EXHIBIT 4.2
BORG-WARNER SECURITY CORPORATION
THIRD AMENDMENT TO CREDIT AGREEMENT AND CONSENT
This THIRD AMENDMENT TO CREDIT AGREEMENT AND CONSENT (this "AMENDMENT")
is dated as of October 16, 1995 and entered into by and among BORG-WARNER
SECURITY CORPORATION, a Delaware corporation ("COMPANY"), the financial
institutions listed on the signature pages hereof ("LENDERS"), BANK OF AMERICA
ILLINOIS, THE BANK OF NEW YORK and THE BANK OF NOVA SCOTIA, as Lead Managers,
BANKERS TRUST COMPANY, CIBC INC. and NATIONSBANK, N.A. (formerly known as
NATIONSBANK, N.A. ("Carolinas")), as Co-Agents, and BANKERS TRUST COMPANY, as
Administrative Agent for Lenders (in such capacity, "ADMINISTRATIVE AGENT"),
and, for purposes of Section 5 hereof, the Credit Support Parties (as defined in
Section 5 hereof) listed on the signature pages hereof, and is made with
reference to that certain Credit Agreement dated as of January 27, 1993 by and
among Company, Lenders, Lead Managers, Co-Agents and Administrative Agent, as
amended by that certain First Amendment to Credit Agreement dated as of June 30,
1994 and that certain Second Amendment to Credit Agreement and Consent dated as
of March 15, 1995 (such agreement, as so amended, being referred to herein as
the "CREDIT AGREEMENT"). Capitalized terms used herein without definition shall
have the same meanings herein as set forth in the Credit Agreement.
RECITALS
WHEREAS, Company and Lenders desire to amend the Credit Agreement by
(i) amending the mandatory prepayment provisions thereof, (ii) amending the
pricing provisions thereof, (iii) amending certain of the covenants thereof,
including without limitation to permit the Company to enter into a $200,000,000
senior term loan facility to be equally and ratably secured with the Loans, (iv)
amending certain of the financial covenants contained therein and (v) making
certain other amendments as set forth below; and
WHEREAS, subject to the terms and conditions of this Amendment, Lenders
are willing to agree to such amendments;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
SECTION 1. AMENDMENTS TO THE CREDIT AGREEMENT
1.1 AMENDMENTS TO SECTION 1: DEFINITIONS.
A. AMENDMENTS TO DEFINITIONS.
(i) The following definitions contained in subsection 1.1 of the Credit
Agreement are hereby amended by deleting each definition in its entirety and by
substituting the following therefor:
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"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 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.
"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 ("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.
"Centaur Interest Amount" means, for each period for which the
determination is being made and for each Centaur Settlement Amount for which
such calculation is being made, an amount equal to the interest expense
attributable to such Centaur Settlement Amount
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for such period, commencing from the date of payment of such Centaur
Settlement Amount for the first such period, which amount shall be
calculated by utilizing the Base Rate then in effect for Loans outstanding
under this Agreement (without reference to the Base Rate Margin).
"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 effective date of the Second Amendment
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
Co-Agents and approved by Co-Agents as of the effective date of the Second
Amendment.
"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 and
any fees or other similar financing costs payable in connection with the
Term Loan Facility, the Receivables Facilities or the amendments to the L/C
Agreement or this Agreement which are capitalized by Company.
"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, an L/C Bank or a
lender under the Term Loan Facility or any of their respective Affiliates or
ML & Co. or any of its Affiliates or any other Person reasonably acceptable
to Co-Agents 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.
"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
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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.
(ii) The definition of "L/C Agreement" contained in subsection 1.1 of
the Credit Agreement is hereby amended by deleting the reference to "Westpac
Banking Corporation" contained therein and substituting "The Long-Term Credit
Bank of Japan" therefor;
(iii) The definition of "Scheduled Commitments Reduction Amount"
contained in subsection 1.1 of the Credit Agreement is hereby amended by
deleting clause (ii) therefrom in its entirety and substituting "(ii) pursuant
to subsections 2.4G(i), (iii) or (vi), the amount reduced shall be applied pro
rata to reduce the amounts set forth above;" therefor;
(iv) Concurrently with the repayment in full of the Senior Notes, the
definition of "Centaur Settlement Amount" contained in subsection 1.1 of the
Credit Agreement shall be amended by deleting each reference to "Second
Amendment" contained therein and substituting "Third Amendment" therefor;
B. NEW DEFINITIONS. Subsection 1.1 of the Credit Agreement is hereby
further amended by adding thereto the following definitions, which definitions
shall be inserted in proper alphabetical order:
"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.
"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.
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"Centaur" means Centaur Insurance Company, an Illinois corporation
and one of the BW-Other Corporations.
"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 the Company, as such Draft
Information Memorandum may be amended or supplemented by materials
distributed to all Lenders prior to the effective date of the Third
Amendment or which are otherwise approved by Requisite Lenders after the
effective date of the Third Amendment, which materials are specifically
identified as amendments or supplements to such Draft Information
Memorandum.
"Existing Receivables Facility" means Company's off-balance sheet
receivables purchase facility with Enterprise Funding Corporation providing
for the purchase of up to $100 million of receivables from the Company and
its Subsidiaries, as such Existing Receivables Facility may hereafter be
amended, supplemented or otherwise modified from time to time to the extent
permitted under this Agreement.
"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 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.
"Fiscal Year" means the fiscal year of Company and its
Subsidiaries ended on December 31 of each calendar year.
"Interest Coverage Ratio" means the ratio of Consolidated EBITDA
to Consolidated Interest Expense.
"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.
"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
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indenture may be amended from time to time to the extent permitted under
this Agreement.
"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 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.
"Stonington" means Stonington Partners, L.P., a Delaware limited
partnership.
"Term Loan Facility" means the Credit Agreement dated as of
October 16, 1995 among the Company, as borrower, the financial institutions
party thereto, as lenders and Bankers Trust Company, as agent, providing for
a term loan to Company of up to $200,000,000, as such Term Loan Facility may
hereafter be amended, supplemented or otherwise modified from time to time
to the extent permitted under this Agreement.
"Third Amendment" means the Third Amendment to Credit Agreement
and Consent dated as of October 16, 1995, by and among Company, Lenders,
Lead Managers, Co-Agents and Administrative Agent.
C. ACCOUNTING TERMS; UTILIZATION GAAP FOR PURPOSES OF CALCULATION
UNDER AGREEMENT. Subsection 1.2 of the Credit Agreement is hereby amended by
deleting the reference to "December 31, 1991" contained in the last sentence
thereof and substituting "December 31, 1994" therefor.
1.2 AMENDMENTS TO SECTION 2: AMOUNTS AND TERMS OF COMMITMENTS AND
LOANS; NOTES; LETTERS OF CREDIT.
A. GLOBAL AMENDMENT. Section 2 of the Credit Agreement is hereby
amended by:
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(1) deleting each reference to "Prime Rate" contained therein and
substituting "Base Rate" therefor;
(2) deleting each reference to "Prime Rate Loan" contained therein
and substituting "Base Rate Loan" therefor;
(3) deleting each reference to "Prime Rate Loans" contained
therein and substituting "Base Rate Loans" therefor; and
(4) deleting each reference to "Prime Rate Margin" contained
therein and substituting "Base Rate Margin" therefor.
B. RATE OF INTEREST. Subsection 2.2A of the Credit Agreement is hereby
amended by deleting the second and third paragraphs thereof in their entirety
and substituting the following therefor:
"From September 30, 1995 through and including September 30, 1996, the
Loans shall bear interest as follows:
(i) if a Base Rate Loan, then at the sum of the Base Rate plus
1.75% per annum; or
(ii) if a Eurodollar Rate Loan, then at the sum of the Adjusted
Eurodollar Rate plus 2.75% per annum.
After September 30, 1996 through maturity, the Loans shall bear
interest as follows:
(i) if a Base Rate Loan, then at the sum of the Base Rate plus the
Base Rate Margin set forth in the table below opposite Company's
Interest Coverage Ratio for the twelve-month period immediately
preceding the fiscal quarter for which the determination is being made;
or
(ii) if a Eurodollar Rate Loan, then at the sum of the Adjusted
Eurodollar Rate plus the Eurodollar Rate Margin set forth in the table
below opposite Company's Interest Coverage Ratio for the twelve-month
period immediately preceding the fiscal quarter for which the
determination is being made.
Interest Base Rate Eurodollar
Coverage Ratio Margin Rate Margin
--------------
Less than 2.25:1.00 1.75% 2.75%
Equal to or greater than 1.50% 2.50%
2.25:1.00 but less than
2.75:1.00
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Equal to or greater than 1.25% 2.25%
2.75:1.00 but less than
3.55:1.00
Equal to or greater than 1.00% 2.00%
3.55:1:00 but less than
4.00:1.00
Equal to or greater than 0.75% 1.75%
4.00:1.00 but less than
4.50:1.00
Equal to or greater than 0.50% 1.50%
4.50:1.00
Upon delivery of the Compliance Certificate pursuant to subsection 5.1(iv)
of the Credit Agreement, the Base Rate Margin and the Eurodollar Rate Margin
shall automatically be adjusted in accordance with the Interest Coverage
Ratio for the twelve-month period immediately preceding the fiscal quarter
for which the determination is being made as set forth in such Compliance
Certificate and the table set forth above, such adjustment to be retroactive
to the first day of the fiscal quarter during which such Compliance
Certificate is delivered. If Company fails to deliver a Compliance
Certificate which sets forth the information necessary to determine the
Interest Coverage Ratio during any fiscal quarter, the Base Rate Margin and
the Eurodollar Rate Margin during the fiscal quarter for which such
Compliance Certificate was not delivered shall automatically be adjusted to
1.75% per annum and 2.75% per annum, respectively."
C. FEES.
(i) Subsection 2.3 of the Credit Agreement is hereby amended by
deleting paragraph A. thereof in its entirety and substituting the following
therefor:
"A. COMMITMENT FEES. Company agrees to pay to Administrative Agent for
distribution to each Lender in proportion to that Lender's Pro Rata
Share of the Commitments, commitment fees for the period from and
including September 30, 1995 to and excluding the date the Commitments
terminate equal to the average of the daily excess of the Commitments
over the aggregate principal amount of Loans outstanding 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 in
arrears on but excluding March 31, June 30, September 30 and December
31 of each year, commencing on the first such date to occur after
September 30, 1995, and ending upon the earlier to occur of the
termination of the Commitments or June 30, 1999. For purposes of this
subsection 2.3A, calculation of the amount of the Commitments shall not
give effect to any limitation of the amount available for
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borrowing thereunder set forth in the numbered paragraphs of subsection
2.1A."
(ii) Subsection 2.3 of the Credit Agreement is hereby further
amended by deleting paragraph C. thereof in its entirety.
D. MANDATORY PREPAYMENTS. Subsection 2.4A(ii) of the Credit Agreement
is hereby amended by deleting it in its entirety and substituting the following
therefor:
"(ii) Mandatory Prepayments.
(a) Prepayments from Asset Sales. Subject to the immediately
succeeding proviso, after the payment in full of the Term Loan Facility
or in the event that any prepayment otherwise payable to the lenders
under the Term Loan Facility is waived by the lenders under the Term
Loan Facility, no later than the second Business Day following the date
of receipt by Company or any of its Subsidiaries of the 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 2.4A(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 Term
Loan Facility; 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 2.4A(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 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 2.4A(ii)(a), Company shall deliver to Administrative
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
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mandatory prepayments shall be applied as specified in subsection
2.4A(iii).
(b) Prepayments Due to Excess Cash Flow. After the payment in full
of the Term Loan Facility or in the event that any prepayment otherwise
payable to the lenders under the Term Loan Facility is waived by the
lenders under the Term Loan Facility, 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
2.4A(iii).
(c) Prepayments Due to Reversion of Surplus Assets of Pension
Plans. After the payment in full of the Term Loan Facility or in the
event that any prepayment otherwise payable to the lenders under the
Term Loan Facility is waived by the lenders under the Term Loan
Facility, 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 2.4A(iii).
(d) Prepayments Due to Commitment Reduction. On each date that any
reduction in the Commitments pursuant to subsections 2.4G(ii) or (iii)
occurs, Company shall make a prepayment of the Loans in an amount equal
to the excess, if any, of the Total Utilization of Commitments over the
Commitments as so reduced.
(e) Prepayments Due to Limitations on Commitments. Company shall
make prepayments of Loans necessary to give effect to the limitations
set forth in subsection 2.1A.
(f) Prepayments Due to Issuance of Debt Securities. After the
payment in full of the Term Loan Facility or in the event that any
prepayment otherwise payable to the lenders under the Term Loan
Facility is waived by the lenders under the Term Loan Facility, 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)-(xii), Company shall
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prepay the Loans in an amount equal to such net cash proceeds. Any such
mandatory prepayments shall be applied as specified in subsection
2.4A(iii).
(g) Prepayments Due to Issuance of Equity Securities. After the
payment in full of the Term Loan Facility or in the event that any
prepayment otherwise payable to the lenders under the Term Loan
Facility is waived by the lenders under the Term Loan Facility, 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 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 2.4A(iii)."
E. MANDATORY REDUCTIONS OF COMMITMENTS. Subsection 2.4G of the Credit
Agreement is hereby amended by deleting clause (iv) thereof in its entirety and
substituting "(iv) [intentionally omitted]," therefor and by deleting the period
at the end of the first sentence thereof and substituting "and (vi) on the date
any prepayment of Loans is made or is required to be made pursuant to subsection
2.4A(ii)(f) or (g) by an amount equal to the amount of such prepayment."
therefor.
F. COMPENSATION. Subsection 2.9E of the Credit Agreement is hereby
amended by deleting clause (y) in subparagraph (ii) thereof in its entirety and
substituting "(y) 0.50% per annum, multiplied by" therefor.
1.3 AMENDMENTS TO SECTION 4: COMPANY'S REPRESENTATIVES AND WARRANTIES.
A. SUBSIDIARIES. Subsection 4.1D of the Credit Agreement is hereby
amended by deleting the third sentence thereof in its entirety and substituting
"As of June 30, 1995, the Material Subsidiaries own not less than 83% of the
value of all tangible assets of Loan Parties taken as a whole." therefor.
B. NO MATERIAL ADVERSE CHANGE; NO STOCK PAYMENTS. Subsection 4.4 of the
Credit Agreement is hereby amended by deleting the reference to "December 31,
1991" contained in the first sentence thereof and substituting "December 31,
1994" therefor.
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1.4 AMENDMENTS TO SECTION 5: COMPANY'S AFFIRMATIVE COVENANTS.
A. FINANCIAL STATEMENTS AND OTHER REPORTS.
(i) Subsection 5.1 of the Credit Agreement is hereby amended by
inserting the phrase "cash flows," immediately after the phrase
"operating profit," contained in clause (xii) thereof;
(ii) Subsection 5.1 of the Credit Agreement is hereby further
amended by renumbering clause (xiv) thereof as clause (xv) and by
adding new subsection 5.1(xiv) thereto as follows:
"(xiv) 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 A annexed hereto with respect
to all Subsidiaries of Company (it being understood that such
written notice shall be deemed to supplement Schedule A annexed
hereto for all purposes of this Agreement); and"
B. EQUAL SECURITY FOR OBLIGATIONS; NO FURTHER NEGATIVE PLEDGES.
Subsection 5.6B of the Credit Agreement is hereby amended by deleting it in its
entirety and substituting the following therefor:
"B. Except with respect to specific property encumbered to secure
payment of particular Indebtedness or to be sold pursuant to an
executed agreement with respect to an Asset Sale, or as may be
restricted by the 9 1/8% Subordinated Note Indenture, the Receivables
Facilities, the Term Loan Facility or the L/C Agreement, neither
Company nor any of its Subsidiaries shall enter into any agreement
prohibiting the creation or assumption of any Lien upon its properties
or assets, whether now owned or hereafter acquired."
C. BW-OTHER CORPORATION.
(i) Subsection 5.10A of the Credit Agreement is hereby amended by
adding the following proviso to the end of the first sentence thereof:
"; and, provided further that Company may pay routine costs
and expenses related to BW-Other Corporation in the ordinary
course of business consistent with past practices"
(ii) Concurrently with the repayment in full of the Senior Notes,
subsection 5.10A of the Credit Agreement shall be
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amended by deleting it in its entirety and substituting the following
therefor:
"A. From and after the effective date of the Third Amendment,
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 except
for existing investments listed on Schedule E; provided, however,
that prior to the effective date of the Third Amendment, Company
may pay such amounts as have been disclosed in writing to the Co-
Agents as of such effective date 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
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 on terms that are less favorable to Company and its
Subsidiaries than those that might be obtained from third
parties."
D. INTEREST RATE PROTECTION. Concurrently with the repayment in full of
the Senior Notes, Section 5 of the Credit Agreement shall be amended by adding a
new subsection 5.12 at the end thereof as follows:
"5.12 INTEREST RATE PROTECTION
Within 120 days of the effective date of the Third Amendment,
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% 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 Administrative Agent; provided that to
the extent that any Receivables Facility permitted pursuant to subsections
6.1(vii) or (x) 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 5.12."
1.5 AMENDMENTS TO SECTION 6: COMPANY'S NEGATIVE COVENANTS.
A. INDEBTEDNESS.
(1) Subsection 6.1(iii) of the Credit Agreement is hereby amended by
deleting it in its entirety and substituting the following therefor:
13
"(iii) Company and its Consolidated Subsidiaries may remain
liable with respect to each of the items of Existing Indebtedness
described in Schedule C 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 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;"
(2) Subsection 6.1(vi) of the Credit Agreement is hereby amended by
deleting it in its entirety and substituting the following therefor:
"(vi) Company may remain liable with respect to $150,000,000
aggregate principal amount of the 9 1/8% Subordinated Notes;"
(3) Subsection 6.1(vii) of the Credit Agreement is hereby amended by
deleting it in its entirety and substituting the following therefor:
"(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;"
(4) Subsection 6.1(viii) of the Credit Agreement is hereby amended by
deleting the phrase "clauses (i)-(vii) and clause (x)" contained therein and
substituting "clauses (i)-(vii) and clauses (x)-(xi)" therefor;
(5) Subsection 6.1(ix) of the Credit Agreement is hereby amended by
deleting the phrase "clauses (i)-(viii) and clause (x)" contained therein,
by substituting "clauses (i)-(viii) and clauses (x)-(xi)" therefor and by
deleting the word "and" at the end thereof;
14
(6) Subsection 6.1(x) of the Credit Agreement is hereby amended by
deleting it in its entirety and substituting the following therefor:
"(x) 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., BW-Canada Alarm (Wells
Fargo) Corporation and their respective wholly owned subsidiaries and
in favor of 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;"
(7) Subsection 6.1 of the Credit Agreement is hereby further amended by
adding new subsections 6.1(xi) and 6.1(xii) thereto as follows:
"(xi) Company may become and remain liable with respect to
the Term Loan Facility; and
(xii) In addition to the Indebtedness permitted by clauses
(i)-(xi), 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; provided however that any
Indebtedness incurred by Company or any Consolidated Subsidiary which
constitutes a Foreign Entity pursuant to this subsection 6.1(xii) shall
reduce the amount available to Company and such Consolidated
Subsidiaries pursuant to subsection 6.1(viii) by that same amount."
(8) Concurrently with the repayment in full of the Senior Notes,
subsection 6.1(iv) of the Credit Agreement shall be amended by deleting it
in its entirety and substituting the following therefor:
"(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;"
(9) Concurrently with the repayment in full of the Senior Notes,
subsection 6.1(viii) of the Credit Agreement shall be amended by deleting it
in its entirety and substituting the following therefor:
15
"(viii) In addition to the Indebtedness permitted by clauses
(i)-(vii) and clauses (x)-(xi), 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;"
(10) Concurrently with the repayment in full of the Senior Notes,
subsection 6.1(ix) of the Credit Agreement shall be amended by deleting it
in its entirety and substituting therefor:
"(ix) [intentionally omitted];"
(11) Concurrently with the repayment in full of the Senior Notes,
subsection 6.1(xii) of the Credit Agreement shall be amended by deleting the
proviso contained therein in its entirety.
B. LIENS.
(1) Subsection 6.2(ii) of the Credit Agreement is hereby amended by
deleting the phrase "the holders of the Additional Senior Indebtedness,
including the holders of Indebtedness refinancing the Senior Notes in
accordance with subsection 6.1(iii)," therefrom and substituting the phrase
"the holders of the Senior Notes, the lenders under the Term Loan Facility
upon the agent thereunder" therefor.
(2) Subsection 6.2(viii) of the Credit Agreement is hereby amended by
deleting it in its entirety and substituting the following therefor:
"(viii) Liens in favor of the purchaser of receivables,
contracts and/or leases 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(x)."
(3) Concurrently with the repayment in full of the Senior Notes,
subsection 6.2(ii) shall be amended by deleting it in its entirety and
substituting the following therefor:
"(ii) Liens granted pursuant to the Collateral Documents in
favor of Collateral Agent for the benefit of the Lenders, the holders
of the Senior Notes, the lenders under the Term Loan Facility upon the
agent thereunder signing an acknowledgment to the Intercreditor
Agreement, the agent or representative for the issuers of the letters
of credit permitted pursuant to subsection 6.4(vi) signing an
acknowledgement to the Intercreditor Agreement, the beneficiaries of
the guaranties permitted pursuant to subsection 6.4(iii) and, as may be
otherwise approved from time to time by Requisite Lenders and as shall
sign an acknowledgement to the Intercreditor Agreement;"
16
C. INVESTMENTS.
(1) Subsection 6.3(iii) of the Credit Agreement is hereby amended by
deleting it in its entirety and substituting the following therefor:
"(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 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(x);"
(2) Subsection 6.3(v) of the Credit Agreement is hereby amended by
deleting the word "and" from the end thereof.
(3) Subsection 6.3(vi) of the Credit Agreement is hereby amended by
deleting it in its entirety and substituting the following therefor:
"(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);"
(4) Subsection 6.3 of the Credit Agreement is hereby further amended by
adding new subsections 6.3(vii) and 6.3(viii) thereto as follows:
"(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(iii)
and (iv), does not exceed the amount permitted by subsections 6.7(iii)
and (iv); and
(viii) Company and its Consolidated Subsidiaries may create
or acquire Joint Ventures to the extent not otherwise
17
prohibited pursuant to this Agreement provided that the aggregate
amount expended for all such Investments does not exceed $5,000,000."
D. CONTINGENT OBLIGATIONS.
(1) Subsection 6.4(ii) of the Credit Agreement is hereby amended by
adding the following at the end thereof "and Contingent Obligations under
substantially similar Loan Guaranties in favor of the Collateral Agent under
the Intercreditor Agreement for the benefit of the lenders under the Term
Loan Facility and the L/C Banks under the L/C Agreement;"
(2) Subsection 6.4(iii) of the Credit Agreement is hereby amended by
deleting the phrase "or L/C Banks" each place it occurs therein and
substituting "L/C Banks or lenders under the Term Loan Facility" therefor;
(3) Subsection 6.4(xi) of the Credit Agreement is hereby amended by
deleting the phrase "permitted by clauses (i)-(x)" therein, by substituting
"permitted by clauses (i)-(x) and clause (xii)" therefor and by deleting the
period at the end thereof and substituting "; and" therefor;
(4) Subsection 6.4(xi) of the Credit Agreement is hereby further
amended by adding new subsection 6.4(xii) as follows:
"(xii) Contingent Obligations in respect of the obligations
of its Consolidated Subsidiaries permitted pursuant to subsections
6.1(x) and (xii)."
(5) Concurrently with the repayment in full of the Senior Notes,
subsection 6.4(vi) shall be amended by deleting it in its entirety and
substituting the following therefor:
"(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
refinanced, renewed and extended; provided that the maximum aggregate
amount of such letter of credit facility permitted does not exceed
$180,000,000;"
18
E. RESTRICTED JUNIOR PAYMENTS.
(1) Subsection 6.5 is hereby amended by adding the phrase "or as may be
provided in the L/C Agreement, the 9 1/8% Subordinated Note Indenture or the
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)," immediately after the
phrase "In addition, except as provided herein," contained in the third full
paragraph thereof.
(2) Concurrently with the repayment in full of the Senior Notes,
subsection 6.5 of the Credit Agreement shall be amended by deleting it in
its entirety and substituting the following therefor:
"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 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.
In addition, except as provided herein, or as may be provided
in the L/C Agreement, the 9 1/8% Subordinated Note Indenture or the
Receivables Facilities (with respect to BPS Financial Services, Inc. or
such other financing subsidiary as
19
may have been established for the purposes of the Alarm Services
Contract Securitization Facility), 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 Subsidiary to (a) pay dividends or
make any other distribution on any of such Subsidiary's capital stock
owned by Company or any Subsidiary of Company, (b) subject to
subordination provisions, pay any indebtedness owed to Company or any
other Subsidiary, (c) make loans or advances to Company or any other
Subsidiary or (d) transfer any of its property or assets to Company or
any other Subsidiary, 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."
F. INTEREST COVERAGE RATIO. Subsection 6.6A of the Credit Agreement
is hereby amended by deleting it in its entirety and substituting the following
therefor:
"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
March 31, 1999 2.70:1.00
June 30, 1999 2.70:1.00"
G. LEVERAGE RATIO. Subsection 6.6B of the Credit Agreement is hereby
amended by deleting it in its entirety and substituting the following therefor:
20
"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
March 31, 1999 2.55:1.00
June 30, 1999 2.45:1.00"
H. CONSOLIDATED NET WORTH. Subsection 6.6C of the Credit Agreement
is hereby amended by deleting it in its entirety and substituting the following
therefor:
"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:
21
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
March 31, 1999 96,000,000
June 30, 1999 103,000,000"
I. CONSOLIDATED EBITDA. Subsection 6.6D of the Credit Agreement is
hereby amended by deleting it in its entirety and substituting the following
therefor:
"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
March 31, 1999 172,000,000
June 30, 1999 175,000,000"
22
J. CONSOLIDATED CAPITAL EXPENDITURES.
(1) Subsection 6.6E of the Credit Agreement is hereby amended by
deleting the word "Adjusted" from the phrase "Adjusted Interest Coverage
Ratio" contained therein.
(2) Concurrently with the repayment in full of the Senior Notes,
subsection 6.6E of the Credit Agreement shall be amended by deleting the
phrase "if the Company's Interest Coverage Ratio for such fiscal year is
greater than 2.90 to 1.00" from the first proviso thereof and substituting
the phrase "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" therefor.
K. ACQUISITIONS.
(1) Subsection 6.7(iv) of the Credit Agreement is hereby amended by
deleting it in its entirety and substituting the following therefor:
"(iv) 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 effective date of the
Second Amendment plus the amount of all Investments made under
subsection 6.3(vii), (A) does not exceed $25,000,000 in the aggregate
for all such Acquisitions or (B) in the event that (x) no Event of
Default or Potential Event of Default has occurred and is continuing,
(y) the ratio of Company's Funded Debt to Consolidated EBITDA for the
immediately preceding four consecutive fiscal quarters is not greater
than 2.50 to 1.00 and (z) the Company's Interest Coverage Ratio for the
immediately preceding four consecutive fiscal quarters is not less than
3.00 to 1.00 (in determining compliance with clauses (y) and (z)
hereof, such calculations shall be made on a pro forma basis of the
period of calculation after giving effect to the occurrence of the
Acquisition on the first day of the relevant calculation period and
after giving effect to all Indebtedness, including any assumed
liabilities, incurred in connection therewith and calculating interest
on any such Indebtedness at a fixed rate equal to the rate (whether
fixed or floating) which such Indebtedness would bear on the date of
determination), does not exceed $50,000,000 in the aggregate for all
such Acquisitions; provided that in calculating the purchase price of
such Acquisitions, the purchase price attributable to any assets
required in the IT Exchange may be excluded; provided however in the
event that thereafter Company
23
no longer meets the conditions set forth in clauses (y) and (z),
Company shall again be required to comply with the foregoing clause (A)
of this subsection 6.7(iv); provided that no Potential Event of Default
or Event of Default shall occur under this Agreement if the aggregate
Acquisitions then exceed $25,000,000 if such Acquisitions, at the time
made, were permitted under this Agreement; 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(iv);
and provided further that any such Person so acquired that constitutes
a Material Subsidiary shall execute counterparts of the Borg-Warner
Subsidiary Guaranty and the Borg-Warner Subsidiary Pledge Agreement as
provided in subsection 5.11; and"
(2) Concurrently with the repayment in full of the Senior Notes,
subsection 6.7(iv) of the Credit Agreement shall be amended by deleting it
in its entirety and substituting the following therefor:
"(iv) 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 effective date of the
Third Amendment 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(iv);
and provided further that any such Person so acquired that constitutes
a Material Subsidiary shall execute counterparts of the Borg-Warner
Subsidiary Guaranty and the Borg-Warner Subsidiary Pledge Agreement as
provided in subsection 5.11; and"
L. SALES AND LEASEBACKS. Subsection 6.8 of the Credit Agreement is
hereby amended by deleting it its entirety and substituting the following
therefor:
24
"6.8 SALES AND LEASEBACKS
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
2.4A(ii)(a)."
M. TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES. Subsection 6.10 of
the Credit Agreement is hereby amended by adding the word "Stonington"
immediately after the phrase "financial advisory arrangements for services
rendered by" contained in clause (iii) thereof.
N. AMENDMENTS OF CERTAIN DOCUMENTS. Subsection 6.13 of the Credit
Agreement is hereby amended by deleting it in its entirety and substituting the
following therefor:
"6.13 AMENDMENTS OR WAIVERS RELATING TO SUBORDINATED INDEBTEDNESS
A. Neither Company nor any of its Subsidiaries will (i) amend,
waive or otherwise change the terms of any 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
25
effective date of the Second Amendment, 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 Administrative 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 Sections
5, 6 and 7 of the Term Loan Facility or any definition of any term used
therein, or amend any of the other covenants or provisions of the Term Loan
Facility, or enter into any other agreement (or amendment thereto) with the
lenders under the Term Loan Facility 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 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
Term Loan Facility 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 Term
Loan Facility or enter into any other agreement with the lenders under the
Term Loan Facility that would have the effect of (i) shortening the maturity
of or requiring the earlier payment of any principal of any loan thereunder,
(ii) imposing any additional prepayment obligations on the Company with
respect to the loans thereunder or (iii) changing the definition of
"Requisite Lenders" in the Term Loan Facility, in each case without the
prior written consent of the Requisite Lenders.
E. Company agrees to deliver to Administrative Agent upon the
execution thereof any amendment, waiver or modification of the Term Loan
Facility."
26
O. FISCAL YEAR. Concurrently with the repayment in full of the
Senior Notes, Section 6 of the Credit Agreement shall be amended by adding a new
subsection 6.15 at the end thereof as follows:
"6.15 FISCAL YEAR
Company shall not change its Fiscal Year-end from December 31."
1.6 AMENDMENTS TO SECTION 7: EVENTS OF DEFAULT.
A. Concurrently with the repayment in full of the Senior Notes,
subsection 7.2 of the Credit Agreement shall be amended by deleting it in its
entirety and substituting the following therefor:
"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"
B. Concurrently with the repayment in full of the Senior Notes,
Section 7 of the Credit Agreement shall be amended by deleting the period at the
end of subsection 7.13 thereof and substituting "; or" therefor and by adding
new subsections 7.14 and 7.15 as follows:
"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
27
effective date of the Third Amendment), 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 effective date of the Third
Amendment) or an event or condition which, after notice or lapse of time or
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 9.19B) 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 EXISTING L/C AGREEMENT
Failure of Company to extend or replace the Existing L/C Agreement
on or prior to December 31, 1998."
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1.7 AMENDMENTS TO SECTION 9: MISCELLANEOUS.
A. PARTICIPATION IN LOANS, NOTES AND LETTERS OF CREDIT. Subsection
9.2 of the Credit Agreement is hereby amended by deleting each reference to
"$10,000,000" contained therein and substituting "$5,000,000" therefor.
B. CERTAIN INTERCREDITOR AGREEMENTS. Section 9 of the Credit
Agreement is hereby amended by adding a new subsection 9.19 as follows:
"9.19 CERTAIN INTERCREDITOR AGREEMENTS
A. Lenders agree, for the benefit of the lenders from time to time
under the Term Loan Facility, (1) unless an Acceleration (as defined in the
Intercreditor Agreement) shall have occurred and be continuing, not to take
any action as "Requisite Obligees" under the Intercreditor Agreement without
the prior written consent of Requisite Lenders (as defined in the Term Loan
Facility), and (2) if an Acceleration has occurred and is continuing, not to
take any action as "Requisite Obligees" under the Intercreditor Agreement
without the prior written consent of (i) more than 50% in amount of the
Credit Agreement Obligations, the L/C Obligations, the Public Debenture
Obligations (as such terms are defined in the Intercreditor Agreement) and
all obligations of any nature of Company and its Subsidiaries from time to
time owed to Agent or Lenders or any of them under the Term Loan Facility
(the "Term Loan Obligations"), (ii) more than 33-1/3% in amount of the
Credit Agreement Obligations if and for so long as the aggregate amount
thereof exceeds 25% in amount of the Credit Agreement Obligations, the L/C
Obligations and the Term Loan Obligations, (iii) more than 33-1/3% in amount
of the L/C Obligations if and for so long as the aggregate amount thereof
exceeds 25% in amount of the Credit Agreement Obligations, the L/C
Obligations and the Term Loan Obligations and (iv) more than 33-1/3% in
amount of the Term Loan Obligations if and for so long as the aggregate
amount thereof exceeds 25% in amount of the Credit Agreement Obligations,
the L/C Obligations and the Term Loan Obligations, such action to include
without limitation authorizing any amendment, modification, supplement or
waiver of any provision of any Loan Guaranty under the Intercreditor
Agreement, the Collateral Documents or the Intercreditor Agreement.
B. Lenders agree, 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
29
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."
1.8 SUBSTITUTION OF EXHIBIT.
A. EXHIBIT IV: FORM OF COMPLIANCE CERTIFICATE. Exhibit IV to the
Credit Agreement is hereby amended by deleting it in its entirety and
substituting therefor a new Exhibit IV in the form of Annex A to this Amendment.
B. EXHIBIT IV: FORM OF COMPLIANCE CERTIFICATE. Concurrently with the
repayment in full of the Senior Notes, Exhibit IV to the Credit Agreement shall
be amended by deleting it in its entirety and substituting therefor a new
Exhibit IV in the form of Annex B to this Amendment.
1.9 SUBSTITUTION OF SCHEDULES. Schedule A to the Credit Agreement is
hereby amended by deleting it in its entirety and substituting therefor a new
Schedule A in the form of Annex C to this Amendment.
SECTION 2. CONSENT
A. TERM LOAN FACILITY. Each Lender executing this Amendment hereby
consents to the terms and conditions of the Term Loan Facility substantially in
the form annexed hereto as Annex D and to Company's designation of Indebtedness
incurred under the Term Loan Facility as "Specified Senior Indebtedness" under
the 9 1/8% Subordinated Note Indenture.
B. AMENDMENT OF L/C AGREEMENT. Each Lender executing this Amendment
hereby consents to the amendment of the L/C Agreement substantially in the form
annexed hereto as Annex E.
C. BANKERS AS AGENT. Each Lender executing this Amendment hereby
acknowledges and agrees that Bankers is acting as Administrative Agent for the
Lenders hereunder and is also acting as agent under the Term Loan Facility on
behalf of the Term Loan Facility lenders and expressly consents to Bankers
acting in such capacities.
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SECTION 3. CONDITIONS TO EFFECTIVENESS
Section 1 and Section 2 of this Amendment shall become effective as of
the date hereof only upon the satisfaction of all of the following conditions
precedent (upon such satisfaction, the "THIRD AMENDMENT EFFECTIVE DATE"):
A. COMPANY DOCUMENTS. On or before the Third Amendment Effective
Date, Company shall deliver to Lenders (or to Administrative Agent for Lenders
with sufficient originally executed copies, where appropriate, for each Lender)
the following, each, unless otherwise noted, dated the Third Amendment Effective
Date:
1. Resolutions of its Board of Directors authorizing and approving the
execution, delivery and performance of this Amendment and an amendment to
the Company Pledge Agreement (the "Pledge Amendment") pledging the shares
and certain promissory notes of BPS Financial Services, Inc. to Collateral
Agent, and the performance of the Agreement as amended by this Amendment,
certified as of the Third Amendment Effective Date by its secretary or
assistant secretary as being in full force and effect without modification
or amendment.
2. Signature and incumbency certificates of its officers executing
this Amendment and the Pledge Amendment;
3. Executed copies of this Amendment and the Pledge Amendment; and
4. A letter from a responsible officer of the Company with respect to
past and anticipated Centaur Settlement Amounts, which letter shall have
been approved by Co-Agents.
B. SUBSIDIARY DOCUMENTS. On or before the Third Amendment Effective
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 deliver to Lenders (or to Administrative Agent for
Lenders with sufficient originally executed copies, where appropriate, for each
Lender) the following, each, unless otherwise noted, dated the Third Amendment
Effective 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 Third
Amendment Effective Date;
(ii) Copies of its Bylaws, certified as of the Third Amendment
Effective Date by its corporate secretary or an assistant secretary;
31
(iii) Resolutions of its Board of Directors approving and authorizing
the execution, delivery and performance of the Borg-Warner Subsidiary
Guaranty by the Borg-Warner Subsidiary Guarantors and of the Borg-Warner
Subsidiary Pledge Agreement by the Material Subsidiaries, certified as of
the Third Amendment Effective 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
(vi) Such other documents as Administrative Agent or Requisite Lenders
may reasonably request.
C. FEES. On or before the Third Amendment Effective Date, each
Lender executing this Amendment shall have received an amendment fee in an
amount equal to such Lender's Pro Rata Share of the Commitments multiplied by
0.50%.
D. REQUISITE LENDER EXECUTION. On or before the Third Amendment
Effective Date, Requisite Lenders shall have delivered to Administrative Agent
originally executed copies of this Amendment.
E. L/C AGREEMENT. On or before the Third Amendment Effective Date,
corresponding consents and amendments shall have been obtained or made with
respect to the Credit Agreement dated as of January 27, 1993, as amended, among
Company, the financial institutions named therein, and The Long Term Credit Bank
of Japan, Chicago Agency. Such amendment shall also include, without limitation,
the extension of the maturity thereof to December 31, 1998 and a decrease in the
commitment level thereunder to $155,000,000 and shall be satisfactory in form
and substance to Administrative Agent and Requisite Lenders.
F. TERM LOAN FACILITY. On the Third Amendment Effective Date,
Company and the lenders party thereto shall have executed and delivered the Term
Loan Facility and an executed copy thereof and of the other loan documents
related thereto shall have been delivered to Agent.
G. COMPLETION OF PROCEEDINGS. On or before the Third Amendment
Effective Date, 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 Administrative Agent,
acting on behalf of Lenders, and its counsel shall be satisfactory in form and
substance to Administrative Agent and such counsel, and Administrative Agent and
such counsel shall have received all such counterpart originals or certified
copies of such documents as Administrative Agent may reasonably request.
H. RECEIVABLES FACILITIES. On or before the Third Amendment
Effective Date, Company and Bankers Trust Company shall have executed and
32
delivered the Receivables Bridge Commitment Letter and such Receivables Bridge
Commitment Letter shall be in full force and effect.
I. REFINANCING OF LTCB TERM LOAN. On the Third Amendment Effective
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.
J. 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 Third Amendment
Effective Date, Company shall have terminated its Line of Credit Agreement with
Bankers dated June 28, 1995, as amended, and shall have repaid in full all
amounts outstanding, if any, thereunder.
K. REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF AGREEMENTS.
Company shall have delivered to Administrative Agent an Officers' Certificate,
dated the Third Amendment Effective Date and addressed to Administrative Agent,
in form and substance satisfactory to Administrative 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 Third Amendment Effective
Date to the same extent as though made on and as of that date, (ii) since
December 31, 1994 through the Third Amendment Effective 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 Third Amendment Effective Date except as otherwise disclosed to
and agreed to in writing by Administrative Agent and Requisite Lenders.
L. 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) the
delivery by Company of the Pledge Amendment pledging the shares of BPS Financial
Services, Inc., together with stock 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 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); and (2) the delivery to
Collateral Agent by Material Subsidiaries of the intercompany promissory notes
referred to in subsection 6.1(vii) (which promissory notes shall be
33
properly endorsed in blank or to Collateral Agent, in form and substance
satisfactory to Collateral Agent).
M. OFFICERS' CERTIFICATE. Company shall have delivered to
Administrative Agent an Officers' Certificate setting forth the calculation of
the tangible asset value of the Material Subsidiaries as of June 30, 1995, as
set forth in subsection 4.1D.
N. 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
Administrative Agent and its counsel, dated as of the Third Amendment Effective
Date and setting forth substantially the matters in the opinions designated in
Annexes F and G hereto and as to such other matters
as Administrative Agent acting on behalf of Requisite Lenders may reasonably
request.
SECTION 4. COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Amendment and to amend
the Credit Agreement in the manner provided herein, Company represents and
warrants to each Lender that the following statements are true, correct and
complete:
A. CORPORATE POWER AND AUTHORITY. Company has all requisite
corporate power and authority to enter into this Amendment and to carry out the
transactions contemplated by, and perform its obligations under, the Credit
Agreement as amended by this Amendment (the "AMENDED AGREEMENT").
B. AUTHORIZATION OF AGREEMENTS. The execution and delivery of this
Amendment and the performance of the Amended Agreement have been duly authorized
by all necessary corporate action on the part of Company.
C. NO CONFLICT. The execution and delivery by Company of this
Amendment and the performance by Company of the Amended Agreement do not and
will not (i) violate any provision of any law or any governmental rule or
regulation applicable to Company or any of its Subsidiaries, the Certificate or
Articles of Incorporation or Bylaws of Company or any of its Subsidiaries or any
order, judgment or decree of any court or other agency of government binding on
Company or any of its Subsidiaries, (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 Company or any of its Subsidiaries, (iii) result in or
require the creation or imposition of any Lien upon any of the properties or
assets of Company or any of its Subsidiaries (other than any Liens created under
any of the Loan Documents in favor of Collateral Agent on behalf of Lenders), or
(iv) require any approval of stockholders or any approval or consent of any
Person under any Contractual Obligation of Company or any of its Subsidiaries.
D. GOVERNMENTAL CONSENTS. The execution and delivery by Company of
this Amendment and the performance by Company of the Amended
34
Agreement 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.
E. BINDING OBLIGATION. This Amendment and the Amended Agreement have
been duly executed and delivered by Company and are the legally valid and
binding obligations of Company, enforceable against Company 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.
F. INCORPORATION OF REPRESENTATIONS AND WARRANTIES FROM CREDIT
AGREEMENT. The representations and warranties contained in Section 4 of the
Credit Agreement are and will be true, correct and complete in all material
respects on and as of the Third Amendment Effective 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 they were
true, correct and complete in all material respects on and as of such earlier
date.
G. ABSENCE OF DEFAULT. No event has occurred and is continuing or
will result from the consummation of the transactions contemplated by this
Amendment that would constitute an Event of Default or a Potential Event of
Default.
SECTION 5. ACKNOWLEDGEMENT AND CONSENT
Company is a party to the Company Pledge Agreement, as amended through
the Third Amendment Effective Date, pursuant to which Company has pledged
certain Collateral to Collateral Agent to secure the Obligations. Each of the
Borg-Warner Pledged Subsidiaries is a party to the Borg-Warner Subsidiary Pledge
Agreement, as amended through the Third Amendment Effective Date, pursuant to
which each such Borg-Warner Pledged Subsidiary has pledged certain Collateral to
Collateral Agent to secure the Obligations. Each of the Borg-Warner Guarantor
Subsidiaries is a party to the Borg-Warner Subsidiary Guaranty, as amended
through the Third Amendment Effective Date, pursuant to which each such Borg-
Warner Guarantor Subsidiary has guarantied the Obligations. Company, Borg-
Warner Pledged Subsidiaries and Borg-Warner Guarantor Subsidiaries are
collectively referred to herein as the "CREDIT SUPPORT PARTIES," and the Company
Pledge Agreement, the Borg-Warner Subsidiary Pledge Agreement and Borg-Warner
Subsidiary Guaranty are collectively referred to herein as the "CREDIT SUPPORT
DOCUMENTS."
Each Credit Support Party hereby acknowledges that it has reviewed the
terms and provisions of the Credit Agreement and this Amendment and consents to
the amendment of the Credit Agreement effected pursuant to this Amendment. Each
Credit Support Party hereby confirms that each Credit Support Document to which
it is a party or otherwise bound and all Collateral encumbered thereby will
continue to guaranty or secure, as the case may be, to the fullest extent
possible the payment and performance
35
of all "Obligations," "Guarantied Obligations" and "Secured Obligations," as the
case may be (in each case as such terms are defined in the applicable Credit
Support Document), including without limitation the payment and performance of
all such "Obligations," "Guarantied Obligations" or "Secured Obligations," as
the case may be, in respect of the Obligations of Company now or hereafter
existing under or in respect of the Amended Agreement and the Notes defined
therein.
Each Credit Support Party acknowledges and agrees that any of the
Credit Support Documents to which it is a party or otherwise bound shall
continue in full force and effect and that all of its obligations thereunder
shall be valid and enforceable and shall not be impaired or limited by the
execution or effectiveness of this Amendment. Each Credit Support Party
represents and warrants that all representations and warranties contained in the
Amended Agreement and the Credit Support Documents to which it is a party or
otherwise bound are true, correct and complete in all material respects on and
as of the Third Amendment Effective 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 they were true, correct
and complete in all material respects on and as of such earlier date.
Each Credit Support Party (other than Company) acknowledges and agrees
that (i) notwithstanding the conditions to effectiveness set forth in this
Amendment, such Credit Support Party is not required by the terms of the Credit
Agreement or any other Loan Document to consent to the amendments to the Credit
Agreement effected pursuant to this Amendment and (ii) nothing in the Credit
Agreement, this Amendment or any other Loan Document shall be deemed to require
the consent of such Credit Support Party to any future amendments to the Credit
Agreement.
SECTION 6. MISCELLANEOUS
A. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
(1) On and after the Third Amendment Effective Date, each reference in
the Credit Agreement to "this Agreement", "hereunder", "hereof", "herein" or
words of like import referring to the Credit Agreement, and each reference
in the other Loan Documents to the "Credit Agreement", "thereunder",
"thereof" or words of like import referring to the Credit Agreement shall
mean and be a reference to the Amended Agreement.
(2) Except as specifically amended by this Amendment, the Credit
Agreement and the other Loan Documents shall remain in full force and effect
and are hereby ratified and confirmed.
(3) The execution, delivery and performance of this Amendment shall
not, except as expressly provided herein, constitute a waiver of any
provision of, or operate as a waiver of any right, power or
36
remedy of Administrative Agent or any Lender under, the Credit Agreement or
any of the other Loan Documents.
B. FEES AND EXPENSES. Company acknowledges that all costs, fees and
expenses as described in subsection 9.3 of the Credit Agreement incurred by
Administrative Agent and its counsel with respect to this Amendment and the
documents and transactions contemplated hereby shall be for the account of
Company.
C. HEADINGS. Section and subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.
D. APPLICABLE LAW. THIS AMENDMENT 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.
E. COUNTERPARTS. This Amendment 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.
[Remainder of page intentionally left blank]
37
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
BORG-WARNER SECURITY CORPORATION
By: ____________________________________________
Title: _________________________________________
WELLS FARGO ALARM SERVICES, INC. (for purposes
of Section 5 only) as a Credit Support Party
By: ____________________________________________
Title: _________________________________________
WELLS FARGO ARMORED SERVICE CORPORATION (for
purposes of Section 5 only) as a Credit Support
Party
By: ____________________________________________
Title: _________________________________________
BW-CANADIAN GUARD CORPORATION (for purposes of
Section 5 only) as a Credit Support Party
By: ____________________________________________
Title: _________________________________________
BORG-WARNER PROTECTIVE SERVICES CORPORATION (for
purposes of Section 5 only) as a Credit Support
Party
By: ____________________________________________
Title: _________________________________________
PONY EXPRESS COURIER CORP. (for purposes of
Section 5 only) as a Credit Support Party
By: ____________________________________________
Title: _________________________________________
BANKERS TRUST COMPANY, Individually and as
Co-Agent and as Administrative Agent
By: ____________________________________________
Title: _________________________________________
CIBC INC., Individually and as Co-Agent
By: ____________________________________________
Title: _________________________________________
NATIONSBANK, N.A., Individually and as Co-Agent
By: ____________________________________________
Title: _________________________________________
BANK OF AMERICA ILLINOIS, Individually and as
Lead Manager
By: ____________________________________________
Title: _________________________________________
THE BANK OF NEW YORK, Individually and as Lead
Manager
By: ____________________________________________
Title: _________________________________________
THE BANK OF NOVA SCOTIA, Individually and as
Lead Manager
By: ____________________________________________
Title: _________________________________________
COMPAGNIE FINANCIERE DE CIC ET DE L'UNION
EUROPEENNE
By: ____________________________________________
Title: _________________________________________
By: ____________________________________________
Title: _________________________________________
DRESDNER BANK AG (Chicago and Grand Cayman
Branches)
By: ____________________________________________
Title: _________________________________________
By: ____________________________________________
Title: _________________________________________
THE MITSUBISHI TRUST AND BANKING CORPORATION
By: ____________________________________________
Title: _________________________________________
THE NIPPON CREDIT BANK, LTD.
By: ____________________________________________
Title: _________________________________________
THE NORTHERN TRUST COMPANY
By: ____________________________________________
Title: _________________________________________
UNION BANK OF FINLAND LTD. - GRAND CAYMAN BRANCH
By: ____________________________________________
Title: _________________________________________
By: ____________________________________________
Title: _________________________________________