken any
other action with respect to a claimed default or event or condition of the
type referred to in subsections 7.2 or 7.14, (c) of any condition or event
that would be required to be disclosed in a current report filed by Company
with the Securities and Exchange Commission on Form 8-K (Items 1, 2, 4 and
5 of such Form as in effect on the date hereof), or (d) of material adverse
change in the business, operations, properties, assets, prospects or
condition (financial or otherwise) of Company and its Subsidiaries, taken
as a whole, an Officers' Certificate specifying the nature and period of
existence of such condition, event or change, or specifying the notice
given or action taken by any such Person and the nature of such claimed
Event of Default, Potential Event of Default, default, event or condition,
and what action Company has taken, is taking and proposes to take with
respect thereto;
(x) Litigation or Other Proceedings: promptly upon any officer of
Company obtaining knowledge of (X) the institution of, or non-frivolous
threat of, any action, suit, proceeding (whether administrative, judicial
or otherwise), governmental investigation or arbitration against or
affecting Company or any of its Subsidiaries or any property of Company or
any of its Subsidiaries (collectively, "PROCEEDINGS") not previously
disclosed in writing by Company to Lenders or (Y) any material development
in any Proceeding that, in any case:
(1) if there exists a reasonable likelihood that such Proceeding
would be adversely determined, might have a Material Adverse Effect;
or
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(2) seeks to enjoin or otherwise prevent the consummation of, or
to recover any damages or obtain relief as a result of, the
transactions contemplated hereby;
written notice thereof together with such other information as may be
reasonably available to Company to enable Lenders and their counsel to
evaluate such matters;
(xi) ERISA Events: promptly upon becoming aware of the occurrence of
or forthcoming occurrence of any ERISA Event, a written notice specifying
the nature thereof, what action the Loan Party or any of its ERISA
Affiliates has taken, is taking or proposes to take with respect thereto
and, when known, any action taken or threatened by the Internal Revenue
Service, the Department of Labor or the PBGC with respect thereto;
(xii) ERISA Notices: with reasonable promptness, copies of (a) upon
request of Requisite Lenders, each Schedule B (Actuarial Information) to
the annual report (Form 5500 Series) filed by a Loan Party or any of its
ERISA Affiliates with the Internal Revenue Service with respect to each
Pension Plan (in which any employees of Company or any of its Subsidiaries
have ever participated as employees of Company or one of its Subsidiaries)
for which a Schedule B is required to be filed; (b) all notices received by
Company or any of its ERISA Affiliates from a Multiemployer Plan sponsor
concerning an ERISA Event; and (c) such other documents or governmental
reports or filings relating to any Employee Benefit Plan as Agent or any
Lender shall reasonably request;
(xiii) Annual Budgets: as soon as practicable and in any event no
later than 30 days after the Board of Directors of Company has given its
approval, the annual budget for each succeeding Fiscal Year of Company and
its Subsidiaries and setting forth forecasted sales, operating profit, cash
flows, capital expenditures and depreciation on a Division by Division
basis;
(xiv) Insurance: as soon as practicable and in any event by the last
day of each Fiscal Year, a report in form and substance reasonably
satisfactory to Agent and Requisite Lenders outlining all material
insurance coverage maintained as of the date of such report by Company and
its Subsidiaries and all material insurance coverage planned to be
maintained by Company and its Subsidiaries in the immediately succeeding
Fiscal Year;
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(xv) Environmental Audits and Reports: as soon as practicable
following receipt thereof, copies of all environmental audits and reports,
whether prepared by personnel of Company or any of its Subsidiaries or by
independent consultants, which relate to an Environmental Claim which could
result in a Material Adverse Effect;
(xvi) Board of Directors: with reasonable promptness, written notice
of any change in the Board of Directors of Company;
(xvii) Subsidiaries: together with each delivery of financial
statements of Company and its Subsidiaries pursuant to subsection (iii)
above, a written notice setting forth with respect to each Person that
became a Subsidiary of Company (a) the date on which each Person that
became a Subsidiary of Company and (b) all of the data required to be set
forth in Schedule 4.1 annexed hereto with respect to all Subsidiaries of
Company (it being understood that such written notice shall be deemed to
supplement Schedule 4.1 annexed hereto for all purposes of this Agreement);
and
(xviii) Other Information: with reasonable promptness, such other
information and data with respect to Company or any of its Subsidiaries as
from time to time may be reasonably requested by any Lender.
5.2 CORPORATE EXISTENCE, ETC.
Except as permitted under subsection 6.7, Company will, and will cause
each of its Subsidiaries to, at all times preserve and keep in full force and
effect its corporate existence and all rights and franchises material to its
business; provided, however, that the corporate existence of any such Subsidiary
may be terminated if such termination is not materially disadvantageous to any
Lender.
5.3 PAYMENT OF TAXES AND CLAIMS; TAX CONSOLIDATION.
A. Company will, and will cause each of its Subsidiaries to, pay
all taxes, assessments and other governmental charges imposed upon it or any of
its properties or assets or in respect of any of its income, businesses,
franchises or property before any material penalty accrues thereon, and all
claims (including, without limitation, claims for labor, services, materials and
supplies) for sums that have become due and payable and that by law have or may
become a material Lien upon any of its properties or assets, prior to the time
when any material penalty or fine shall be incurred with respect thereto;
provided that no such charge or claim need be paid if being
73
contested in good faith by appropriate proceedings promptly instituted and
diligently conducted and if such reserve or other appropriate provision, if any,
as shall be required in conformity with GAAP shall have been made therefor.
B. Company will not, nor will it permit any of its Subsidiaries to,
file or consent to the filing of any consolidated income tax return with any
Person (other than Company or any of its Subsidiaries).
5.4 MAINTENANCE OF PROPERTIES; INSURANCE.
Company will, and will cause each of its Subsidiaries to, maintain or
cause to be maintained in good repair, working order and condition, ordinary
wear and tear excepted, all material properties used or useful in the business
of Company and its Subsidiaries and from time to time will make or cause to be
made all appropriate repairs, renewals and replacements thereof. Company will
maintain or cause to be maintained, with financially sound and reputable
insurers, insurance with respect to its properties and business and the
properties and businesses of its Subsidiaries against loss or damage of the
kinds customarily insured against by corporations of established reputation
engaged in similar businesses and similarly situated, of such types and in such
amounts as are customarily carried under similar circumstances by such other
corporations ("INDUSTRY STANDARDS") and may self insure to the extent, but only
to the extent, consistent with Industry Standards.
5.5 INSPECTION; LENDER MEETING; CONFIDENTIALITY.
A. Company shall, and shall cause each of its Subsidiaries to, permit
any authorized representatives designated by any Lender to visit and inspect any
of the properties of Company or any of its Subsidiaries, including its and their
financial and accounting records, and to make copies and take extracts
therefrom, and to discuss its and their affairs, finances and accounts with its
and their officers and independent public accountants, all upon reasonable
notice and at such reasonable times during normal business hours and as often as
may be reasonably requested. Without in any way limiting the foregoing, Company
will, upon the request of Agent, participate in a meeting of Agent and Lenders
once during each Fiscal Year to be held at Company's corporate offices (or such
other location as may be agreed to by Company and Agent) at such time as may be
agreed to by Company and Agent.
B. Agent and each Lender acknowledge that Company is a public company
subject to the Securities Exchange Act of 1934,
74
as amended from time to time, and that in the course of complying with this
Agreement, Agent and Lenders may obtain material non-public information, and
Agent and each Lender hereby agrees to keep any non-public information delivered
or made available to Agent or such Lender pursuant to the Loan Documents, which
Company or its authorized representative has identified as confidential
information, confidential from any Person other than Persons, including
attorneys, consultants or other professional advisors, employed by or retained
by Agent, or such Lender who are or are expected to become engaged in
evaluating, approving, structuring or administering the Loans or Affiliates of
Agent or such Lender which have agreed to keep such information confidential
pursuant to this subsection 5.5B; provided, that nothing herein shall prevent
any Lender from disclosing such information to any bona fide assignee,
transferee or participant in connection with the contemplated assignment or
transfer of any Loans or participation therein (whether or not such assignment,
transfer or participation actually occurs), or as required or requested by a
governmental agency or representative thereof, or pursuant to legal process or
otherwise required by law, or as required in connection with the exercise of any
remedy under the Loan Documents; provided, however, that this subsection shall
no longer apply to information which has become public other than through a
breach by Agent or any Lender of this subsection or information that has been
received by a Lender without restrictions as to disclosure or use from a Person
who, to such Lender's knowledge or reasonable belief, was not prohibited from
disclosing such information by any duty of confidentiality.
5.6 COMPLIANCE WITH LAWS, ETC.
Company shall, and shall cause each of its Subsidiaries to, exercise
all due diligence in order to comply with the requirements of all applicable
laws, rules, regulations and orders of any governmental authority, noncompliance
with which would have a Material Adverse Effect.
5.7 ENVIRONMENTAL DISCLOSURE.
A. Company shall, and shall cause each of its Subsidiaries to,
comply and shall use its reasonable efforts to cause (i) their respective
employees, agents, contractors and subcontractors, (ii) all tenants under any
leases or occupancy agreements affecting any portion of the Facilities and (iii)
all other Persons on or occupying such property, to comply with all
Environmental Laws.
B. Company shall promptly advise Agent in writing and in reasonable
detail of (i) any Release of any Hazardous Materials required to be reported to
any federal, state or local
75
governmental or regulatory agency under any applicable Environmental Laws that
could reasonably be expected to have a Material Adverse Effect, (ii) any
remedial action taken by Company or, to the extent Company or any of its
Subsidiaries has any such knowledge, any other Person in response to (x) any
Hazardous Materials on, under or about any Facility, the existence of which
could reasonably be expected to result in a Material Adverse Effect, or (y) any
Environmental Claim that could reasonably be expected to result in a Material
Adverse Effect, and (iii) any request for information from any governmental
agency that suggests such agency is investigating whether Company or any of its
Subsidiaries may be potentially responsible for a Release of Hazardous Materials
which could reasonably be expected to have a Material Adverse Effect.
C. Company shall, at its own expense, provide copies to Agent of
such documents or information as to which Company or any of its Subsidiaries has
access as Agent or Requisite Lenders may reasonably request in relation to any
matters disclosed pursuant to this subsection 5.7.
5.8 COMPANY'S REMEDIAL ACTION REGARDING HAZARDOUS MATERIALS.
Company shall promptly take, and shall cause each of its Subsidiaries
promptly to take, any and all necessary remedial action in connection with the
presence, storage, use, disposal, transportation or Release of any Hazardous
Materials on, under or about any Facility in order to comply in all material
respects with all applicable Environmental Laws and Governmental Authorizations.
In the event Company or any of its Subsidiaries undertakes any remedial action
with respect to any Hazardous Materials on, under or about any Facility, Company
or such Subsidiary shall conduct and complete such remedial action in compliance
in all material respects with all applicable Environmental Laws, and in
accordance with the policies, orders and directives of all federal, state and
local governmental authorities except when, and only to the extent that,
Company's or such Subsidiary's liability for such presence, storage, use,
disposal, transportation or discharge of any Hazardous Materials is being
contested in good faith by Company or such Subsidiary and such reserve or other
appropriate provision, if any, as shall be required in conformity with GAAP
shall have been made therefor.
5.9 INTEREST RATE PROTECTION.
Within 120 days of the Closing Date, Company shall obtain, and shall
thereafter cause to be maintained for a period of not less than two years, one
or more Interest Rate Agreements, in an aggregate notional principal amount
equal to at least 50%
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of the sum of the aggregate committed amount under the Company's Receivables
Facilities plus (without duplication) Company's total Funded Debt at an
effective rate not in excess of 12% per annum, each such Interest Rate Agreement
to be in form and substance satisfactory to Agent; provided that to the extent
that any Receivables Facility permitted pursuant to subsections 6.1(vii) or
(viii) bears interest at a fixed rate not exceeding 12% per annum, such
Receivables Facility shall be deemed to be an Interest Rate Agreement for
purposes of this subsection 5.9.
5.10 BW-OTHER CORPORATION GROUP.
A. From and after the Closing Date, Company and its Subsidiaries
may not make direct or indirect Investments in or become or be liable with
respect to any Contingent Obligation with respect to BW-Other Corporation Group
except for existing investments listed on Schedule 5.10; provided, however, that
prior to the Closing Date, Company may pay such amounts as have been disclosed
in writing to Agent and thereafter Company may pay the Centaur Settlement
Amount; and, provided, further that Company may pay routine costs and expenses
related to BW-Other Corporation Group in the ordinary course of business
consistent with past practices. Company will not and will not permit any of its
Subsidiaries to directly or indirectly enter into or permit to exist any
transaction between Company and its Subsidiaries and BW-Other Corporation Group
on terms that are less favorable to Company and its Subsidiaries than those that
might be obtained from third parties.
B. Company will not, and will not permit any of its Consolidated
Subsidiaries to, merge or consolidate with or otherwise acquire, in one
transaction or a series of transactions, any material portion of BW-Other
Corporation Group.
5.11 FURTHER ASSURANCES AS TO FUTURE MATERIAL SUBSIDIARIES.
Company will notify Agent promptly in the event that any Subsidiary
becomes a Material Subsidiary and will pledge the shares of such Material
Subsidiary to Collateral Agent for the benefit of Lenders pursuant to the
Company Pledge Agreement and from and after the Closing Date will cause each
such Subsidiary to execute counterparts of the Borg-Warner Subsidiary Guaranty
and the Borg-Warner Subsidiary Pledge Agreement (or appropriate amendments
thereof), in each case to the same extent and subject to the same limitations as
though such Subsidiary were a Borg-Warner Guarantor Subsidiary or a Borg-Warner
Pledged Subsidiary on the date hereof, and to take all such further action as
may be required to perfect the security interests granted thereunder as may be
required by Agent and Requisite Lenders.
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SECTION 6. COMPANY'S NEGATIVE COVENANTS
Company covenants and agrees that, so long as the Commitments
hereunder shall remain in effect and until payment in full of all of the Loans
and other Obligations, unless Requisite Lenders shall otherwise give prior
written consent, Company shall perform, and shall cause each of its Subsidiaries
to perform, all covenants in this Section 6.
6.1 INDEBTEDNESS.
Company and its Consolidated Subsidiaries shall not directly or
indirectly, create, incur, assume or guaranty, or otherwise become or remain
directly or indirectly liable with respect to, any Indebtedness, except:
(i) Company and its Consolidated Subsidiaries may become and remain
liable with respect to the Obligations;
(ii) (a) Company and its Material Subsidiaries may become and remain
liable with respect to Indebtedness to any of Company's Consolidated
Subsidiaries; (b) any Material Subsidiary may become and remain liable with
respect to Indebtedness to Company or any other Material Subsidiary; (c)
any Consolidated Subsidiary which is not a Material Subsidiary may become
and remain liable with respect to Indebtedness to Company or a Material
Subsidiary for working capital advances in the ordinary course of business
and in amounts consistent with past practices; provided that (1) all such
intercompany Indebtedness described in clause (b) above shall be evidenced
by promissory notes which promissory notes shall be pledged to Agent for
the benefit of Lenders, (2) all such intercompany Indebtedness owed by
Company to any of its Subsidiaries shall be subordinated in right of
payment to the payment in full of the Obligations, and (3) any payment by
any Material Subsidiary of Company under any guaranty of the Obligations
shall result in a pro tanto reduction of the amount of any intercompany
Indebtedness owed by such Material Subsidiary to Company or to any of its
Material Subsidiaries for whose benefit such payment is made;
(iii) Company and its Consolidated Subsidiaries may remain liable
with respect to each of the items of Existing Indebtedness described in
Schedule 6.1 annexed hereto and any Indebtedness incurred to refinance such
Existing Indebtedness; provided that after giving effect to such
refinancing Indebtedness and the repayment of the corresponding Existing
Indebtedness with the proceeds thereof, (a) the aggregate principal amount
of the
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refinancing Indebtedness and the corresponding Existing Indebtedness so
refinanced shall not be greater than the outstanding principal amount of
such Existing Indebtedness immediately prior to such refinancing, (b) the
weighted average life to maturity of such refinancing Indebtedness shall be
no shorter than the Existing Indebtedness being refinanced and (c) such
refinancing Indebtedness shall not be secured by any additional property
than that which secures the Existing Indebtedness being refinanced;
(iv) Company and its Consolidated Subsidiaries may become and remain
liable with respect to Indebtedness in respect of Capital Leases; provided
that the aggregate outstanding amount of such Capital Leases does not
exceed $30,000,000 at any time;
(v) Company and its Consolidated Subsidiaries may become and remain
liable with respect to Contingent Obligations permitted by subsection 6.4
and, upon any matured obligations actually arising pursuant thereto, the
Indebtedness corresponding to the Contingent Obligations so extinguished;
(vi) Company may remain liable with respect to $150,000,000 aggregate
principal amount of the 9-1/8% Subordinated Notes;
(vii) BPS Financial Services, Inc. may become and remain liable with
respect to the Existing Receivables Facility, the Receivables Bridge
Facility and the New Receivables Facility and with respect to intercompany
promissory notes in favor of Company and its other Consolidated
Subsidiaries, evidencing BPS Financial Services, Inc.'s obligations with
respect to the purchase price of receivables purchased by BPS Financial
Services, Inc. under the Existing Receivables Facility, the Receivables
Bridge Facility or the New Receivables Facility provided that all
intercompany promissory notes issued to Company or Material Subsidiaries
shall be pledged by Company or such Material Subsidiaries to Collateral
Agent for the benefit of Lenders;
(viii) Wells Fargo Alarm Services, Inc., BW-Canada Alarm (Wells
Fargo) Corporation, and their respective wholly owned subsidiaries may
become and remain liable with respect to the Alarm Services Contract
Securitization Facility; the financing subsidiary established for the
purpose of the Alarm Services Contract Securitization Facility may become
and remain liable with respect to intercompany promissory notes in favor of
Wells Fargo Alarm Services, Inc.,
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BW-Canada Alarm (Wells Fargo) Corporation and their respective wholly-owned
subsidiaries and Company evidencing such subsidiary's obligations with
respect to the purchase price of receivables, contracts and/or leases under
the Alarm Services Contract Securitization Facility; provided that all
intercompany promissory notes issued to Company or Material Subsidiaries
shall be pledged by Company or such Material Subsidiaries to Collateral
Agent for the benefit of Lenders;
(ix) In addition to the Indebtedness permitted by clauses (i)-(viii),
Company's Consolidated Subsidiaries which constitute Foreign Entities may
incur and remain liable with respect to Indebtedness not exceeding at any
one time $5,000,000 in aggregate outstanding principal amount; (x) Company
may become and remain liable with respect to Indebtedness in an aggregate
principal amount not in excess of $178,100,000 under the Existing Revolving
Credit Agreement; and
(xi) In addition to Indebtedness permitted by clauses (i)-(x),
Company and its Consolidated Subsidiaries may become and remain liable with
respect to Indebtedness not exceeding $20,000,000 in the aggregate
outstanding at any time.
6.2 LIENS AND RELATED MATTERS.
A. PROHIBITION ON LIENS. Company shall not, and shall not permit any
of its Subsidiaries to, directly or indirectly, create, incur, assume or permit
to exist any Lien on or with respect to any property or asset of any kind
(including any document or instrument in respect of goods or accounts
receivable) of Company or any of its Consolidated Subsidiaries, whether now
owned or hereafter acquired, or any income or profits therefrom, or file or
permit the filing of, or permit to remain in effect, any financing statement or
other similar notice of any Lien with respect to any such property, asset,
income or profits under the Uniform Commercial Code of any State or under any
similar recording or notice statute, except:
(i) Permitted Encumbrances;
(ii) Liens granted pursuant to the Collateral Documents in favor of
Collateral Agent for the benefit of the Lenders, the lenders under the
Existing Revolving Credit Agreement, the banks under the Existing L/C
Agreement, the holders of the Senior Notes, the beneficiaries of the
guaranties permitted pursuant to subsection 6.4(iii) and such other
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parties as may be approved from time to time by Requisite Lenders and as
shall sign an acknowledgment to the Intercreditor Agreement;
(iii) Liens described in Schedule 6.2 annexed hereto securing
Indebtedness permitted pursuant to subsection 6.1(iii) or (v);
(iv) Liens encumbering deposits made to secure obligations arising
from statutory, regulatory, contractual or warranty requirements of Company
or its Subsidiaries;
(v) Liens on property subject to such Capital Leases securing the
Indebtedness described in subsection 6.1(iv);
(vi) Liens in favor of the purchasers and their assignees of
Company's and its Consolidated Subsidiaries' receivables with respect to
receivables purchased pursuant to the Receivables Facility permitted
pursuant to subsection 6.1(vii);
(vii) Liens in favor of the purchaser of receivables, contracts,
leases and related equipment from Wells Fargo Alarm Services, Inc.,
BW-Canada Alarm (Wells Fargo) Corporation, and their respective
subsidiaries, which Liens are filed with respect to such receivables,
contracts and/or leases in connection with the Alarm Services Contract
Securitization Facility permitted under subsection 6.1(viii); and
(viii) Liens on the assets or property of a Consolidated Subsidiary
which is a Foreign Entity securing the Indebtedness incurred by such
Foreign Entity and permitted pursuant to subsection 6.1(ix).
B. EQUITABLE LIEN IN FAVOR OF LENDERS. If Company or any of its
Subsidiaries shall create or assume any Lien upon any of its properties or
assets, whether now owned or hereafter acquired, other than Liens excepted by
the provisions of subsection 6.2A, it shall make or cause to be made effective
provision whereby the Obligations will be secured by such Lien equally and
ratably with any and all other Indebtedness secured thereby as long as any such
Indebtedness shall be so secured; provided that, notwithstanding the foregoing,
this covenant shall not be construed as a consent by Requisite Lenders to the
creation or assumption of any such Lien not permitted by the provisions of
subsection 6.2A.
C. NO FURTHER NEGATIVE PLEDGES. Except with respect to specific property
encumbered to secure payment of particular
81
Indebtedness or to be sold pursuant to an executed agreement with respect to an
Asset Sale or as may be restricted by the Existing Revolving Credit Agreement,
the Existing L/C Agreement, the 9 1/8% Subordinated Note Indenture, or the
Receivables Facilities, neither Company nor any of its Subsidiaries shall enter
into any agreement prohibiting the creation or assumption of any Lien upon any
of its properties or assets, whether now owned or hereafter acquired.
D. NO RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS TO COMPANY OR OTHER
SUBSIDIARIES. Except as provided herein or as may be provided in the Existing
Revolving Credit Agreement, the L/C Agreement, Receivables Facilities (with
respect to BPS Financial Services, Inc. or such other financing subsidiary as
may have been established for purposes of the Alarm Services Contract
Securitization Facility) or the 9 1/8% Subordinated Note Indenture, Company will
not, and will not permit any of its Subsidiaries to, create or otherwise cause
or suffer to exist or become effective any consensual encumbrance or restriction
of any kind on the ability of any such Subsidiary to (i) pay dividends or make
any other distributions on any of such Subsidiary's capital stock owned by
Company or any other Subsidiary of Company, (ii) subject to subordination
provisions, repay or prepay any Indebtedness owed by such Subsidiary to Company
or any other Subsidiary of Company, (iii) make loans or advances to Company or
any other Subsidiary of Company, or (iv) transfer any of its property or assets
to Company or any other Subsidiary of Company, except any restrictions existing
under any agreements in effect on the Closing Date or any renewals or extensions
thereof; provided that the terms and conditions of any such renewals or
extensions are no less favorable to Lenders than the agreements being renewed or
extended.
6.3 INVESTMENTS; JOINT VENTURES.
Company shall not, and shall not permit any of its Consolidated
Subsidiaries to, directly or indirectly, make or own any Investment in any
Person, including any Joint Venture, except:
(i) Company and its Consolidated Subsidiaries may make and own
Investments in Cash Equivalents;
(ii) Company and its Consolidated Subsidiaries may make and own
Investments described in Schedule 5.10 annexed hereto;
(iii) Company and its Consolidated Subsidiaries may make intercompany
loans to the extent permitted under subsection 6.1(ii); Company and its
Consolidated Subsidiaries may own the Investments existing on the Closing
Date in Company's Subsidiaries; Company and its Consolidated
82
Subsidiaries may make and own additional Investments after the Closing Date
in Consolidated Subsidiaries which constitute Material Subsidiaries or in
Consolidated Subsidiaries which are both Borg-Warner Guarantor Subsidiaries
and Borg-Warner Pledged Subsidiaries; and Wells Fargo Alarm Services, Inc.
and BW-Canada Alarm (Wells Fargo) Corporation may make and own Investments
approved by Requisite Lenders in financing subsidiaries established for the
purpose of purchasing and selling receivables, contracts and/or leases in
connection with the Alarm Services Contract Securitization Facility
permitted pursuant to subsection 6.1(viii);
(iv) Company and its Consolidated Subsidiaries may acquire and retain
ownership of Investments in connection with Asset Sales permitted by
subsection 6.7(iii);
(v) Company and its Consolidated Subsidiaries may make and own
Investments received in connection with the bankruptcy or reorganization of
suppliers and customers and in settlement of delinquent obligations of, and
other disputes with, customers and suppliers arising in the ordinary course
of business;
(vi) Company and its Consolidated Subsidiaries may make intercompany
investments in BPS Financial Services, Inc. to the extent permitted
pursuant to subsection 6.1(vii);
(vii) Company and its Consolidated Subsidiaries may create or acquire
new Consolidated Subsidiaries and make Investments in such Consolidated
Subsidiaries to the extent not otherwise prohibited under this Agreement
provided that the aggregate amount of all such Investments, (x) to the
extent such creation or acquisition constitutes a Consolidated Capital
Expenditure, does not exceed the Consolidated Capital Expenditure amount
permitted pursuant to subsection 6.6E and (y) together with all amounts
expended pursuant to subsection 6.7(ii), does not exceed the amount
permitted by subsection 6.7(ii); and
(viii) Company and its Consolidated Subsidiaries may create or
acquire Joint Ventures to the extent not otherwise prohibited pursuant to
this Agreement provided that the aggregate amount expended for all such
Investments does not exceed $5,000,000.
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6.4 CONTINGENT OBLIGATIONS.
Company shall not, and shall not permit any of its Consolidated
Subsidiaries to, directly or indirectly, create or become or remain liable with
respect to any Contingent Obligation, except:
(i) Guaranties resulting from endorsement of negotiable instruments
for collection in the ordinary course of business;
(ii) Obligations under the Loan Guaranties and Contingent Obligations
under substantially similar Loan Guaranties in favor of the lenders under
the Existing Revolving Credit Agreement and the banks under the Existing
L/C Agreement;
(iii) Guaranties in favor of Lenders (or lenders under the Existing
Revolving Credit Agreement or banks under the Existing L/C Agreement) or
their Affiliates of Interest Rate Agreements entered into by Company and
with respect to which such institutions or their Affiliates have signed an
acknowledgment to the Intercreditor Agreement;
(iv) Contingent Obligations relating to obligations of Company to make
payments with respect to the cancellation or repurchase of certain stock or
stock options granted or to be granted to employees of Company and its
Subsidiaries under the Borg-Warner Security Corporation Management Stock
Option Plan, the 1993 Stock Option Plan or pursuant to subscription
agreements with respect to shares of Common Stock;
(v) Company may become and remain liable with respect to Contingent
Obligations under Interest Rate Agreements required under subsection 5.9;
(vi) Contingent Obligations with respect to letters of credit issued
pursuant to the Existing L/C Facility and refinancings, renewals and
extensions thereof, provided that the terms and conditions of any such
refinancing, renewal and extension do not (1) impose terms and conditions
more restrictive or burdensome on Company and its Subsidiaries than the
terms and conditions of the L/C Agreement as in effect on the date hereof
and as hereafter amended in accordance with the terms of this Agreement and
(2) except as otherwise permitted pursuant to this subsection 6.4 or the
following proviso, increase the principal amount of such Contingent
Obligations or commitment therefor over the principal amount or commitment
as in effect at the time so
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refinanced, renewed and extended; provided that the maximum aggregate
amount of such letter of credit facility permitted does not exceed
$180,000,000;
(vii) Contingent Obligations described on Schedule 6.4 annexed
hereto;
(viii) Contingent Obligations in respect of any obligation of Company
or its Consolidated Subsidiaries which constitute Material Subsidiaries
which is permitted under this Agreement;
(ix) Contingent Obligations relating to guaranties of the obligations
of suppliers, customers, franchisees and licensees of Company and its
Consolidated Subsidiaries; provided that the maximum aggregate liability of
Company and its Consolidated Subsidiaries under all such Contingent
Obligations, shall not at any one time exceed $5,000,000 (including any
Contingent Obligations in existence as of the date hereof);
(x) Contingent Obligations of Company relating to Indebtedness
permitted under subsection 6.1(ix) that is incurred by a Foreign Entity
which is a Consolidated Subsidiary;
(xi) Contingent Obligations of Company in respect of the obligations
of its Consolidated Subsidiaries permitted pursuant to subsections
6.1(vii), (viii) and (xi); and
(xii) In addition to the Contingent Obligations permitted by clauses
(i)-(xi), Company and its Consolidated Subsidiaries may become and remain
liable with respect to other Contingent Obligations; provided that the
maximum aggregate liability of Company and its Consolidated Subsidiaries in
respect of all such Contingent Obligations shall not at any one time exceed
$10,000,000.
6.5 RESTRICTED JUNIOR PAYMENTS.
Company shall not, and shall not permit any of its Consolidated
Subsidiaries to, directly or indirectly, declare, order, pay, make or set apart
any sum for any Restricted Junior Payment; except:
(i) Company may make Restricted Junior Payments to cancel or
repurchase stock or stock options granted or to be granted to employees of
Company or any of its Consolidated Subsidiaries under the Borg-Warner
Security Corporation Management Stock Option Plan, the 1993 Stock Option
Plan or
85
pursuant to any stock subscription agreements with respect to
shares of Common Stock in an aggregate amount which does not exceed
$5,000,000; and
(ii) Company may make Restricted Junior Payments in respect of
Company's obligations to pay interest on its Subordinated Indebtedness in
accordance with the terms of, and only to the extent required by, the terms
of such Subordinated Indebtedness, as such terms are in effect on the
Closing Date;
provided that immediately prior to and immediately after giving effect to any
Restricted Junior Payment permitted by this subsection 6.5, no Event of Default
or Potential Event of Default exists or will exist.
Company will not, and will not permit any of its Subsidiaries to,
deposit any funds for the purpose of making any Restricted Junior Payment with a
trustee, paying agent or registrar or other payment intermediary more than three
(3) Business Days prior to the date such payment is due, unless required to do
so by the terms, as of the Closing Date, of the applicable indenture.
6.6 FINANCIAL COVENANTS.
A. INTEREST COVERAGE RATIO. Company will not permit its Interest Coverage
Ratio as of the last day of each of the fiscal quarters shown below for the four
consecutive preceding fiscal quarters ended on such date, to be less than the
correlative ratio indicated below:
MINIMUM
FISCAL QUARTER ENDED INTEREST COVERAGE RATIO
-------------------------------------------------------------------
September 30, 1995 2.25:1.00
December 31, 1995 2.20:1.00
March 31, 1996 2.20:1.00
June 30, 1996 2.20:1.00
September 30, 1996 2.20:1.00
December 31, 1996 2.20:1.00
March 31, 1997 2.25:1.00
June 30, 1997 2.30:1.00
September 30, 1997 2.35:1.00
December 31, 1997 2.40:1.00
March 31, 1998 2.45:1.00
June 30, 1998 2.55:1.00
September 30, 1998 2.60:1.00
December 31, 1998 2.70:1.00
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B. LEVERAGE RATIO. Company will not permit the ratio as of the last
day of each of the fiscal quarters shown below of Funded Debt to Consolidated
EBITDA for the four consecutive preceding fiscal quarters ended on such date to
be more than the correlative ratio indicated for such date:
FISCAL QUARTER ENDED MAXIMUM LEVERAGE RATIO
------------------------------------------------------------------
September 30, 1995 3.75:1.00
December 31, 1995 4.20:1.00
March 31, 1996 4.10:1.00
June 30, 1996 3.90:1.00
September 30, 1996 3.80:1.00
December 31, 1996 3.65:1.00
March 31, 1997 3.50:1.00
June 30, 1997 3.35:1.00
September 30, 1997 3.20:1.00
December 31, 1997 3.10:1.00
March 31, 1998 3.00:1.00
June 30, 1998 2.90:1.00
September 30, 1998 2.80:1.00
December 31, 1998 2.65:1.00
C. CONSOLIDATED NET WORTH. Company will not permit its Consolidated
Net Worth as of the last day of the fiscal quarters set forth below and at all
times thereafter (until the last day of the next fiscal quarter when such
amounts shall be increased as provided for herein) to be less than the
correlative amount indicated below:
MINIMUM
FISCAL QUARTER ENDED CONSOLIDATED NET WORTH
------------------------------------------------------------------
September 30, 1995 $31,000,000
December 31, 1995 33,000,000
March 31, 1996 36,000,000
June 30, 1996 39,000,000
September 30, 1996 42,000,000
December 31, 1996 46,000,000
March 31, 1997 49,000,000
June 30, 1997 54,000,000
September 30, 1997 58,000,000
December 31, 1997 65,000,000
March 31, 1998 70,000,000
June 30, 1998 75,000,000
September 30, 1998 82,000,000
December 31, 1998 90,000,000
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D. CONSOLIDATED EBITDA. Company will not permit Consolidated EBITDA
as of the last day of each of the fiscal quarters shown below for the four
consecutive preceding fiscal quarters ended on such date to be less than the
correlative amount indicated below:
MINIMUM CONSOLIDATED
FISCAL QUARTER ENDED EBITDA
------------------------------------------------------------
September 30, 1995 $125,000,000
December 31, 1995 125,000,000
March 31, 1996 129,000,000
June 30, 1996 134,000,000
September 30, 1996 135,000,000
December 31, 1996 139,000,000
March 31, 1997 144,000,000
June 30, 1997 148,000,000
September 30, 1997 152,000,000
December 31, 1997 155,000,000
March 31, 1998 157,000,000
June 30, 1998 162,000,000
September 30, 1998 165,000,000
December 31, 1998 170,000,000
E. CONSOLIDATED CAPITAL EXPENDITURES. Company and its Subsidiaries
shall not permit the sum of (i) Consolidated Capital Expenditures plus (ii) an
amount equal to 75% of the Alarm Installation Costs which are sold in such
fiscal year in connection with the Alarm Services Contract Securitization
Facility permitted pursuant to subsection 6.1(viii) plus (iii) an amount equal
to 100% of the Alarm Installation Costs originated in such fiscal year which are
treated as sales-type leases which are not sold in connection with such
Receivables Facility to exceed in any fiscal year the amount set forth below for
such fiscal year (the "CAPITAL EXPENDITURE AMOUNT"):
FISCAL YEAR ENDED CAPITAL EXPENDITURE AMOUNT
----------------- --------------------------
December 31, 1995 $55,000,000
December 31, 1996 and thereafter 60,000,000
; provided that for fiscal years commencing on and after January 1, 1996, if the
Company's Interest Coverage Ratio for such fiscal year is not less than 3.00 to
1.00 and the ratio of Company's Funded Debt to Consolidated EBITDA for such
fiscal year is not greater than 2.60 to 1.00, in each case as of December 31,
1995, or as of the last day of any fiscal year thereafter, the
88
Capital Expenditure Amount for the immediately succeeding fiscal year, and for
each fiscal year thereafter, shall be increased to $75,000,000; provided that if
any portion of the Capital Expenditure Amount for any fiscal year (the
"REFERENCE PERIOD") has not been incurred within such Reference Period (the
unutilized portion of such Capital Expenditure Amount being referred to as the
"UNUTILIZED AMOUNT"), Company and its Subsidiaries may, in the fiscal year
immediately following the Reference Period, make additional Consolidated Capital
Expenditures in an amount not to exceed the lesser of (i) the Unutilized Amount
and (ii) 25% of the Capital Expenditure Amount in respect of the Reference
Period. In determining any amount pursuant to the foregoing clauses (i) or (ii)
permitted to be carried forward as Consolidated Capital Expenditures to be made
in a succeeding fiscal year, such amount shall be determined solely on the basis
of the permitted Capital Expenditure Amount for that Reference Period and shall
not include any Unutilized Amount from any prior period. Notwithstanding the
foregoing, in no event shall the Capital Expenditure Amount for the fiscal year
ending December 31, 1995, be increased by any Unutilized Amount from the fiscal
year ending December 31, 1994.
6.7 RESTRICTION ON FUNDAMENTAL CHANGES; ASSET SALES AND ACQUISITIONS.
Subject to subsection 5.2, each of Company and its Consolidated
Subsidiaries will not enter into any transaction of merger or consolidate, or
liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, exchange, lease, sub-lease, transfer or otherwise
dispose of, in one transaction or a series of related transactions, all or any
of its business, property or fixed assets, or all or any portion of the stock or
beneficial ownership, whether now owned or hereinafter acquired, or acquire by
purchase or otherwise all or substantially all the business, property or fixed
assets of, or stock or other evidence of beneficial ownership of, any Person,
except:
(i) any Subsidiary of Company may be merged or consolidated with or
into Company or any wholly-owned Subsidiary of Company, or be liquidated,
wound up or dissolved, or all or substantially all of its business,
property or assets may be conveyed, sold, leased, transferred or otherwise
disposed of, in one transaction or a series of transactions, to Company or
any wholly-owned Subsidiary of Company; provided that, in the case of such
a merger or consolidation, Company or such wholly-owned Subsidiary shall be
the continuing or surviving corporation; provided further that, in the case
of such a merger or consolidation or disposition of a majority of the stock
of a
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Subsidiary or substantially all of the business, property or assets of such
a Subsidiary (the "AFFECTED SUBSIDIARY") of Company which is a guarantor of
any of the Obligations, (a) the continuing, surviving or transferee
corporation shall expressly assume the obligations of the Affected
Subsidiary under such guaranty and (b) in the case of a merger or
consolidation, the net worth of the continuing or surviving corporation
(calculated without giving effect to any increase in the amount of
intercompany Indebtedness for which the continuing or surviving corporation
is liable as compared to the amount of intercompany Indebtedness for which
the Affected Subsidiary was liable immediately prior to such merger or
consolidation) shall not be less than the net worth of the Affected
Subsidiary immediately prior to such merger or consolidation; and provided
still further that, subject to the terms of the applicable Collateral
Document, in the case of such a merger or consolidation or disposition of a
majority of the stock of a Subsidiary or substantially all of the business,
property or assets of such a Subsidiary of Company the stock of which is
pledged to secure the Obligations, the stock of the continuing, surviving
or transferee corporation shall, at the time of consummation of such
merger, consolidation or transfer, be pledged to secure the Obligations;
(ii) Company and its Consolidated Subsidiaries may acquire all or
substantially all the business, property or fixed assets of, or stock or
other evidence of beneficial ownership of, any Person engaged in businesses
substantially similar to those conducted by the Company and its
Consolidated Subsidiaries (such asset or stock acquisitions
being herein collectively referred to as "ACQUISITIONS"); provided that the
purchase price (including all assumed liabilities) paid with respect to
Acquisitions made on or after the Closing Date plus the amount of all
Investments made under subsection 6.3(vii) does not exceed $5,000,000 in
the aggregate for all such Acquisitions; provided that in calculating the
purchase price of such Acquisitions, the purchase price attributable to any
assets acquired in the IT Exchange may be excluded; provided further that
to the extent that Company pays all or any portion of the purchase price
for an Acquisition through the issuance of shares of Common Stock, the
value of the shares of such Common Stock shall be deducted from the
calculation of the purchase price payable by Company or its Consolidated
Subsidiaries for such Acquisitions for purposes of determining compliance
with the provisions of this subsection 6.7(ii); and provided further that
any such Person so acquired that constitutes a Material Subsidiary shall
execute counterparts of the Borg-Warner
90
Subsidiary Guaranty and the Borg-Warner Subsidiary Pledge Agreement as
provided in subsection 5.11; and
(iii) Company may sell, exchange or otherwise dispose of assets in
Asset Sale transactions; provided that (a) any Asset Sale is made for the
fair market value of such assets and for at least eighty-five percent (85%)
cash, and (b) the Net Cash Proceeds of each such Asset Sale are applied in
conformity with subsection 2.4B(ii)(a); and, provided, further, that
Company and its Subsidiaries may not sell, exchange or otherwise dispose of
all or a substantial portion of any Division without the prior written
consent of Requisite Lenders.
6.8 SALES AND LEASE-BACKS.
Other than with respect to the IT Exchange and any other similar
transfer of information technology assets, Company and its Consolidated
Subsidiaries shall not directly or indirectly, become or remain liable as lessee
or as a guarantor or other surety with respect to any lease, whether an
Operating Lease or a Capital Lease, of any property (whether real, personal or
mixed), whether now owned or hereafter acquired, (i) which Company or any of its
Subsidiaries has sold or transferred or is to sell or transfer to any other
Person (other than Company or any of its Subsidiaries) or (ii) which Company or
any of its Subsidiaries intends to use for substantially the same purpose as any
other property which has been or is to be sold or transferred by Company or any
of its Subsidiaries to any Person (other than Company or any of its
Subsidiaries) in connection with such lease, except to the extent that the Net
Cash Proceeds of any such transactions are applied in accordance with the
provisions of subsection 2.4B(ii)(a).
6.9 SALE OR DISCOUNT OF RECEIVABLES.
Company shall not, and shall not permit any of its Consolidated
Subsidiaries to, directly or indirectly, sell with recourse, or discount or
otherwise sell for less than the face value thereof, notes, accounts
receivable, contracts, leases or other receivables, other than pursuant to
the Receivables Facilities.
6.10 TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, enter into or permit to exist any transaction
(including, without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service) with any holder of 5% or more of any
91
class of equity Securities of Company or with any Affiliate of Company or of any
such holder, on terms that are less favorable to Company or that Subsidiary, as
the case may be, than those that might be obtained at the time from Persons who
are not such a holder or Affiliate; provided that the foregoing restriction
shall not apply to (i) any transaction between Company and any of its wholly-
owned Subsidiaries or between any of its wholly-owned Subsidiaries, (ii)
customary fees paid to members of the Boards of Directors of Company and its
Subsidiaries; or (iii) financial advisory arrangements for services rendered by
Stonington or ML & Co. or any of its Affiliates to Company or any of its
Subsidiaries; provided that such arrangements are no less favorable to Company
and its Subsidiaries than those obtainable in a comparable arm's-length
transaction with a Person that is not an Affiliate of the Company.
6.11 DISPOSAL OF SUBSIDIARY STOCK.
Except as permitted by subsection 6.7 and as contemplated by the
Pledge Agreements, Company will not,
(i) directly or indirectly sell, assign, pledge or otherwise
encumber or dispose of any shares of capital stock or other equity
securities of (or warrants, rights or options to acquire shares or other
equity securities of) any of its Consolidated Subsidiaries, except to
qualify directors if required by applicable law; or
(ii) permit any of its Consolidated Subsidiaries directly or
indirectly to sell, assign, pledge or otherwise encumber or dispose of any
shares of capital stock or other securities of (or warrants, rights or
options to acquire shares or other securities of) such Subsidiary, except
to Company, another Subsidiary of Company or to qualify directors if
required by applicable law.
6.12 CONDUCT OF BUSINESS.
Company will not and will not permit any of its Subsidiaries to engage
in any business other than (i) the business engaged in by Company and its
Subsidiaries on the date hereof as described in the Company's Annual Report on
Form 10-K for the Fiscal Year ended December 31, 1994 and substantially similar
or related businesses and (ii) such other lines of business as may be consented
to by Requisite Lenders.
6.13 AMENDMENTS OF CERTAIN DOCUMENTS.
A. Neither Company nor any of its Subsidiaries will (i) amend, waive or
otherwise change the terms of any
92
Subordinated Indebtedness, or make any payment consistent with an amendment,
waiver or change thereto, without the consent of Requisite Lenders; provided
that notwithstanding the foregoing Company may agree to amend any provisions of
the Subordinated Indebtedness (a) to cure any ambiguity, to correct or
supplement any provision therein which may be defective or inconsistent with any
other provision of such Subordinated Indebtedness, (b) to comply with the Trust
Indenture Act of 1939, or (c) to make modifications of a technical or clarifying
nature which are no less favorable to the Lenders than the provisions of the
Subordinated Indebtedness in effect on the Closing Date; or (ii) defease, or
make any payments the effect of which is to defease (whether pursuant to the
defeasance provisions of the Subordinated Indebtedness or otherwise and
including without limitation any covenant defeasance), the Subordinated
Indebtedness in whole or in part.
B. Neither Company nor any of its Subsidiaries will amend, modify, waive
or supplement or otherwise change any of the terms of the Receivables Facilities
from those in effect on the Closing Date, in the case of the Existing
Receivables Facility, or on the initial closing date for such Receivables
Facilities, in the case of the Receivables Bridge Facility, the New Receivables
Facility or the Alarm Services Contract Securitization Facility, without the
prior written consent of Requisite Lenders if such amendment, modification,
waiver, supplement or change would be less favorable to, or increase the
obligations of, Company or any of its Subsidiaries or would confer additional
rights on any other party to such agreement adverse to the Company or any of its
Subsidiaries or would be adverse to the Lenders under this Agreement. Company
agrees to deliver to Agent upon execution thereof copies of all program
documents (other than any fee or expense letters) for the Receivables Bridge
Facility and the New Receivables Facility and any amendments, modifications,
waivers, supplements or changes thereto (without regard to whether the prior
written consent of Requisite Lenders is required thereto).
C. Neither Company nor any of its Subsidiaries will amend, modify, waive
or supplement or otherwise change any of the terms of (i) Sections 5, 6 and 7 of
the Existing Revolving Credit Agreement or any definition of any term used
therein or (ii) Articles V, VI and VII of the Existing L/C Agreement or any
definition of any term used therein, or amend any of the other covenants or
provisions of the Existing Revolving Credit Agreement, the Existing L/C
Agreement or any Collateral Document, as applicable, or enter into any other
agreement (or amendment thereto) if the effect thereof is to impose any further
affirmative or negative covenants or events of default on the Company or any of
its Subsidiaries or to make more restrictive or burdensome with respect to the
Company or any of its Subsidiaries
93
any affirmative or negative covenant or event of default contained therein, in
either case without obtaining the prior written consent of the Requisite
Lenders, provided that this subsection 6.13C shall not require the consent of
the Requisite Lenders to any waiver or amendment of any term or provision of the
Existing Revolving Credit Agreement or the Existing L/C Agreement if the effect
of such waiver or amendment is to make any such term or provision less
restrictive or burdensome on the Company or any of its Subsidiaries or to
relieve the Company or any of its Subsidiaries from the burden of compliance
with such term or provision or to waive the failure to comply with such term or
provision.
D. Neither Company nor any of its Subsidiaries will amend, modify, waive
or supplement or otherwise change any of the terms of the Existing Revolving
Credit Agreement or Existing L/C Agreement, as the case may be, or enter into
any other agreement with the Company or any of its Subsidiaries that would have
the effect of (i) shortening the maturity of or requiring the earlier payment of
any principal of any loan or letter of credit reimbursement obligation, (ii)
imposing any additional prepayment obligations on the Company with respect to
the loans or letter of credit reimbursement obligations or (iii) changing the
definition of "Required Banks" in the Existing L/C Agreement or "Requisite
Lenders" in the Existing Revolving Credit Agreement, in each case without the
prior written consent of the Requisite Lenders.
E. Company agrees to deliver to Agent upon execution thereof any
amendment, waiver or modification of the Existing Revolving Credit Agreement or
the Existing L/C Agreement.
F. Company agrees that at any time it is required to deliver an Officers'
Certificate to Collateral Agent under Section 5(h) of the Intercreditor
Agreement, that it will concurrently therewith deliver to Agent an Officers'
Certificate certifying as to the absence of any Event of Default or any
Potential Event of Default hereunder, and otherwise certifying that such release
complies with the applicable provisions of the Pledge Agreements and subsection
6.7 or 6.11 of this Agreement. If a release of collateral pursuant to such
Section 5(h) constitutes the release of all of the shares of stock of a
Subsidiary in connection with the sale or other disposition of
such shares, and the conditions for a release of the Liens of the Pledge
Agreements are otherwise satisfied, the Collateral Agent shall also release the
Subsidiary being sold or otherwise disposed of from all liability under the Loan
Guaranty to which it is a party as provided for in the Intercreditor Agreement.
Company shall not request any release of Collateral from the Liens created by
the Pledge Agreements that is not permitted pursuant to subsection 6.7 or 6.11
of this Agreement without the
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prior written consent of Requisite Lenders. Notwithstanding anything to the
contrary contained in Section 9(f) of the Intercreditor Agreement, Section 19 of
the Pledge Agreements, or any similar provision in other Loan Documents
permitting the release of Collateral when the obligations under the Existing
Revolving Credit Agreement and the Existing L/C Agreement have been paid in
full, in no event may the Company or any Subsidiary terminate the Intercreditor
Agreement, any Pledge Agreement or any other such Loan Document without the
prior written consent of Requisite Lenders unless and until the Obligations have
been indefeasibly paid in full and all commitments to extend credit under this
Agreement terminated.
6.14 DESIGNATION OF SENIOR INDEBTEDNESS.
The Company hereby designates the Indebtedness incurred under this
Agreement as "Specified Senior Indebtedness" under the 9 1/8% Subordinated Note
Indenture. Neither Company nor any of its Subsidiaries will, without obtaining
the prior written consent of Requisite Lenders, enter into any agreements or
instruments creating or evidencing Indebtedness if such agreements or
instruments specifically designate such Indebtedness to be "Designated Senior
Indebtedness" or "Specified Senior Indebtedness" under any of the Subordinated
Indebtedness (or any comparable provision of any refinancing agreement entered
into in respect thereof).
6.15 FISCAL YEAR.
Company shall not change its Fiscal Year-end from December 31.
SECTION 7. EVENTS OF DEFAULT
If any of the following conditions or events ("EVENTS OF DEFAULT")
shall occur and be continuing:
7.1 FAILURE TO MAKE PAYMENTS WHEN DUE.
Failure by Company to pay any installment of principal of any Loan
when due, whether at stated maturity, by acceleration, by notice of voluntary
prepayment, by mandatory prepayment or otherwise; failure by Company to pay any
interest on any Loan or any fee or any other amount due under this Agreement
within five days after the date due; or
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7.2 DEFAULT IN OTHER AGREEMENTS.
(i) Failure of Company or any of its Subsidiaries to pay when due (a)
any principal of or interest on any Indebtedness (other than Indebtedness
referred to in subsection 7.1) in an individual principal amount of $2,500,000
or more or any items of Indebtedness with an aggregate principal amount of
$5,000,000 or more or (b) any Contingent Obligation in an individual principal
amount of $2,500,000 or more or any Contingent Obligations with an aggregate
principal amount of $5,000,000 or more, in each case beyond the end of any grace
period provided therefor; or (ii) breach or default by Company or any of its
Subsidiaries with respect to any other material term of (a) any evidence of any
Indebtedness in an individual principal amount of $2,500,000 or more or any
items of Indebtedness with an aggregate principal amount of $5,000,000 or more
or any Contingent Obligation in an individual principal amount of $2,500,000 or
more or any Contingent Obligations with an aggregate principal amount of
$5,000,000 or more or (b) any loan agreement, mortgage, indenture or other
agreement relating to such Indebtedness or Contingent Obligation(s), if the
effect of such breach or default is to cause, or to permit the holder or holders
of that Indebtedness or Contingent Obligation(s) (or a trustee on behalf of such
holder or holders) to cause, that Indebtedness or Contingent Obligation(s) to
become or be declared due and payable prior to its stated maturity or the stated
maturity of any underlying obligation, as the case may be (upon the giving or
receiving of notice, lapse of time, both, or otherwise); or
7.3 BREACH OF CERTAIN COVENANTS.
Failure of Company to perform or comply with any term or condition
contained in subsection 2.5 or 5.2 or Section 6 of this Agreement; or
7.4 BREACH OF WARRANTY.
Any representation, warranty, certification or other statement made by
any Loan Party in any Loan Document or in any statement or certificate at any
time given by any Loan Party in writing pursuant hereto or thereto or in
connection herewith or therewith shall be false in any material respect on the
date as of which made; or
7.5 OTHER DEFAULTS UNDER LOAN DOCUMENTS.
Company or any other Loan Party shall default in the performance of or
compliance with any term contained in this Agreement or any of the other Loan
Documents, other than any such term referred to in any other subsection of this
Section 7, and
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such default shall not have been remedied or waived within 30 days after receipt
by Company of notice from Agent or any Lender of such default; or
7.6 INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
(i) A court having jurisdiction in the premises shall enter a decree
or order for relief in respect of Company or any of its Material Subsidiaries in
an involuntary case under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect, which decree
or order is not stayed; or any other similar relief shall be granted under any
applicable federal or state law; or (ii) an involuntary case shall be commenced
against Company or any of its Material Subsidiaries under the Bankruptcy Code or
under any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect; or a decree or order of a court having jurisdiction in the
premises for the appointment of a receiver, liquidator, sequestrator, trustee,
custodian or other officer having similar powers over Company or any of its
Material Subsidiaries, or over all or a substantial part of its property, shall
have been entered; or there shall have occurred the involuntary appointment of
an interim receiver, trustee or other custodian of Company or any of its
Material Subsidiaries for all or a substantial part of its property; or a
warrant of attachment, execution or similar process shall have been issued
against any substantial part of the property of Company or any of its Material
Subsidiaries, and any such event described in this clause (ii) shall continue
for 60 days unless dismissed, bonded or discharged; or
7.7 VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
(i) Company or any of its Material Subsidiaries shall have an order
for relief entered with respect to it or commence a voluntary case under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar
law now or hereafter in effect, or shall consent to the entry of an order for
relief in an involuntary case, or to the conversion of an involuntary case to a
voluntary case, under any such law, or shall consent to the appointment of or
taking possession by a receiver, trustee or other custodian for all or a
substantial part of its property; or Company or any of its Material Subsidiaries
shall make any assignment for the benefit of creditors; or (ii) Company or any
of its Material Subsidiaries shall be unable, or shall fail generally, or shall
admit in writing its inability, to pay its debts as such debts become due; or
the Board of Directors of Company or any of its Material Subsidiaries (or any
committee thereof) shall adopt any resolution or otherwise authorize any
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action to approve any of the actions referred to in clause (i) above or this
clause (ii); or
7.8 JUDGMENTS AND ATTACHMENTS.
(i) Any money judgment, writ or warrant of attachment or similar
process involving in the aggregate at any time an amount in excess of $1,000,000
(in either case not adequately covered by insurance as to which a solvent and
unaffiliated insurance company has acknowledged coverage) shall be entered or
filed against Company or any of its Material Subsidiaries or any of their
respective assets and shall remain undischarged, unvacated, unbonded or unstayed
for a period of 60 days (or in any event later than five days prior to the date
of any proposed sale thereunder); or (ii) Company or any of its Material
Subsidiaries shall settle or otherwise resolve any litigation or proceeding, and
the aggregate liability in connection therewith, whether current or prospective,
shall exceed $5,000,000, and in the case of clause (ii) such aggregate liability
could reasonably be expected to result in a Material Adverse Effect; or
7.9 DISSOLUTION.
Any order, judgment or decree shall be entered against Company or any
of its Material Subsidiaries decreeing the dissolution or split up of Company or
that Subsidiary and such order shall remain undischarged or unstayed for a
period in excess of 30 days; or
7.10 EMPLOYEE BENEFIT PLANS.
There shall occur one or more ERISA Events (determined without regard
to any materiality standard in that definition) which individually or in the
aggregate results in or might reasonably be expected to result in liability of a
Loan Party or any of its ERISA Affiliates in excess of $10,000,000 (or
$5,000,000 if as a result of such ERISA Event a Lien has been or is reasonably
likely to be imposed) during the term of this Agreement; or there shall exist an
amount of unfunded benefit liabilities (as defined in Section 4001(a)(18) of
ERISA), individually or in the aggregate for all Pension Plans (excluding for
purposes of such computation any Pension Plans with respect to which assets
exceed benefit liabilities), which exceeds $30,000,000; or
7.11 INVALIDITY OF GUARANTIES.
Any of the Loan Guaranties for any reason, other than the satisfaction
in full of all Obligations and termination of this Agreement, ceases to be in
full force and effect or is
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declared to be null and void, or Company or any Borg-Warner Guarantor Subsidiary
denies that it has any further liability under the Loan Guaranty to which it is
party, or gives notice to such effect; or
7.12 FAILURE OF SECURITY.
Any Pledge Agreement or any other Collateral Document shall, at any
time, cease to be in full force and effect or shall be declared null and void,
or the validity or enforceability thereof shall be contested by any Loan Party
or the Collateral Agent shall not have or shall cease to have a valid and
perfected first priority security interest in the Collateral (other than as the
direct result of a breach by Agent of any obligation imposed on Agent under the
Collateral Documents); or
7.13 CHANGE IN CONTROL.
(i) A change shall occur in the Board of Directors of Company so that
a majority of the Board of Directors of Company ceases to consist of the
individuals who constituted the Board of Directors of Company on the Closing
Date (or individuals whose election or nomination for election was approved by a
vote of at least 75% of the directors then in office who either were directors
on the Closing Date or whose election or nomination for election was previously
so approved); or (ii) any Person or group (within the meaning of Rule 13d-3 of
the Securities and Exchange Commission) other than ML & Co. and its Affiliates
and members of Company's management on the Closing Date shall become or be the
owner, directly or indirectly, beneficially or of record, of shares representing
more than 30% of the aggregate ordinary voting power represented by the issued
and outstanding capital stock of Company on a fully diluted basis, unless ML &
Co. and its Affiliates shall own and continue to so own a majority of such
capital stock; or
7.14 RECEIVABLES FACILITIES.
(i) Any condition or event shall occur under the Existing Receivables
Facility that constitutes a Termination Event (as such term is defined in the
Existing Receivables Facility as of the Closing Date), or any condition or event
shall occur under any Receivable Facility the effect of which is the same as, or
similar to, any such Termination Event; (ii) any condition or event shall occur
under the Receivables Bridge Facility or the New Receivables Facility that
constitutes an Early Amortization Event (as such term is defined in the Draft
Information Memorandum with respect to the Receivables Bridge Facility or the
New Receivables Facility as of the Closing Date) or an event or condition which,
after notice or lapse of time or
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both, would constitute an Early Amortization Event if that event or condition
were not cured or removed within any applicable grace or cure period (a
"UNMATURED EARLY AMORTIZATION EVENT"), or any condition or event shall occur
under any Receivables Facility the effect of which is the same as, or similar
to, any such Early Amortization Event or Unmatured Early Amortization Event;
(iii) any condition or event shall occur, or any breach or default by Company or
any of its Subsidiaries shall occur, under any Receivables Facility if the
effect of such condition, event, breach or default is to cause, or to permit any
purchaser or other investor under any Receivables Facility to cause, upon the
giving or receiving of notice, lapse of time, both or otherwise, any commitment
to purchase receivables or to advance or invest funds for the purchase of
receivables under any such Receivables Facility in whole or in part to be
suspended or terminated or any principal repayment or amortization or
accumulation period to commence prior to January 1, 1999 in the case of the
Receivables Bridge Facility or the New Receivables Facility or prior to the
scheduled commencement date for such repayment, amortization or accumulation as
in effect on the initial closing date for such Receivables Facility in the case
of the Alarm Services Contract Securitization Facility; (iv) Company or any of
its Subsidiaries shall optionally redeem, retire, prepay, purchase for value or
make any similar optional payment of the principal of, any Receivables
Certificates (as defined in subsection 9.20) issued to finance the purchase of
receivables under the Receivables Bridge Facility (excluding however the
refinancing of the Receivables Bridge Facility with the proceeds of the New
Receivables Facility) or the New Receivables Facility; or (v) Company shall fail
to draw down on the Receivables Bridge Facility on or prior to November 30, 1995
to refinance the Existing Receivables Facility in its entirety, in the event
that by November 30, 1995 (x) the Existing Receivables Facility is not extended
pursuant to an extension agreement in form and substance satisfactory to
Requisite Lenders or (y) the proceeds of the New Receivables Facility have not
been utilized to refinance in full the Existing Receivables Facility; or
7.15 FAILURE TO REDEEM SENIOR NOTES.
Failure of Company to redeem or repurchase all of its outstanding
Senior Notes by April 1, 1996; or
7.16 EXISTING L/C AGREEMENT.
Failure of Company to extend or replace the Existing L/C Agreement on
or prior to December 31, 1998.
THEN (i) upon the occurrence of any Event of Default described in subsection 7.6
or 7.7(i), each of (a) the unpaid principal amount
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of and accrued interest on the Loans and (b) all other Obligations shall
automatically become immediately due and payable, without presentment, demand,
protest or other requirements of any kind, all of which are hereby expressly
waived by Company, and the obligation of each Lender to make any Loan shall
thereupon terminate, and (ii) upon the occurrence and during the continuation of
any other Event of Default, Agent shall, upon the written request or with the
written consent of Requisite Lenders, by written notice to Company, declare all
or any portion of the amounts described in clauses (a) and (b) above to be, and
the same shall forthwith become, immediately due and payable, and the obligation
of each Lender to make any Loan shall thereupon terminate.
Notwithstanding anything contained in the preceding paragraph, if at
any time within 60 days after an acceleration of the Loans pursuant to such
paragraph Company shall pay all arrears of interest and all payments on account
of principal which shall have become due otherwise than as a result of such
acceleration (with interest on principal and, to the extent permitted by law, on
overdue interest, at the rates specified in this Agreement) and all Events of
Default and Potential Events of Default (other than non-payment of the principal
of and accrued interest on the Loans, in each case which is due and payable
solely by virtue of acceleration) shall be remedied or waived pursuant to
subsection 9.6, then Requisite Lenders, by written notice to Company, may at
their option rescind and annul such acceleration and its consequences; but such
action shall not affect any subsequent Event of Default or Potential Event of
Default or impair any right consequent thereon. The provisions of this
paragraph are intended merely to bind Lenders to a decision which may be made at
the election of Requisite Lenders and are not intended to benefit Company and do
not grant Company the right to require Lenders to rescind or annul any
acceleration hereunder, even if the conditions set forth herein are met.
SECTION 8. AGENT
8.1 APPOINTMENT.
Bankers is hereby appointed Agent hereunder and under the other Loan
Documents and each Lender hereby authorizes Agent to act as its agent in
accordance with the terms of this Agreement and the other Loan Documents. Agent
agrees to act upon the express conditions contained in this Agreement and the
other Loan Documents, as applicable. The provisions of this Section 8 are
solely for the benefit of Agent and Lenders and Company shall have no rights as
a third party beneficiary of any of the provisions thereof. In performing its
functions and duties under
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this Agreement and other than as expressly provided for in subsection 2.1D(v),
Agent shall act solely as an agent of Lenders and does not assume and shall not
be deemed to have assumed any obligation towards or relationship of agency or
trust with or for Company or any of its Subsidiaries. Each Lender hereby
acknowledges and agrees that Bankers is acting as Agent for the Lenders
hereunder and is also acting as agent under the Existing Revolving Credit
Agreement on behalf of the Existing Revolving Credit Agreement lenders and
expressly consents to Bankers acting in such capacities.
8.2 POWERS; GENERAL IMMUNITY.
A. DUTIES SPECIFIED. Each Lender irrevocably authorizes Agent to take
such action on such Lender's behalf and to exercise such powers hereunder and
under the other Loan Documents as are specifically delegated to Agent by the
terms hereof and thereof, together with such powers as are reasonably incidental
thereto. Agent shall have only those duties and responsibilities that are
expressly specified in this Agreement and the other Loan Documents and it may
perform such duties by or through its agents or employees. Agent shall not
have, by reason of this Agreement or any of the other Loan Documents, a
fiduciary relationship in respect of any Lender; and nothing in this Agreement
or any of the other Loan Documents, expressed or implied, is intended to or
shall be so construed as to impose upon Agent any obligations in respect of this
Agreement or any of the other Loan Documents except as expressly set forth
herein or therein.
B. NO RESPONSIBILITY FOR CERTAIN MATTERS. Agent shall not be responsible
to any Lender for the execution, effectiveness, genuineness, validity,
enforceability, collectability or sufficiency of this Agreement or any other
Loan Document or for any representations, warranties, recitals or statements
made herein or therein or made in any written or oral statements or in any
financial or other statements, instruments, reports or certificates or any other
documents furnished or made by Agent to Lenders or by or on behalf of Company to
Agent or any Lender in connection with the Loan Documents and the transactions
contemplated thereby or for the financial condition or business affairs of
Company or any other Person liable for the payment of any Obligations, nor shall
Agent be required to ascertain or inquire as to the performance or observance
of any of the terms, conditions, provisions, covenants or agreements contained
in any of the Loan Documents or as to the use of the proceeds of the Loans or
as to the existence or possible existence of any Event of Default or Potential
Event of Default. Anything contained in this Agreement to the contrary
notwithstanding, Agent shall not have any liability arising from confirmations
of the amount of outstanding Loans.
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C. EXCULPATORY PROVISIONS. Neither Agent nor any of its officers,
directors, employees or agents shall be liable to Lenders for any action taken
or omitted by Agent under or in connection with any of the Loan Documents except
to the extent caused by Agent's gross negligence or willful misconduct. If
Agent shall request instructions from Lenders with respect to any act or action
(including the failure to take an action) in connection with this Agreement or
any of the other Loan Documents, Agent shall be entitled to refrain from such
act or taking such action unless and until Agent shall have received
instructions from Requisite Lenders. Without prejudice to the generality of the
foregoing, (i) Agent shall be entitled to rely, and shall be fully protected in
relying, upon any communication, instrument or document believed by it to be
genuine and correct and to have been signed or sent by the proper person or
persons, and shall be entitled to rely and shall be protected in relying on
opinions and judgments of attorneys (who may be attorneys for Company and its
Subsidiaries), accountants, experts and other professional advisors selected by
it; and (ii) no Lender shall have any right of action whatsoever against Agent
as a result of Agent acting or (where so instructed) refraining from acting
under this Agreement or any of the other Loan Documents in accordance with the
instructions of Requisite Lenders. Agent shall be entitled to refrain from
exercising any power, discretion or authority vested in it under this Agreement
or any of the other Loan Documents unless and until it has obtained the
instructions of Requisite Lenders.
D. AGENT ENTITLED TO ACT AS LENDER. The agency hereby created shall in
no way impair or affect any of the rights and powers of, or impose any duties or
obligations upon, Agent in its individual capacity as a Lender hereunder. With
respect to its participation in the Loans, Agent shall have the same rights and
powers hereunder as any other Lender and may exercise the same as though it were
not performing the duties and functions delegated to it hereunder, and the term
"Lender" or "Lenders" or any similar term shall, unless the context clearly
otherwise indicates, include Agent in its individual capacity. Agent and its
Affiliates may accept deposits from, lend money to and generally engage in any
kind of banking, trust, financial advisory or other business with Company or any
of its Affiliates as if it were not performing the duties specified herein, and
may accept fees and other consideration from Company for services in connection
with this Agreement and otherwise without having to account for the same to
Lenders.
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8.3 REPRESENTATIONS AND WARRANTIES; NO RESPONSIBILITY FOR APPRAISAL OF
CREDITWORTHINESS.
Each Lender represents and warrants that it has made its own
independent investigation of the financial condition and affairs of Company and
its Subsidiaries in connection with the making of the Loans hereunder and that
it has made and shall continue to make its own appraisal of the creditworthiness
of Company and its Subsidiaries. Agent shall not have any duty or
responsibility, either initially or on a continuing basis, to make any such
investigation or any such appraisal on behalf of Lenders or to provide any
Lender with any credit or other information with respect thereto, whether coming
into its possession before the making of the Loans or at any time or times
thereafter, and Agent shall not have any responsibility with respect to the
accuracy of or the completeness of any information provided to Lenders.
8.4 RIGHT TO INDEMNITY.
Each Lender, in proportion to its Final Pro Rata Share, severally
agrees to indemnify Agent, to the extent that Agent shall not have been
reimbursed by Company, for and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
(including, without limitation, counsel fees and disbursements) or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by or
asserted against Agent in performing its duties hereunder or under the other
Loan Documents or otherwise in its capacity as Agent in any way relating to or
arising out of this Agreement or the other Loan Documents; provided that no
Lender shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from Agent's gross negligence or willful misconduct. If any indemnity
furnished to Agent for any purpose shall, in the opinion of Agent, be
insufficient or become impaired, Agent may call for additional indemnity and
cease, or not commence, to do the acts indemnified against until such additional
indemnity is furnished.
8.5 SUCCESSOR AGENT.
Agent may resign at any time by giving 30 days' prior written notice
thereof to Lenders and Company, and Agent may be removed at any time with or
without cause by an instrument or concurrent instruments in writing delivered to
Company and Agent and signed by Requisite Lenders. Upon any such notice of
resignation or any such removal, Requisite Lenders shall have the right, upon
five Business Days' notice to Company, to appoint a successor Agent. Upon the
acceptance of any appointment as Agent
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hereunder by a successor Agent, that successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring or removed Agent and the retiring or removed Agent shall be discharged
from its duties and obligations under this Agreement. After any retiring or
removed Agent's resignation or removal hereunder as Agent, the provisions of
this Section 8 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent under this Agreement.
8.6 INTERCREDITOR AGREEMENT, LOAN GUARANTIES AND COLLATERAL DOCUMENTS.
A. AUTHORIZATION OF AGENT. Each Lender hereby authorizes Agent to
enter into the Intercreditor Agreement on behalf of and for the benefit of that
Lender, and agrees to be bound by the terms of the Intercreditor Agreement;
provided that Agent shall not enter into or consent to any amendment,
modification, termination or waiver of any provision contained in the
Intercreditor Agreement without the prior consent of Requisite Lenders. Each
Lender hereby authorizes the Collateral Agent to enter into the Loan Guaranties
and the Collateral Documents and to take all action contemplated by the
Intercreditor Agreement. Each Lender agrees that no Lender shall have any right
individually to seek or to enforce any Loan Guaranty or to realize upon the
security granted by any Collateral Documents, it being understood and agreed
that such rights and remedies may be exercised by Collateral Agent for the
benefit of Lenders and the parties to the Intercreditor Agreement upon the terms
of the Loan Guaranties, the Collateral Documents and the Intercreditor
Agreement. Each Lender hereby authorizes Collateral Agent to release Collateral
as permitted or required under this Agreement, the Collateral Documents or the
Intercreditor Agreement, and agrees that a certificate executed by Collateral
Agent evidencing such release of Collateral shall be conclusive evidence of such
release as to any third party.
B. CONFLICT IN LOAN DOCUMENTS. If there is any conflict between
this Agreement and any other Loan Document, except the Intercreditor Agreement,
this Agreement and such other Loan Document shall be interpreted and construed,
if possible, so as to avoid or minimize such conflict but, to the extent (and
only to the extent) of such conflict, this Agreement shall prevail and control.
If there is any conflict between the Intercreditor Agreement and any Loan
Document, including this Agreement, the Intercreditor Agreement and such Loan
Document shall be interpreted and construed, if possible, so as to avoid or
minimize such conflict but, to the extent (and only to the extent) of such
conflict, the Intercreditor Agreement shall prevail and control.
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SECTION 9. MISCELLANEOUS
9.1 ASSIGNMENTS AND PARTICIPATIONS IN LOANS.
A. GENERAL. Subject to 9.1B, each Lender shall have the right at any
time to (i) sell, assign or transfer to any Eligible Assignee, or (ii) sell
participations to any Person in, all or any part of its Commitment or the Loan
made by it or any other interest herein or in any other Obligations owed to it;
provided that no such sale, assignment, transfer or participation shall, without
the consent of Company, require Company to file a registration statement with
the Securities and Exchange Commission or apply to qualify such sale,
assignment, transfer or participation under the securities laws of any state;
provided, further that no such sale, assignment or transfer described in clause
(i) above shall be effective unless and until an Assignment Agreement effecting
such sale, assignment or transfer shall have been accepted by Agent and recorded
in the Register as provided in subsection 9.1B(ii). Except as otherwise provided
in this subsection 9.1, no Lender shall, as between Company and such Lender, be
relieved of any of its obligations hereunder as a result of any sale, assignment
or transfer of, or any granting of participations in, all or any part of its
Commitment or the Loan or other Obligations owed to such Lender.
B. ASSIGNMENTS.
(i) Amounts and Terms of Assignments. Each Commitment, Loan or other
Obligation may (a) be assigned in any amount to another Lender, or to an
Affiliate of the assigning Lender or another Lender, with the giving of
notice to Company and Agent or (b) be assigned in an aggregate amount of
not less than $5,000,000 (or such lesser amount as (i) shall constitute the
aggregate amount of the Commitment, Loan and other Obligations of the
assigning Lender or (ii) shall be approved by the Agent within thirty days
of the Closing Date) to any other Eligible Assignee with the consent of
Company and Agent (which consent of Company and Agent shall not be
unreasonably withheld). To the extent of any such assignment in accordance
with either clause (a) or (b) above, the assigning Lender shall be relieved
of its obligations with respect to its Commitment, Loan or other
Obligations or the portion thereof so assigned. The parties to each such
assignment shall execute and deliver to Agent, for its acceptance and
recording in the Register, an Assignment Agreement, together with a
processing and recordation fee of, in the case of assignments to a Lender
or an Affiliate of a Lender, $1,500 and, in cases of an assignment to any
other Eligible
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Assignee, $3,500 and such forms, certificates or other evidence, if any,
with respect to United States federal income tax withholding matters as the
assignee under such Assignment Agreement may be required to deliver to
Agent pursuant to subsection 2.7B(iii)(a). Upon such execution, delivery,
acceptance and recordation, from and after the effective date specified in
such Assignment Agreement, (y) the assignee thereunder shall be a party
hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment Agreement, shall have the rights
and obligations of a Lender hereunder and (z) the assigning Lender
thereunder shall, to the extent that rights and obligations hereunder have
been assigned by it pursuant to such Assignment Agreement, relinquish its
rights and be released from its obligations under this Agreement (and, in
the case of an Assignment Agreement covering all or the remaining portion
of an assigning Lender's rights and obligations under this Agreement, such
Lender shall cease to be a party hereto). The Commitments hereunder shall
be modified to reflect the Commitment of such assignee and any remaining
Commitment of such assigning Lender and, if any such assignment occurs
after the issuance of the Notes hereunder, the assigning Lender shall, upon
the effectiveness of such assignment or as promptly thereafter as
practicable, surrender its Note to Agent for cancellation, and thereupon a
new Note shall be issued to the assignee and to the assigning Lender,
substantially in the form of Exhibit III annexed hereto, with appropriate
insertions, to reflect the new Commitment and/or outstanding Loan, as the
case may be, of the assignee and the assigning Lender.
(ii) Acceptance by Agent; Recordation in Register. Upon its receipt of
an Assignment Agreement executed by an assigning Lender and an assignee
representing that it is an Eligible Assignee, together with the processing
and recordation fee referred to in subsection 9.1B(i) and any forms,
certificates or other evidence with respect to United States federal income
tax withholding matters that such assignee may be required to deliver to
Agent pursuant to subsection 2.7B(iii)(a), Agent shall, if such Assignment
Agreement has been completed and is in substantially the form of Exhibit
VIII hereto and if Agent and Company have consented to the assignment
evidenced thereby (in each case to the extent such consent is required
pursuant to subsection 9.1B(i)), (a) accept such Assignment Agreement by
executing a counterpart thereof as provided therein (which acceptance shall
evidence any required consent of Agent to such assignment), (b) record the
information contained therein in the Register, and (c) give prompt notice
thereof
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to Company. Agent shall maintain a copy of each Assignment Agreement
delivered to and accepted by it as provided in this subsection 9.1B(ii).
C. PARTICIPATIONS. The holder of any participation, other than an
Affiliate of the Lender granting such participation, shall not be entitled to
require such Lender to take or omit to take any action hereunder except action
directly affecting (i) the extension of the scheduled final maturity date of any
Loan allocated to such participation, (ii) a reduction of the principal amount
of or the rate of interest payable on any Loan allocated to such participation,
(iii) the release of the Liens held by Collateral Agent on behalf of Lenders
with respect to all or substantially all of the Collateral or (iv) a reduction
of the amount of any fees payable hereunder to the extent of such participation,
and all amounts payable by Company hereunder (including without limitation
amounts payable to such Lender pursuant to subsections 2.6D and 2.7) shall be
determined as if such Lender had not sold such participation. Company and each
Lender hereby acknowledge and agree that, solely for purposes of subsections 9.4
and 9.5, (a) any participation will give rise to a direct obligation of Company
to the participant and (b) the participant shall be considered to be a "Lender".
D. ASSIGNMENTS TO FEDERAL RESERVE BANKS. In addition to the assignments
and participations permitted under the foregoing provisions of this subsection
9.1, any Lender may assign and pledge all or any portion of its Loan, the other
Obligations owed to such Lender, and its Note to any Federal Reserve Bank as
collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any operating circular issued by such Federal Reserve
Bank; provided that (i) no Lender shall, as between Company and such Lender, be
relieved of any of its obligations hereunder as a result of any such assignment
and pledge and (ii) in no event shall such Federal Reserve Bank be considered to
be a "Lender" or be entitled to require the assigning Lender to take or omit to
take any action hereunder.
E. INFORMATION. Each Lender may furnish any information concerning
Company and its Subsidiaries in the possession of that Lender from time to time
to assignees and participants (including prospective assignees and
participants), subject to subsection 5.5.
9.2 EXPENSES.
Whether or not the transactions contemplated hereby shall be
consummated, Company agrees to pay promptly (i) all the actual and reasonable
costs and expenses of preparation of the
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Loan Documents; (ii) all the costs of furnishing all opinions by counsel for
Company (including without limitation any opinions requested by Lenders as to
any legal matters arising hereunder) and of Company's performance of and
compliance with all agreements and conditions on its part to be performed or
complied with under this Agreement and the other Loan Documents including,
without limitation, with respect to confirming compliance with environmental and
insurance requirements; (iii) the reasonable fees, expenses and disbursements of
counsel to Agent (including allocated costs of internal counsel) in connection
with the negotiation, preparation, execution and administration of the Loan
Documents and the Loans and any consents, amendments, waivers or other
modifications hereto or thereto and any other documents or matters requested by
Company; (iv) all other actual and reasonable costs and expenses incurred by
Agent in connection with the syndication of the Commitments and the negotiation,
preparation and execution of the Loan Documents and the transactions
contemplated hereby and thereby; (v) all the actual and reasonable costs and
expenses of creating and perfecting Liens in favor of Collateral Agent on behalf
of Lenders, including filing and recording fees and expenses, and fees and
expenses of counsel providing such opinions as Agent or any Lender may
reasonably request; and (vi) after the occurrence of an Event of Default, all
costs and expenses, including reasonable attorneys' fees (including allocated
costs of internal counsel) and costs of settlement, incurred by Agent and
Lenders in enforcing any Obligations of or in collecting any payments due from
Company hereunder or under the other Loan Documents by reason of such Event of
Default or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a "work-out" or
pursuant to any insolvency or bankruptcy proceedings.
9.3 INDEMNITY.
In addition to the payment of expenses pursuant to subsection 9.2,
whether or not the transactions contemplated hereby shall be consummated,
Company agrees to defend, indemnify, pay and hold harmless Agent and Lenders,
and the officers, directors, employees, agents and affiliates of Agent and
Lenders (collectively called the "INDEMNITEES") from and against any and all
other liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, claims, costs, expenses and disbursements of any kind or nature
whatsoever (including without limitation the reasonable fees and disbursements
of counsel for such Indemnitees in connection with any investigative,
administrative or judicial proceeding commenced or threatened by any Person,
whether or not any such Indemnitee shall be designated as a party or a potential
party thereto), whether direct, indirect or consequential and whether based on
any
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federal, state or foreign laws, statutes, rules or regulations (including
without limitation securities and commercial laws, statutes, rules or
regulations and Environmental Laws), on common law or equitable cause or on
contract or otherwise, that may be imposed on, incurred by, or asserted against
any such Indemnitee, in any manner relating to or arising out of this Agreement
or the other Loan Documents or the transactions contemplated hereby or thereby
(including without limitation Lenders' agreement to make the Loans hereunder or
the use or intended use of the proceeds of any of the Loans or the statements
contained in the commitment letter delivered by any Lender to Company with
respect thereto (collectively called the "INDEMNIFIED LIABILITIES"); provided
that Company shall not have any obligation to any Indemnitee hereunder with
respect to any Indemnified Liabilities to the extent such Indemnified
Liabilities arise solely from the gross negligence or willful misconduct of that
Indemnitee as determined by a final judgment of a court of competent
jurisdiction. To the extent that the undertaking to defend, indemnify, pay and
hold harmless set forth in the preceding sentence may be unenforceable because
it is violative of any law or public policy, Company shall contribute the
maximum portion that it is permitted to pay and satisfy under applicable law to
the payment and satisfaction of all Indemnified Liabilities incurred by the
Indemnitees or any of them.
9.4 SET-OFF.
In addition to any rights now or hereafter granted under applicable
law and not by way of limitation of any such rights, upon the occurrence and the
continuation of any Event of Default each Lender is hereby authorized by Company
at any time or from time to time, without notice to Company or to any other
Person, any such notice being hereby expressly waived, to set off and to
appropriate and to apply any and all deposits (general or special, including,
but not limited to, Indebtedness evidenced by certificates of deposit, whether
matured or unmatured, but not including trust accounts) and any other
Indebtedness at any time held or owing by that Lender to or for the credit or
the account of Company against and on account of the obligations and liabilities
of Company to that Lender under this Agreement and the other Loan Documents,
including, but not limited to, all claims of any nature or description arising
out of or connected with this Agreement or any other Loan Document, irrespective
of whether or not (i) that Lender shall have made any demand hereunder or (ii)
the principal of or the interest on the Loans or any other amounts due hereunder
shall have become due and payable pursuant to Section 7 and although said
obligations and liabilities, or any of them, may be contingent or unmatured.
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9.5 RATABLE SHARING.
Lenders hereby agree among themselves that if any of them shall,
whether by voluntary payment, by realization upon security, through the exercise
of any right of set-off or banker's lien, by counterclaim or cross action or by
the enforcement of any right under the Loan Documents or otherwise, or as
adequate protection of a deposit treated as cash collateral under the Bankruptcy
Code, receive payment or reduction of a proportion of the aggregate amount of
principal, interest, fees and other amounts then due and owing to that Lender
hereunder or under the other Loan Documents (collectively, the "AGGREGATE
AMOUNTS DUE" to such Lender) which is greater than the proportion received by
any other Lender in respect of the Aggregate Amounts Due to such other Lender,
then the Lender receiving such proportionately greater payment shall (i) notify
Agent and each other Lender of the receipt of such payment and (ii) apply a
portion of such payment to purchase participations (which it shall be deemed to
have purchased from each seller of a participation simultaneously upon the
receipt by such seller of its portion of such payment) in the Aggregate Amounts
Due to the other Lenders so that all such recoveries of Aggregate Amounts Due
shall be shared by all Lenders in proportion to the Aggregate Amounts Due to
them; provided that if all or part of such proportionately greater payment
received by such purchasing Lender is thereafter recovered from such Lender upon
the bankruptcy or reorganization of Company or otherwise, those purchases shall
be rescinded and the purchase prices paid for such participations shall be
returned to such purchasing Lender ratably to the extent of such recovery, but
without interest. Company expressly consents to the foregoing arrangement and
agrees that any holder of a participation so purchased may exercise any and all
rights of banker's lien, set-off or counterclaim with respect to any and all
monies owing by Company to that holder with respect thereto as fully as if that
holder were owed the amount of the participation held by that holder.
9.6 AMENDMENTS AND WAIVERS.
No amendment, modification, termination or waiver of any provision of
this Agreement or of the Notes, or consent to any departure by Company
therefrom, shall in any event be effective without the written concurrence of
Requisite Lenders; provided that any such amendment, modification, termination,
waiver or consent which: increases the amount of any of the Commitments or
reduces the principal amount of any of the Loans; changes the definitions of
Funding Percentages, Final Pro Rata Share or Funded Pro Rata Share; changes in
any manner the definition of "Requisite Lenders"; changes in any manner any
provision of this Agreement which, by its terms, expressly
111
requires the approval or concurrence of all Lenders; postpones the date of final
maturity of the Loans; decreases the interest rate borne by any of the Loans
(other than any waiver of any increase in the interest rate applicable to any of
the Loans pursuant to subsection 2.2E) or the amount of any fees payable
hereunder; or changes in any manner the provisions contained in subsection 7.1
or this subsection 9.6, shall be effective only if evidenced by a writing signed
by or on behalf of all Lenders affected thereby; and provided further that any
such amendment, modification, termination, waiver or consent which changes in
any manner the provisions contained in subsection 2.4B(ii)(f) shall be effective
only if evidenced by a writing signed by or on behalf of Lenders having or
holding 90% of the sum of the aggregate Loan Exposure of all Lenders. In
addition, no amendment, modification, termination or waiver of any provision of
Section 8 or of any other provision of this Agreement which, by its terms,
expressly requires the approval or concurrence of Agent shall be effective
without the written concurrence of Agent. Agent may, but shall have no
obligation to, with the concurrence of any Lender, execute amendments,
modifications, waivers or consents on behalf of that Lender. Any waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which it was given. No notice to or demand on Company in any case
shall entitle Company to any other or further notice or demand in similar or
other circumstances. Any amendment, modification, termination, waiver or consent
effected in accordance with this subsection 9.6 shall be binding upon each
Lender at the time outstanding, each future Lender and, if signed by Company, on
Company.
9.7 INDEPENDENCE OF COVENANTS.
All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or would otherwise be within
the limitations of, another covenant shall not avoid the occurrence of an Event
of Default or Potential Event of Default if such action is taken or condition
exists.
9.8 NOTICES.
Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, telexed or sent by telefacsimile or United States mail
or courier service and shall be deemed to have been given when delivered in
person or by courier service, upon receipt of telefacsimile or telex, or three
Business Days after depositing it in the United States mail with postage prepaid
and properly addressed; provided that
112
notices to Agent shall not be effective until received. For the purposes hereof,
the address of each party hereto shall be as set forth under such party's name
on the signature pages hereof or (i) as to Company and Agent, such other address
as shall be designated by such Person in a written notice delivered to the other
parties hereto and (ii) as to each other party, such other address as shall be
designated by such party in a written notice delivered to Agent.
9.9 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
A. All representations, warranties and agreements made herein shall
survive the execution and delivery of this Agreement and the making of the Loans
hereunder.
B. Notwithstanding anything in this Agreement or implied by law to
the contrary, the agreements of Company set forth in subsections 2.6D, 2.7, 9.2,
9.3 and 9.4 and the agreements of Lenders set forth in subsections 8.2C, 8.4 and
9.5 shall survive the payment of the Loans and the termination of this
Agreement.
9.10 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of Agent or any Lender in the exercise
of any power, right or privilege hereunder or under any other Loan Document
shall impair such power, right or privilege or be construed to be a waiver of
any default or acquiescence therein, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further exercise thereof or
of any other power, right or privilege. All rights and remedies existing under
this Agreement and the other Loan Documents are cumulative to, and not exclusive
of, any rights or remedies otherwise available.
9.11 MARSHALLING; PAYMENTS SET ASIDE.
Neither Agent nor any Lender shall be under any obligation to marshal
any assets in favor of Company or any other party or against or in payment of
any or all of the Obligations. To the extent that Company makes a payment or
payments to Agent or Lenders (or to Agent for the benefit of Lenders), or Agent
or Lenders enforce any security interests or exercise their rights of setoff,
and such payment or payments or the proceeds of such enforcement or setoff or
any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee, receiver or
any other party under any bankruptcy law, any other state or federal law, common
law or any equitable cause, then, to the extent of such
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recovery, the obligation or part thereof originally intended to be satisfied,
and all Liens, rights and remedies therefor or related thereto, shall be revived
and continued in full force and effect as if such payment or payments had not
been made or such enforcement or setoff had not occurred.
9.12 SEVERABILITY.
In case any provision in or obligation under this Agreement or the
Notes shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
9.13 OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF LENDERS' RIGHTS.
The obligations of Lenders hereunder are several and no Lender shall
be responsible for the obligations or Commitments of any other Lender hereunder.
Nothing contained herein or in any other Loan Document, and no action taken by
Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt, and each Lender shall be entitled to protect and enforce its
rights arising out of this Agreement and it shall not be necessary for any other
Lender to be joined as an additional party in any proceeding for such purpose.
9.14 HEADINGS.
Section and subsection headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
9.15 APPLICABLE LAW.
THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
9.16 SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and assigns
114
of Lenders (it being understood that Lenders' rights of assignment are subject
to subsection 9.1). Neither Company's rights or obligations hereunder nor any
interest therein may be assigned or delegated by Company without the prior
written consent of all Lenders.
9.17 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST COMPANY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY OBLIGATION MAY BE
BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF
NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT COMPANY ACCEPTS FOR
ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE
NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED
THEREBY IN CONNECTION WITH THIS AGREEMENT, SUCH OTHER LOAN DOCUMENT OR SUCH
OBLIGATION. Company hereby agrees that service of all process in any such
proceeding in any such court may be made by registered or certified mail, return
receipt requested, to Company at its address provided in subsection 9.8, such
service being hereby acknowledged by Company to be sufficient for personal
jurisdiction in any action against Company in any such court and to be otherwise
effective and binding service in every respect. Nothing herein shall affect the
right to serve process in any other manner permitted by law or shall limit the
right of any Lender to bring proceedings against Company in the courts of any
other jurisdiction.
9.18 WAIVER OF JURY TRIAL.
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE
LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this waiver
is intended to be all-encompassing of any and all disputes that may be filed in
any court and that relate to the subject matter of this transaction, including
without limitation contract claims, tort claims, breach of duty claims and all
other common law and statutory claims. Each party hereto acknowledges that this
waiver is a material inducement to enter into a business relationship, that each
has already relied on this waiver in entering into this Agreement, and that each
will continue to rely on this waiver in their related future dealings. Each
party hereto further warrants and represents that it has reviewed this waiver
with its legal counsel and that it knowingly
115
and voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS
MADE HEREUNDER. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.
9.19 COUNTERPARTS; EFFECTIVENESS.
This Agreement and any amendments, waivers, consents or supplements
hereto or in connection herewith may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto and receipt by
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Company and Agent of written or telephonic notification of such execution and
authorization of delivery thereof.
9.20 CERTAIN RECEIVABLES FACILITIES INTERCREDITOR AGREEMENTS.
By its execution of this Agreement, each Lender agrees, for the
benefit of the holders from time to time of trade receivables backed
certificates issued in connection with the Receivables Bridge Facility and the
New Receivables Facility (the "Receivables Certificates") not to:
(a) challenge the transfers of receivables and related assets from the
sellers under such Receivables Facilities (the "Sellers") to BPS Financial
Services, Inc. (the "Transferor"), whether on the grounds that such sales
were disguised financings or fraudulent conveyances or otherwise, so long
as such transfers are carried out in all material respects in accordance
with the Purchase Agreement and the Pooling Agreement described (and as
defined) in the Draft Information Memorandum or the Receivables Bridge
Facility, as the case may be;
(b) assert that the Transferor and any Seller should be substantively
consolidated; or
(c) institute or join any other Person in instituting any bankruptcy
or other insolvency proceeding against the Transferor so long as any of the
Receivables Certificates shall be outstanding or there shall not have
lapsed one year plus one day since the last day on which any of the
Receivables Certificates shall have been outstanding.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
COMPANY:
BORG-WARNER SECURITY CORPORATION
By: Timothy M. Wood
------------------------------------
Title: Vice President
---------------------------------
Notice Address:
Borg-Warner Security Corporation
200 South Michigan Avenue
Chicago, Illinois 60604
Attention: Chief Financial Officer
LENDERS:
BANKERS TRUST COMPANY,
individually and as Agent
By: Mary Jo Jolly
------------------------------------
Title: Assistant Vice President
---------------------------------
Notice Address:
Bankers Trust Company
One Bankers Trust Plaza
130 Liberty Street
New York, New York 10006
Attention: Ariana Boer
with a copy to:
Bankers Trust Company
300 South Grand Avenue
41st Floor
Los Angeles, California 90071
Attention: Cristie Sheffield
S-1
CIBC INC.
By: John W. Kunkle
----------------
Title: Vice President
----------------
Notice Address:
200 W. Madison
Suite 2300
Chicago, IL 60606
Attention: John Kunkle
THE LONG-TERM CREDIT BANK OF JAPAN, LTD.
By: Brady S. Sadek
----------------
Title: Vice President & Deputy General
Manager
Notice Address:
190 South LaSalle Street
Suite 800
Chicago, IL 60603
Attention: Ken Loveless
NATIONSBANK, N.A.,
individually and as Documentation Agent
By: Percy Berger
--------------
Title: Senior Vice President
-----------------------
Notice Address:
233 South Wacker Drive
Suite 2800
Chicago, IL 60606
Attention: Carter Smith
S-2
TORONTO DOMINION (TEXAS), INC.
By: Diane Bailey
-----------------
Title: Vice President
--------------
Notice Address:
Diane Bailey
909 Fannin, Suite 1700
Houston, Texas 77010
Tel: (713) 653-8250
Fax: (713) 951-9921
CAISSE NATIONALE DE CREDIT AGRICOLE
By: Dean Balice
-----------
Title: Senior Vice President & Branch
Manager
Notice Address:
55 E. Monroe Street
Suite 4700
Chicago, IL 60603
Attention: Lynn Rosinsky
Phone: (312) 917-7449
FAX: (312) 372-2830
THE FUJI BANK, LIMITED
By: Peter L. Chinnici
------------------------
Title: Joint General Manager
---------------------
Notice Address:
225 West Wacker Drive
Suite 2000
Chicago, Illinois 60606
Attention: Mark McCracken
Tel: (312) 621-0500
Fax: (312) 621-0539
S-3
BANK OF HAWAII
By: Donna R. Parker
---------------------------
Title: Assistant Vice President
------------------------
Notice Address:
130 Merchant Street
20th Floor
Honolulu, Hawaii 96813
Attention: Donna Parker
S-4