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<SEC-DOCUMENT>0000950117-04-000868.txt : 20040304
<SEC-HEADER>0000950117-04-000868.hdr.sgml : 20040304
<ACCEPTANCE-DATETIME>20040304123753
ACCESSION NUMBER: 0000950117-04-000868
CONFORMED SUBMISSION TYPE: 10-K
PUBLIC DOCUMENT COUNT: 15
CONFORMED PERIOD OF REPORT: 20031231
FILED AS OF DATE: 20040304
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: HONEYWELL INTERNATIONAL INC
CENTRAL INDEX KEY: 0000773840
STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714]
IRS NUMBER: 222640650
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10-K
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-08974
FILM NUMBER: 04648090
BUSINESS ADDRESS:
STREET 1: 101 COLUMBIA RD
STREET 2: PO BOX 4000
CITY: MORRISTOWN
STATE: NJ
ZIP: 07962
BUSINESS PHONE: 9734552000
MAIL ADDRESS:
STREET 1: 101 COLUMBIA RD P O BOX 4000
STREET 2: 101 COLUMBIA RD P O BOX 4000
CITY: MORRISTOWN
STATE: NJ
ZIP: 07962
FORMER COMPANY:
FORMER CONFORMED NAME: ALLIEDSIGNAL INC
DATE OF NAME CHANGE: 19940929
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>a36887.txt
<DESCRIPTION>HONEYWELL INTERNATIONAL INC.
<TEXT>
<PAGE>
________________________________________________________________________________
________________________________________________________________________________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-K
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-8974
Honeywell International Inc.
(Exact name of registrant as specified in its charter)
<Table>
<S> <C>
DELAWARE 22-2640650
- --------------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
101 Columbia Road
Morris Township, New Jersey 07962
- --------------------------------------- ------------------------------------
(Address of principal executive
offices) (Zip Code)
</Table>
Registrant's telephone number, including area code (973) 455-2000
Securities registered pursuant to Section 12(b) of the Act:
<Table>
<S> <C>
Name of Each Exchange
Title of Each Class on Which Registered
- --------------------------------------- ------------------------------------
Common Stock, par value $1 per share* New York Stock Exchange
Chicago Stock Exchange
Pacific Exchange
Zero Coupon Serial Bonds due 2009 New York Stock Exchange
9 1/2% Debentures due June 1, 2016 New York Stock Exchange
</Table>
- ---------
* The common stock is also listed for trading on the London stock exchange.
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No _
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes X No _
The aggregate market value of the voting stock held by nonaffiliates of the
Registrant was approximately $23.1 billion at June 30, 2003.
There were 858,794,651 shares of Common Stock outstanding at February 27, 2004.
Documents Incorporated by Reference
Part I and II: Annual Report to Shareowners for the Year Ended December 31,
2003.
Part III: Proxy Statement for Annual Meeting of Shareowners to be held
April 26, 2004.
________________________________________________________________________________
________________________________________________________________________________
<PAGE>
TABLE OF CONTENTS
<Table>
<Caption>
Item Page
---- ----
<S> <C> <C>
Part I. 1. Business................................................................................... 1
2. Properties................................................................................. 11
3. Legal Proceedings.......................................................................... 12
4. Submission of Matters to a Vote of Security Holders........................................ 12
Executive Officers of the Registrant........................................................... 12
Part II. 5. Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases
of Equity Securities................................................................... 14
6. Selected Financial Data.................................................................... 14
7. Management's Discussion and Analysis of Financial Condition and Results of Operations...... 14
7A. Quantitative and Qualitative Disclosures About Market Risk................................. 14
8. Financial Statements and Supplementary Data................................................ 14
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure....... 14
9A. Controls and Procedures.................................................................... 15
Part III. 10. Directors and Executive Officers of the Registrant........................................ 15
11. Executive Compensation.................................................................... 15
12. Security Ownership of Certain Beneficial Owners and Management............................ 15
13. Certain Relationships and Related Transactions............................................ 18
14. Principal Accountant Fees and Services.................................................... 18
Part IV. 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.......................... 18
Signatures............................................................................................... 19
</Table>
- ---------
This report contains certain statements that may be deemed 'forward-looking
statements' within the meaning of Section 21E of the Securities Exchange Act of
1934. All statements, other than statements of historical fact, that address
activities, events or developments that we or our management intends, expects,
projects, believes or anticipates will or may occur in the future are
forward-looking statements. Such statements are based upon certain assumptions
and assessments made by our management in light of their experience and their
perception of historical trends, current conditions, expected future
developments and other factors they believe to be appropriate. The
forward-looking statements included in this report are also subject to a number
of material risks and uncertainties, including but not limited to economic,
competitive, governmental and technological factors affecting our operations,
markets, products, services and prices. Such forward-looking statements are not
guarantees of future performance, and actual results, developments and business
decisions may differ from those envisaged by such forward-looking statements.
<PAGE>
PART I.
Item 1. Business
Honeywell International Inc. (Honeywell) is a diversified technology and
manufacturing company, serving customers worldwide with aerospace products and
services, control, sensing and security technologies for buildings, homes and
industry, automotive products, specialty chemicals, fibers, and electronic and
advanced materials. Honeywell was incorporated in Delaware in 1985.
We maintain an internet website at http://www.honeywell.com. Our Annual
Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on
Form 8-K, and any amendments to those reports, are available free of charge on
our website under the heading 'Investor Relations' (see 'SEC Filings')
immediately after they are filed with, or furnished to, the Securities and
Exchange Commission (SEC). Honeywell's Code of Business Conduct, Corporate
Governance Guidelines and Charters of the Committees of the Board of Directors
are also available, free of charge, on our website under the heading 'Investor
Relations' (see 'Corporate Governance'), or by writing to Honeywell, 101
Columbia Road, Morris Township, New Jersey 07962, c/o Vice President and
Corporate Secretary. Honeywell's Code of Business Conduct applies to all
Honeywell directors, officers (including the Chief Executive Officer, Chief
Financial Officer and Controller) and employees.
Major Businesses
We globally manage our business operations through strategic business units,
which have been aggregated under four reportable segments: Aerospace, Automation
and Control Solutions, Specialty Materials and Transportation Systems. Financial
information related to our reportable segments is included in Note 23 of Notes
to Financial Statements in our 2003 Annual Report to Shareowners which is
incorporated herein by reference.
Following is further information about our four reportable segments which
are comprised of various strategic business units and product classes that serve
multiple end markets:
<Table>
<Caption>
Strategic
Business Units Product Classes Major Products/Services Major Customers/Uses Key Competitors
- -------------- --------------- ----------------------- -------------------- ---------------
<S> <C> <C> <C> <C>
Aerospace
Engines, Systems Turbine propulsion TFE731 turbofan Business, regional United Technologies
and Services engines TPE331 turboprop and military trainer aircraft (Pratt & Whitney
TFE1042 turbofan Commercial and military Canada)
F124 turbofan helicopters Rolls Royce/
LF502 turbofan Military vehicles Allison
LF507 turbofan Turbomeca
CFE738 turbofan Williams
HTF 7000 turbofan
T53, T55 turboshaft
LT101 turboshaft
T800 turboshaft
AGT1500 turboshaft
LV 100 turboshaft
Repair, overhaul and
spare parts
----------------------------------------------------------------------------------------------------------
Auxiliary power units Airborne auxiliary Commercial, regional, United Technologies
(APUs) power units business and (Pratt & Whitney
Jet fuel starters military aircraft Canada)
Secondary power Ground power United Technologies
systems (Hamilton
Ground power units Sundstrand)
Repair, overhaul and
spare parts
----------------------------------------------------------------------------------------------------------
</Table>
1
<PAGE>
<Table>
<Caption>
Strategic
Business Units Product Classes Major Products/Services Major Customers/Uses Key Competitors
- -------------- --------------- ----------------------- -------------------- ---------------
<S> <C> <C> <C> <C>
Environmental control Air management systems: Commercial, regional Auxilec
systems Air conditioning and general Barber Colman
Bleed air aviation aircraft Dukes
Cabin pressure control Military aircraft Eaton-Vickers
Air purification and Ground vehicles Goodrich (Lucas
treatment Spacecraft Aerospace)
Electrical power systems: Liebherr
Power distribution and Litton Breathing
control Systems
Emergency power Pacific Scientific
generation Parker Hannifin
Repair, overhaul and United Technologies
spare parts (Hamilton
Sundstrand)
Smiths
TAT
----------------------------------------------------------------------------------------------------------
Engine systems and Electronic and Commercial, regional and BAE Controls
accessories hydromechanical general aviation aircraft Goodrich
fuel controls Military aircraft (Chandler-Evans)
Engine start systems Goodrich (Lucas
Electronic engine Aerospace)
controls Parker Hannifin
Sensors United Technologies
Electric and pneumatic (Hamilton
power generation systems Sundstrand)
Thrust reverser
actuation, pneumatic and
electric
----------------------------------------------------------------------------------------------------------
Aircraft hardware Consumable hardware, Commercial, regional, business Anixter (Pentacon)
distribution including fasteners, and military aviation Arrow Pemco
bearings, bolts and aircraft Avnet
o-rings BE Aerospace (M&M
Adhesives, sealants, Aerospace)
lubricants, cleaners Dixie
and paints Fairchild Direct
Electrical connectors, Wesco Aircraft
switches, relays and
circuit breakers
Value-added services,
repair and overhaul
kitting and point-of-use
replenishment
- -------------------------------------------------------------------------------------------------------------------------------
Aerospace Avionics systems Flight safety systems: Commercial, business Airshow, Inc.
Electronic Enhanced Ground and general aviation aircraft BAE
Systems Proximity Warning Government aviation Boeing/Jeppesen
Systems (EGPWS) Century
Traffic Alert and Garmin
Collision Avoidance Goodrich
Systems (TCAS) Kaiser
Windshear detection L3
systems Lockheed Martin
Flight data and cockpit Northrop Grumman
voice recorders Rockwell Collins
Weather Radar Smiths
Communication, navigation S-tec
and surveillance Thales
systems: Trimble/Terra
Weather radar Universal Avionics
Navigation & communication Universal Weather
radios
Air-to-ground telephones
Global positioning
systems
Automatic flight control
systems
Satellite systems
Surveillance systems
Integrated systems
Flight management systems
Cockpit display systems
Data management and
aircraft performance
monitoring systems
Vehicle management
systems
Aircraft information
systems
</Table>
2
<PAGE>
<Table>
<Caption>
Strategic
Business Units Product Classes Major Products/Services Major Customers/Uses Key Competitors
- -------------- --------------- ----------------------- -------------------- ---------------
<S> <C> <C> <C> <C>
Network file servers
Wireless network
transceivers
Satellite TV systems
Audio/Video equipment
Weather information
network
Navigation database
information
Cabin management systems
Vibration detection and
monitoring
Mission management
systems
Tactical data management
systems
----------------------------------------------------------------------------------------------------------
Aircraft, Obstruction and Inset lights Airports Bruce
Airport lighting Control and monitoring Commercial, regional, Hella/Goodrich
systems business, helicopter and LSI
Regulators military aviation aircraft Luminator
Tower and obstruction (operators, OEMs, parts Safegate
lights distributors and MRO service Siemens
Interior and exterior providers) Thorn
aircraft lighting General contractors (building Whelen
Visual docking guidance and tower manufacturers),
systems cell phone companies
----------------------------------------------------------------------------------------------------------
Inertial sensor Inertial sensor systems Military and Astronautics-
for guidance, commercial vehicles Kearfott
stabilization, Commercial spacecraft BAE
navigation and control and launch vehicles Ball
Gyroscopes, Commercial, regional, business GEC
accelerometers, inertial and military aircraft L3 Com
measurement units and Transportation KVH
thermal switches Missiles Northrop Grumman
Munitions Rockwell
Smiths
----------------------------------------------------------------------------------------------------------
Automatic test EW ATE Boeing Northrop Grumman
equipment Avionics ATE USAF Lockheed
Vehicle health Foreign air forces
Management
----------------------------------------------------------------------------------------------------------
Control products Radar altimeters Military aircraft Ball Brothers
Pressure products Missiles, UAVs BAE
Air data products Commercial Druck
Thermal switches applications Goodrich
Magnetic sensors NavCom
RF sensors Northrop Grumman
Rosemount
Solarton
----------------------------------------------------------------------------------------------------------
Space products and Guidance subsystems Commercial and military- BAE
subsystems Control subsystems spacecraft Ithaco
Processing subsystems DoD L3
Radiation hardened FAA Northrop Grumman
electronics and NASA Raytheon
integrated circuits
GPS-based range safety
systems
----------------------------------------------------------------------------------------------------------
Management and technical Maintenance/operation U.S. government space (NASA) Bechtel
services and provision of space DoD (logistics and Boeing
systems, services information services) Computer Sciences
and facilities DoE Dyncorp
Systems engineering Local governments ITT
and integration Commercial space ground Lockheed Martin
Information technology segment systems and services Raytheon
services SAIC
Logistics and sustainment The Washington
Group
United Space
Alliance
- -------------------------------------------------------------------------------------------------------------------------------
</Table>
3
<PAGE>
<Table>
<Caption>
Strategic
Business Units Product Classes Major Products/Services Major Customers/Uses Key Competitors
- -------------- --------------- ----------------------- -------------------- ---------------
<S> <C> <C> <C> <C>
Aircraft Landing Landing systems Wheels and brakes Commercial airline, Aircraft Braking
Systems Friction products regional, business Systems
Wheel and brake and military aircraft Dunlop Standard
repair and High performance commercial Aerospace
overhaul services vehicles Goodrich
USAF, DoD, DoE Messier-Bugatti
Boeing, Airbus, Lockheed NASCO
Martin Various smaller
repair and
overhaul companies
- -------------------------------------------------------------------------------------------------------------------------------
Automation and Control Solutions
Automation and Control Products Heating, ventilating and Original equipment Carrier
Control Products (Environmental controls air conditioning manufacturers (OEMs) Cherry
and combustion; sensing controls and components Distributors Danfoss
and controls) for homes and buildings Contractors Eaton
Indoor air quality Retailers Emerson
products including System integrators Endruss & Hauser
zoning, air cleaners, Commercial customers and Holmes
humidification, heat and homeowners served by the Invensys
energy recovery distributor, wholesaler, Johnson Controls
ventilators contractor, retail and Kavlico
Controls plus integrated utility channels Motorola
electronic systems for Package and materials handling Omron
burners, boilers and operations Siemens
furnaces Appliance manufacturers SPX (EST)
Consumer household Automotive companies Yokogawa
products including Aviation companies
humidifiers and Food and beverage processors
thermostats Medical equipment
Water controls Heat treat processors
Sensors, measurement, Computer and business
control and industrial equipment manufacturers
components Data acquisition companies
Datacom components
----------------------------------------------------------------------------------------------------------
Security and fire Security products and OEMs Bosch
products and services systems Retailers GE (Interlogix)
Fire products and systems Distributors Pelco
Access controls and Commercial customers Phillips
closed circuit and homeowners served by the Siemens
television distributor, wholesaler, SPX (EST)
contractor, retail and Tyco
utility channels
- -------------------------------------------------------------------------------------------------------------------------------
Process Solutions Industrial automation Advanced control software Refining and petrochemical Asea Brown Boveri
solutions and industrial companies Aspentech
automation systems for Chemical manufacturers Emerson (Fisher-
control and monitoring Oil and gas producers Rosemount)
of continuous, batch and Food and beverage processors Invensys
hybrid operations Pharmaceutical companies Siemens
Production management Utilities Yokogawa
software Film and coated producers
Communications systems Pulp and paper industry
for Industrial Control Continuous web producers in
equipment and systems the paper, plastics, metals,
Consulting, networking rubber, non-wovens and
engineering and printing industries
installation
Process control
instrumentation
Field instrumentation
Analytical
instrumentation
Recorders
Controllers
Critical environment
control solutions and
services
Aftermarket maintenance,
repair and upgrade
- -------------------------------------------------------------------------------------------------------------------------------
</Table>
4
<PAGE>
<Table>
<Caption>
Strategic
Business Units Product Classes Major Products/Services Major Customers/Uses Key Competitors
- -------------- --------------- ----------------------- -------------------- ---------------
<S> <C> <C> <C> <C>
Building Solutions Solutions and services HVAC and building control Building managers and owners GroupMac
solutions and services Contractors, architects and Invensys
Energy management developers Johnson Controls
solutions and services Consulting engineers Local contractors
Security and asset Security directors and utilities
management solutions and Plant managers Siemens
services Utilities Trane
Enterprise building Large, global corporations
integration solutions Public school systems
Building information Universities
services Local governments
- -------------------------------------------------------------------------------------------------------------------------------
Specialty Materials
Specialty Materials Nylon Nylon filament and Commercial, residential and BASF
staple yarns specialty carpet markets DSM
Nylon bulk Nylon for fibers, DuPont
continuous filament engineered resins and film Enichem
Nylon polymer Fertilizer ingredients Hoechst
Caprolactam Specialty chemicals Monsanto
Ammonium sulfate Rhodia
Cyclohexanol Solutia
Cyclohexanone
Sulfuric acid
Ammonia
----------------------------------------------------------------------------------------------------------
Performance fibers Industrial Passenger car tires Acordis
polyester yarns Passenger car and light truck Akra
seatbelts and airbags DuPont
Broad woven fabrics Far Eastern
Ropes and mechanical Hyosung
rubber goods Kolon
Sports gear Kosa
Sailcloth Shinkong
Cordage Teijin
Toray
----------------------------------------------------------------------------------------------------------
Advanced Fibers & High molecular weight Bullet resistant vests, DuPont
Composites polyethylene fiber and helmets and other armor DSM
shield composites applications Teijin
Aramid shield composites Cut-resistant gloves
Rope & cordage
----------------------------------------------------------------------------------------------------------
Specialty Films Cast nylon film Food and pharmaceutical American Biaxis
Bi-axially oriented nylon packaging CFP
film Daikan
Fluoropolymer film Kolon
Unitika
----------------------------------------------------------------------------------------------------------
Fluorocarbons Genetron'r' refrigerants, Refrigeration Atofina
aerosol and Air conditioning INEOS Fluor
insulation foam blowing Polyurethane foam Solvay-Solexis
agents Precision cleaning
Genesolv'r' solvents Optical
Oxyfume sterilant gases Metalworking
Ennovate 3000 blowing Hospitals
agent for refrigeration Medical equipment
insulation manufacturers
----------------------------------------------------------------------------------------------------------
Hydrofluoric acid (HF) Anhydrous and aqueous Fluorocarbons Ashland
hydrofluoric acid Steel Atofina
Oil refining E. Merck
Chemical intermediates Hashimoto
Norfluor
Quimica Fluor
----------------------------------------------------------------------------------------------------------
Fluorine specialties Sulfur hexafluoride Electric utilities Air Products
(SF[u]6) Magnesium Asahi Glass
Iodine pentafluoride Gear manufacturers Atofina
(IF[u]5) Solvay-Solexis
Antimony pentafluoride
(SbF[u]5)
----------------------------------------------------------------------------------------------------------
Nuclear services UF[u]6 conversion Nuclear fuel British Nuclear
services Electric utilities Fuels
Cameco
Cogema
----------------------------------------------------------------------------------------------------------
</Table>
5
<PAGE>
<Table>
<Caption>
Strategic
Business Units Product Classes Major Products/Services Major Customers/Uses Key Competitors
- -------------- --------------- ----------------------- -------------------- ---------------
<S> <C> <C> <C> <C>
Research and life sciences Active pharmaceutical Agrichemicals Avecia
ingredients Pharmaceuticals Degussa
Pharmaceutical Biotech DSM
intermediates E-Merck
Pharmaceutical Fisher Scientific
formulations Lonza
Oxime-based fine Sigma-Aldrich
chemicals
Fluoroaromatics
Bromoaromatics
High-purity solvents
----------------------------------------------------------------------------------------------------------
Electronic chemicals Ultra high-purity HF Semiconductors Air Products
Inorganic acids Arch
Hi-purity solvents E. Merck
----------------------------------------------------------------------------------------------------------
Performance chemicals HF derivatives Diverse by product type Atotech
Imaging chemicals Fluoroaromatics BASF
Chemical processing Phosphors Solvay-Solexis
Display chemicals Catalysts
Surface treatment Oxime-silanes
Catalysts Hydroxylamine
Sealants
----------------------------------------------------------------------------------------------------------
Specialty waxes Petroleum waxes and Candles Exxon
blends Tire and Rubber IGI
Personal care Schumann-Sasol
Packaging
Firelogs
----------------------------------------------------------------------------------------------------------
Specialty additives Polyethylene waxes Coatings and inks BASF
Petroleum waxes and PVC Clarient
blends Plastics Eastman
PVC lubricant systems Reflective coatings
Plastic additives Security and safe applications
Luminescent photodyes
----------------------------------------------------------------------------------------------------------
Semiconductor Interconnect- Semiconductors ATMI
materials and dielectrics Microelectronics Dow Chemical
services Interconnect-metals Telecommunications Dow Corning
Semiconductor packaging Japan Energy
materials JSR
Advanced polymers Sumitomo
Sapphire substrates Tokyo-Ohka
Anti-reflective coatings Tosoh SMD
Thermo-couplings
----------------------------------------------------------------------------------------------------------
UOP (50%-owned joint Catalysts Petroleum, ABB Lummus
venture) Molecular sieves petrochemical, gas Axens
Adsorbents processing and Exxon-Mobil
Design of process, chemical industries Procatalyse
plants and equipment Shell/Criterion
Customer catalyst Stone & Webster
manufacturing Zeochem
- -------------------------------------------------------------------------------------------------------------------------------
Transportation Systems
Honeywell Turbo Charge-air systems Turbochargers Passenger car, truck ABB
Technologies Remanufactured components and off-highway Borg-Warner
OEMs Hitachi
Engine manufacturers Holset
Aftermarket distributors IHI
and dealers MHI
Tianyan
----------------------------------------------------------------------------------------------------------
Thermal systems Exhaust gas coolers Passenger car, truck Behr/McCord
Charge-air coolers and off-highway OEMs Modine
Aluminum radiators Engine manufacturers Valeo
Aluminum cooling Aftermarket distributors
modules and dealers
- -------------------------------------------------------------------------------------------------------------------------------
</Table>
6
<PAGE>
<Table>
<Caption>
Strategic
Business Units Product Classes Major Products/Services Major Customers/Uses Key Competitors
- -------------- --------------- ----------------------- -------------------- ---------------
<S> <C> <C> <C> <C>
Consumer Products Aftermarket Oil, air, fuel, Automotive and heavy AC Delco
Group filters, spark plugs, transmission and coolant vehicle aftermarket channels, Bosch
electronic components and filters OEMs and OES Champion
car care products PCV valves Auto supply retailers Champ Labs
Spark plugs Specialty installers Havoline/Texaco
Wire and cable Mass merchandisers Mann & Hummel
Antifreeze/coolant NGK
Ice-fighter products Peak/Old World
Windshield washer fluids Industries
Waxes, washes and Pennzoil-Quaker
specialty cleaners State
Purolator/Arvin Ind
STP/ArmorAll/
Clorox
Turtle Wax
Various Private
Label
Wix/Dana
Zerex/Valvoline
- -------------------------------------------------------------------------------------------------------------------------------
Friction Materials Friction materials Disc brake pads and shoes Automotive and heavy vehicle Akebono
Aftermarket brake hard Drum brake linings OEMs, OES, brake Dana
parts Brake blocks manufacturers and aftermarket Delphi
Disc and drum brake channels Federal-Mogul
components Mass merchandisers ITT Galfer
Brake hydraulic Installers JBI
components Railway and commercial/ Nisshinbo
Brake fluid military aircraft OEMs TMD
Aircraft brake linings and brake manufacturers Roulunds
Railway linings
- -------------------------------------------------------------------------------------------------------------------------------
</Table>
Aerospace Sales
Our sales to aerospace customers were 38, 40 and 41 percent of our total
sales in 2003, 2002 and 2001, respectively. Our sales to commercial aerospace
original equipment manufacturers were 7, 9 and 12 percent of our total sales in
2003, 2002 and 2001, respectively. If there were a large decline in sales of
aircraft that use our components, operating results could be negatively
impacted. In addition, our sales to commercial aftermarket customers of
aerospace products and services were 15, 16 and 16 percent of our total sales in
2003, 2002 and 2001, respectively. If there were a large decline in the number
of global flying hours or landings for aircraft that use our components or
services, operating results could be negatively impacted. The terrorist attacks
on September 11, 2001 resulted in an abrupt downturn in the aviation industry
which was already negatively impacted by a weak economy. This dramatic downturn
in the commercial air transport industry continued to adversely impact the
operating results of our Aerospace segment in 2003.
U.S. Government Sales
Sales to the U.S. Government (principally by our Aerospace segment), acting
through its various departments and agencies and through prime contractors,
amounted to $2,595, $2,277 and $2,491 million in 2003, 2002 and 2001,
respectively, which included sales to the U.S. Department of Defense, as a prime
contractor and subcontractor, of $2,269, $1,833 and $1,631 million in 2003, 2002
and 2001, respectively. U.S. defense spending increased in 2003 and is also
expected to increase in 2004.
In addition to normal business risks, companies engaged in supplying
military and other equipment to the U.S. Government are subject to unusual
risks, including dependence on Congressional appropriations and administrative
allotment of funds, changes in governmental procurement legislation and
regulations and other policies that may reflect military and political
developments, significant changes in contract scheduling, complexity of designs
and the rapidity with which they become obsolete, necessity for constant design
improvements, intense competition for U.S. Government business necessitating
increases in time and investment for design and development, difficulty of
forecasting costs and schedules when bidding on developmental and highly
sophisticated technical work and other factors characteristic of the industry.
Changes are customary over the life of U.S. Government contracts, particularly
development contracts, and generally result in adjustments of contract prices.
7
<PAGE>
We, like other government contractors, are subject to government
investigations of business practices and compliance with government procurement
regulations. Although such regulations provide that a contractor may be
suspended or barred from government contracts under certain circumstances, and
the outcome of pending government investigations cannot be predicted with
certainty, we are not currently aware of any such investigations that we expect,
individually or in the aggregate, will have a material adverse effect on us. In
addition, we have a proactive business compliance program designed to ensure
compliance and sound business practices.
Backlog
Our total backlog at year-end 2003 and 2002 was $7,191 and $7,332 million,
respectively. We anticipate that approximately $5,573 million of the 2003
backlog will be filled in 2004. We believe that backlog is not necessarily a
reliable indicator of our future sales because a substantial portion of the
orders constituting this backlog may be canceled at the customer's option.
Competition
We are subject to active competition in substantially all product and
service areas. Competition is expected to continue in all geographic regions.
Competitive conditions vary widely among the thousands of products and services
provided by us, and vary country by country. Depending on the particular
customer or market involved, our businesses compete on a variety of factors,
such as price, quality, reliability, delivery, customer service, performance,
applied technology, product innovation and product recognition. Brand identity,
service to customers and quality are generally important competitive factors for
our products and services, and there is considerable price competition. Other
competitive factors for certain products include breadth of product line,
research and development efforts and technical and managerial capability. While
our competitive position varies among our products and services, we believe we
are a significant competitor in each of our major product and service classes.
However, a number of our products and services are sold in competition with
those of a large number of other companies, some of which have substantial
financial resources and significant technological capabilities. In addition,
some of our products compete with the captive component divisions of original
equipment manufacturers.
International Operations
We are engaged in manufacturing, sales, service and research and development
mainly in the United States, Europe, Canada, Asia and Latin America. U.S.
exports and foreign manufactured products are significant to our operations.
U.S. exports comprised 10 percent of our total net sales in both 2003 and 2002.
Foreign manufactured products and services, mainly in Europe, were 34 and 30
percent of our total net sales in 2003 and 2002, respectively.
Our international operations, including U.S. exports, are potentially
subject to a number of unique risks and limitations, including: fluctuations in
currency value; exchange control regulations; wage and price controls;
employment regulations; foreign investment laws; import and trade restrictions,
including embargoes; and governmental instability. However, we have limited
exposure in high risk countries and have taken action to mitigate these risks.
Approximately 19 percent of total net sales of Aerospace-related products
and services were exports of U.S. manufactured products and systems and
performance of services such as aircraft repair and overhaul. Exports were
principally made to Europe, Asia and Canada. Foreign manufactured products and
services comprised 14 percent of total Aerospace net sales.
Approximately 2 percent of total net sales of Automation and Control
Solutions products were exports of U.S. manufactured products. Foreign
manufactured products and services accounted for 48 percent of total net sales
of Automation and Control Solutions. The principal manufacturing facilities
outside the U.S. are in Europe, with less significant operations in Asia and
Canada.
Approximately 12 percent of total net sales of Specialty Materials were
exports of U.S. manufactured products. Exports were principally made to Asia,
Europe, Latin America and Canada. Foreign manufactured products comprised 28
percent of total net sales of Specialty Materials. The principal manufacturing
facilities outside the U.S. are in Europe, with less significant operations in
Asia and Canada.
8
<PAGE>
Exports of U.S. manufactured products comprised 1 percent of total net sales
of Transportation Systems products. Foreign manufactured products accounted for
62 percent of total net sales of Transportation Systems. The principal
manufacturing facilities outside the U.S. are in Europe, with less significant
operations in Asia, Latin America and Canada.
Raw Materials
The principal raw materials used in our operations are generally readily
available. We experienced no significant or unusual problems in the purchase of
key raw materials and commodities in 2003. We are not dependent on any one
supplier for a material amount of our raw materials. However, we are highly
dependent on our suppliers and subcontractors in order to meet commitments to
our customers. In addition, many major components and product equipment items
are procured or subcontracted on a sole-source basis with a number of domestic
and foreign companies. We maintain a qualification and performance surveillance
process to control risk associated with such reliance on third parties. While we
believe that sources of supply for raw materials and components are generally
adequate, it is difficult to predict what effects shortages or price increases
may have in the future. The costs of certain key raw materials, including
natural gas and benzene, in our Specialty Materials' business were at
historically high levels in 2003 and are expected to remain at those levels in
2004. Based on current volume usage, a 10 percent increase in the year-end price
of natural gas and benzene would increase our costs by $12 and $15 million,
respectively. At present, we have no reason to believe a shortage of raw
materials will cause any material adverse impact during 2004.
Patents, Trademarks, Licenses and Distribution Rights
Our business as a whole, and that of our strategic business units, are not
dependent upon any single patent or related group of patents, or any licenses or
distribution rights. We own, or are licensed under, a large number of patents,
patent applications and trademarks acquired over a period of many years, which
relate to many of our products or improvements to those products and which are
of importance to our business. From time to time, new patents and trademarks are
obtained, and patent and trademark licenses and rights are acquired from others.
We also have distribution rights of varying terms for a number of products and
services produced by other companies. In our judgment, those rights are adequate
for the conduct of our business. We believe that, in the aggregate, the rights
under our patents, trademarks and licenses are generally important to our
operations, but we do not consider any patent, trademark or related group of
patents, or any licensing or distribution rights related to a specific process
or product to be of material importance in relation to our total business.
We have registered trademarks for a number of our products, including such
consumer brands as Honeywell, Prestone, FRAM, Anso, Autolite, Bendix King and
Garrett.
Research and Development
Our research activities are directed toward the discovery and development of
new products and processes, improvements in existing products and processes, and
the development of new uses for existing products.
Research and development expense totaled $751, $757 and $832 million in
2003, 2002 and 2001, respectively. The decrease in research and development
expense in 2002 compared with 2001 related mainly to lower spending by our
Aerospace segment due primarily to program completions and fewer new program
launches by original equipment manufacturers. Customer-sponsored (principally
the U.S. Government) research and development activities amounted to an
additional $608, $603 and $697 million in 2003, 2002 and 2001, respectively.
Environment
We are subject to various federal, state and local government requirements
regulating the discharge of materials into the environment or otherwise relating
to the protection of the environment. It is our policy to comply with these
requirements, and we believe that, as a general matter, our policies, practices
and procedures are properly designed to prevent unreasonable risk of
environmental damage, and of resulting financial liability, in connection with
our business. Some risk of environmental damage is, however, inherent in some of
our operations and products, as it is with other companies engaged in similar
businesses.
9
<PAGE>
We are and have been engaged in the handling, manufacture, use and disposal
of many substances classified as hazardous or toxic by one or more regulatory
agencies. We believe that, as a general matter, our policies, practices and
procedures are properly designed to prevent unreasonable risk of environmental
damage and personal injury, and that our handling, manufacture, use and disposal
of these substances are in accord with environmental and safety laws and
regulations. It is possible, however, that future knowledge or other
developments, such as improved capability to detect substances in the
environment or increasingly strict environmental laws and standards and
enforcement policies, could bring into question our handling, manufacture, use
or disposal of these substances.
Among other environmental requirements, we are subject to the federal
superfund law, and similar state laws, under which we have been designated as a
potentially responsible party that may be liable for cleanup costs associated
with various hazardous waste sites, some of which are on the U.S. Environmental
Protection Agency's superfund priority list. Although, under some court
interpretations of these laws, there is a possibility that a responsible party
might have to bear more than its proportional share of the cleanup costs if it
is unable to obtain appropriate contribution from other responsible parties, we
have not had to bear significantly more than our proportional share in multi-
party situations taken as a whole.
In the matter entitled Interfaith Community Organization, et al. v.
Honeywell International Inc., et al., the United States District Court for the
District of New Jersey held in May 2003 that a predecessor Honeywell site
located in Jersey City, New Jersey constituted an imminent and substantial
endangerment and ordered Honeywell to conduct the excavation and transport for
offsite disposal of approximately one million tons of chromium residue present
at the site. Honeywell strongly disagrees with the Court's determinations and
has appealed the Court's decision to the Third Circuit Court of Appeals. Per the
Appeals Court's order, the parties are engaged in mediation. In October 2003,
the District Court denied Honeywell's motion for a stay of certain aspects of
its May 2003 order, and we are considering whether to appeal such ruling. The
site at issue is one of twenty-one sites located in Jersey City, New Jersey
which are the subject of an Administrative Consent Order (ACO) entered into with
the New Jersey Department of Environmental Protection (NJDEP) in 1993. Under the
ACO, Honeywell agreed to study and remediate these sites in accordance with
NJDEP's directions, provided that the total costs of such studies and
remediation do not exceed $60 million. Honeywell has cooperated with the NJDEP
under the ACO and believes that decisions regarding site cleanups should be made
by the NJDEP under the ACO. We are confident that proceeding under the ACO will
ensure a safe remediation and allow the property to be placed back into
productive use much faster and at a cost significantly less than the remedies
required by the Court's order. We have not completed development of a remedial
action plan for the excavation and offsite disposal directed under the Court's
order and therefore are unable to estimate the cost of such actions. At trial,
plaintiff's expert testified that the excavation and offsite disposal cost might
be $400 million. However, there are significant variables in the implementation
of the Court's order and depending on the method of implementation chosen, the
estimate could increase or decrease. Prior to 2003, provisions were made in our
financial statements as to remedial costs consistent with the ACO and during the
three months ended June 30, 2003 we provided for additional costs which are
likely to be incurred during the pendency of our appeal, which provisions do not
assume excavation and offsite removal of chromium from the site. There are
alternative outcomes and remedies beyond the scope of the ACO that could result
from the remanding, reversal or replacement of the Court's decision and order.
At this time, we can neither identify a probable alternative outcome nor
reasonably estimate the cost of an alternative remedy. Although we expect the
Court's decision and order to be remanded, reversed or replaced, should the
remedies prescribed in the Court's decision and order ultimately be upheld, such
outcome could have a material adverse impact on our consolidated results of
operations or operating cash flows in the periods recognized or paid. We do not
expect that this matter will have a material adverse effect on our consolidated
financial position.
In accordance with a 1992 consent decree with the State of New York,
Honeywell is studying environmental conditions in and around Onondaga Lake (the
Lake), in Syracuse, New York. The purpose of the study is to identify, evaluate
and propose remedial measures that can be taken to remedy historic industrial
contamination in the Lake. A predecessor company to Honeywell operated a
10
<PAGE>
chemical plant which is alleged to have contributed mercury and other
contaminants to the Lake and certain surrounding areas. In May 2003, Honeywell
submitted to the New York State Department of Environmental Conservation (DEC) a
draft Feasibility Study for the Lake and certain surrounding areas. In November
2003, the DEC issued formal comments on the Feasibility Study. Those comments
include a request for further evaluation of remedies for the Lake and
surrounding areas. Accordingly, pursuant to the consent decree, Honeywell is
required to submit a revised Feasibility Study on or before May 3, 2004.
Provisions have been made in our financial statements based on our expected
revisions to our Feasibility Study. We do not expect that this matter will have
a material adverse effect on our consolidated financial position. However,
should the DEC ultimately require a substantially more extensive remedy than
that expected to be proposed in the revised Feasibility Study and should
Honeywell agree to undertake such a remedy, such outcome could have a material
adverse impact on our consolidated results of operations and operating cash
flows in the periods recognized or paid.
During 2003, three incidents occurred at our Baton Rouge, Louisiana chemical
plant including a release of chlorine, a release of antimony pentachloride which
resulted in an employee fatality, and an employee exposure to hydrofluoric acid.
As a result of these incidents, the United States Environmental Protection
Agency (USEPA), Occupational Health and Safety Administration (OSHA), the
Chemical Safety Board and state and local agencies commenced investigations. A
number of potential government claims have been settled, including a $110,000
penalty paid to OSHA for citations arising from the incidents. The USEPA and
Chemical Safety Board investigations are ongoing however no charges have been
filed or claims asserted. Honeywell has been served with several civil lawsuits.
We do not expect that these matters will have a material adverse effect on our
consolidated financial position, consolidated results of operations or operating
cash flows.
Further information regarding environmental matters is included in
Management's Discussion and Analysis of Financial Condition and Results of
Operations of our 2003 Annual Report to Shareowners which is incorporated
herein by reference.
Employees
We have approximately 108,000 employees at December 31, 2003, of which
approximately 61,000 were located in the United States.
Item 2. Properties
We have over 1,000 locations consisting of plants, research laboratories,
sales offices and other facilities. Our headquarters and administrative complex
is located at Morris Township, New Jersey. Our plants are generally located to
serve large marketing areas and to provide accessibility to raw materials and
labor pools. Our properties are generally maintained in good operating
condition. Utilization of these plants may vary with sales to customers and
other business conditions; however, no major operating facility is significantly
idle. We own or lease warehouses, railroad cars, barges, automobiles, trucks,
airplanes and materials handling and data processing equipment. We also lease
space for administrative and sales staffs. Our properties and equipment are in
good operating condition and are adequate for our present needs. We do not
anticipate difficulty in renewing existing leases as they expire or in finding
alternative facilities.
11
<PAGE>
Our principal plants, which are owned in fee unless otherwise indicated, are
as follows:
<Table>
<S> <C> <C>
Aerospace
---------
Glendale, AZ South Bend, IN Albuquerque, NM
(partially leased) Olathe, KS Rocky Mount, NC
Phoenix, AZ Minneapolis, MN Urbana, OH
Tempe, AZ Plymouth, MN Redmond, WA (leased)
Tucson, AZ Teterboro, NJ Toronto, Canada
Torrance, CA
(partially leased)
Clearwater, FL
Automation and Control Solutions
--------------------------------
Phoenix, AZ Northford, CT Golden Valley, MN
San Diego, CA Freeport, IL Juarez, Mexico
Specialty Materials
-------------------
Baton Rouge, LA Pottsville, PA Hopewell, VA
Geismar, LA Columbia, SC Seelze, Germany
Moncure, NC Chesterfield, VA Longlaville, France
Transportation Systems
----------------------
Mexicali, Mexico Thaon-Les-Vosges, France Atessa, Italy
Glinde, Germany Skelmersdale, United
Kingdom
</Table>
Item 3. Legal Proceedings
We are subject to a number of lawsuits, investigations and claims (some of
which involve substantial amounts) arising out of the conduct of our business.
See a discussion of environmental, asbestos and other litigation matters in
Note 21 of Notes to Financial Statements of our 2003 Annual Report to
Shareowners which is incorporated herein by reference.
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable.
Executive Officers of the Registrant
The executive officers of Honeywell, listed as follows, are elected annually
by the Board of Directors. There are no family relationships among them.
<Table>
<Caption>
Name, Age,
Date First
Elected an
Executive Officer Business Experience
----------------- -----------------------------------------------------------
<S> <C>
David M. Cote (a), 51 Chairman of the Board and Chief Executive Officer since
2002 July 2002. President and Chief Executive Officer from
February 2002 to June 2002. Chairman of the Board,
President and Chief Executive Officer of TRW
(manufacturer of aerospace and automotive products) from
August 2001 to February 2002. President and Chief
Executive Officer of TRW from February 2001 to July 2001.
President and Chief Operating Officer of TRW from
November 1999 to January 2001. Senior Vice President of
General Electric Company and President and Chief
Executive Officer of GE Appliances from June 1996 to
November 1999.
</Table>
- ---------
(a) Also a Director.
12
<PAGE>
<Table>
<Caption>
Name, Age,
Date First
Elected an
Executive Officer Business Experience
----------------- -----------------------------------------------------------
<S> <C>
Dr. Nance K. Dicciani, 56 President and Chief Executive Officer Specialty Materials
2001 since November 2001. Senior Vice President and Business
Group Executive of Chemical Specialties and Director,
European Region of Rohm and Haas (chemical company) from
June 1998 to October 2001.
Roger Fradin, 50 President and Chief Executive Officer Automation and
2004 Control Solutions since January 2004. President of
Automation and Control Products from June 2002 to
December 2003. President and Chief Executive Officer of
Security and Fire Solutions from February 2000 to May
2002. President of The Security Group of The Pittway
Corporation from September 1995 to April 2002.
Robert J. Gillette, 44 President and Chief Executive Officer Transportation
2001 Systems since July 2001. President of Honeywell Turbo
Technologies from July 2000 to June 2001. Vice President
and General Manager of Engineering Plastics from
December 1996 to June 2000.
Robert D. Johnson, 56 President and Chief Executive Officer Aerospace since July
1998 2001. Chief Operating Officer and Executive Vice
President, Aerospace, from December 1999 to June 2001.
President and Chief Executive Officer of AlliedSignal
Aerospace from April 1999 to November 1999.
President -- Aerospace Marketing, Sales and Services from
January 1999 to March 1999.
David J. Anderson, 54 Senior Vice President and Chief Financial Officer since
2003 June 2003. Senior Vice President and Chief Financial
Officer of ITT Industries (global manufacturing company)
from December 1999 to June 2003. Senior Vice President
and Chief Financial Officer of Newport News Shipbuilding
from June 1996 to December 1999.
Larry E. Kittelberger, 55 Senior Vice President Administration and Chief Information
2001 Officer since August 2001. Senior Vice President and
Chief Information Officer of Lucent Technologies Inc.
from November 1999 to August 2001. Senior Vice President
and Chief Information Officer of AlliedSignal Inc from
February 1999 to November 1999. Vice President and Chief
Information Officer from August 1995 to January 1999.
Peter M. Kreindler, 58 Senior Vice President and General Counsel since
1992 March 1992. Secretary from December 1994 through
November 1999.
Thomas W. Weidenkopf, 45 Senior Vice President Human Resources and Communications
2002 since April 2002. Vice President of Human Resources,
Aerospace, from March 1999 to March 2002. Vice President,
Human Resources -- Aerospace Marketing, Sales & Services
from March 1997 to February 1999.
</Table>
13
<PAGE>
Part II.
Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities
Market and dividend information for Honeywell's common stock is included in
Note 26 of Notes to Financial Statements of our 2003 Annual Report to
Shareowners which is incorporated herein by reference.
The number of record holders of our common stock at December 31, 2003 was
88,454.
The following table summarizes Honeywell's purchases of its common stock,
par value $1 per share, for the year ending December 31, 2003:
Issuer Purchases of Equity Securities
<Table>
<Caption>
(a) (b) (c) (d)
Maximum
Total Number (or
Number of Approximate
Shares Dollar Value) of
Purchased as Shares that
Total Part of Publicly May Yet be
Number of Average Announced Purchased Under
Shares Price Paid Plans or Plans or
Period Purchased per Share Programs Programs
------ --------- --------- -------- --------
<S> <C> <C> <C> <C>
December 19-31, 2003 1,887,000 $32.71 1,887,000 (A)
</Table>
- ---------
(A) In November 2003 Honeywell announced its intention to repurchase sufficient
outstanding shares of its common stock to offset the dilutive impact of
employee stock based compensation plans, including future option exercises,
restricted unit vesting and matching contributions under our savings plans.
We estimate share repurchases of approximately 10 million shares annually.
Item 6. Selected Financial Data
Selected Financial Data on page 26 of our 2003 Annual Report to Shareowners
is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
'Management's Discussion and Analysis' on pages 27 through 44 of our 2003
Annual Report to Shareowners is incorporated herein by reference.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Information relating to market risk is included under the caption 'Financial
Instruments' in 'Management's Discussion and Analysis' on pages 43 and 44 of our
2003 Annual Report to Shareowners, and such information is incorporated herein
by reference.
Item 8. Financial Statements and Supplementary Data
Our consolidated financial statements, together with the report thereon of
PricewaterhouseCoopers LLP dated February 5, 2004, appearing on pages 45 through
76 of our 2003 Annual Report to Shareowners, are incorporated herein by
reference. With the exception of the aforementioned information and the
information incorporated by reference in Items 1, 3, 5, 6, 7 and 7A, the 2003
Annual Report to Shareowners is not to be deemed filed as part of this
Annual Report on Form 10-K .
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not Applicable.
14
<PAGE>
Item 9A. Controls and Procedures
Honeywell management, including the Chief Executive Officer and Chief
Financial Officer, conducted an evaluation of the effectiveness of our
disclosure controls and procedures as of the end of the period covered by this
Annual Report on Form 10-K. Based upon that evaluation, the Chief Executive
Officer and the Chief Financial Officer concluded that such disclosure controls
and procedures were effective as of the end of the period covered by this Annual
Report on Form 10-K in alerting them on a timely basis to material information
relating to Honeywell required to be included in Honeywell's periodic filings
under the Exchange Act. There have been no changes that have materially
affected, or are reasonably likely to materially affect, Honeywell's internal
control over financial reporting that have occurred during the period covered by
this Annual Report on Form 10-K.
Part III.
Item 10. Directors and Executive Officers of the Registrant
Information relating to the Directors of Honeywell, as well as information
relating to compliance with Section 16(a) of the Securities Exchange Act of
1934, will be contained in our definitive Proxy Statement involving the election
of the Directors which will be filed with the SEC pursuant to Regulation 14A not
later than 120 days after December 31, 2003, and such information is
incorporated herein by reference. Certain other information relating to the
Executive Officers of Honeywell appears in Part I of this Annual Report on
Form 10-K under the heading 'Executive Officers of the Registrant'.
The members of the Audit Committee of our Board of Directors are: Russell E.
Palmer (Chair), Marshall N. Carter, James J. Howard, Eric K. Shinseki, John R.
Stafford, and Michael W. Wright. The Board has determined that Mr. Palmer
satisfies the 'audit committee financial expert' criteria established by the SEC
and the 'accounting or related financial management expertise' criteria
established by the New York Stock Exchange (NYSE). All members of the Audit
Committee are 'independent' as that term is defined in applicable SEC Rules and
NYSE listing standards.
Honeywell's Code of Business Conduct is available, free of charge, on our
website under the heading 'Investor Relations' (see 'Corporate Governance'), or
by writing to Honeywell, 101 Columbia Road, Morris Township, New Jersey 07962,
c/o Vice President and Corporate Secretary. Honeywell's Code of Business Conduct
applies to all Honeywell directors, officers (including the Chief Executive
Officer, Chief Financial Officer and Controller) and employees. Amendments to or
waivers of the Code of Business Conduct granted to any of Honeywell's directors
or executive officers will be published on our website within five business days
of such amendment or waiver.
Item 11. Executive Compensation
Information relating to executive compensation is contained in the Proxy
Statement referred to above in 'Item 10. Directors and Executive Officers of the
Registrant,' and such information is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Information relating to security ownership of certain beneficial owners and
management is contained in the Proxy Statement referred to above in 'Item 10.
Directors and Executive Officers of the Registrant,' and such information is
incorporated herein by reference.
15
<PAGE>
Equity Compensation Plans
Information about our equity compensation plans is as follows:
<Table>
<Caption>
Number of
Securities
Number of Remaining
Shares to Available for
be Issued Weighted- Future Issuance
Upon Average Under Equity
Exercise of Exercise Price of Compensation
Outstanding Outstanding Plans (Excluding
Options, Options, Securities
Warrants Warrants Reflected in
Plan Category and Rights and Rights Column(a))
------------- ---------- ---------- ----------
(a) (b) (c)
<S> <C> <C> <C>
Equity compensation plans approved by security
holders...................................... 51,861,643(1) $37.13(2) 28,114,430(3)
Equity compensation plans not approved by
security holders............................. 920,285(4) N/A(5) N/A(6)
Total...................................... 52,781,928 $37.13 28,114,430
</Table>
- ---------
(1) Equity compensation plans approved by shareowners that are included in
column (a) of the table are the 2003 Stock Incentive Plan of Honeywell
International Inc. and its Affiliates (the 2003 Stock Incentive Plan)
(524,500 common shares to be issued for options; 1,391,000 restricted units
subject to attainment of certain performance goals or continued employment;
and 543,600 deferred restricted units of previously earned and vested awards
under prior plans approved by shareowners where delivery of shares has been
deferred); the 1993 Stock Plan for Employees of Honeywell International Inc.
and its Affiliates (47,254,305 common shares to be issued for options;
190,725 shares to be issued for SARs; and 1,712,513 restricted units subject
to attainment of certain performance goals or continued employment); the
1985 Stock Plan for Employees of AlliedSignal Inc. and its Subsidiaries
(40,000 common shares to be issued for options); and the Stock Plan for
Non-Employee Directors of Honeywell International Inc. and predecessor plans
(154,000 common shares to be issued for options and 51,000 shares of
restricted stock). The 2003 Stock Incentive Plan has issued 628,830 growth
plan units for the two-year performance cycle beginning January 1, 2003 and
ending December 31, 2004. Growth plan units are denominated in cash units
and the percentage of such units that are payable depends upon the
achievement of pre-established performance goals during the two-year
performance cycle relating to growth in earnings per share, revenue and
return on investment. The value of any growth plan unit is not determinable
and may be paid in cash or shares of Honeywell common stock. Growth plan
units are therefore not included in the table above.
(2) Column (b) does not include any exercise price for restricted units or
growth plan units granted to employees or non-employee directors under
equity compensation plans approved by shareowners. Restricted units do not
have an exercise price because their value is dependent upon attainment of
certain performance goals or continued employment or service and they are
settled for shares of Honeywell common stock on a one-for-one basis. Growth
plan units are denominated in cash units and the ultimate value of the award
is dependent upon attainment of certain performance goals.
(3) The number of shares that may be issued under the 2003 Stock Incentive Plan
as of December 31, 2003 is 27,942,430 except that the following additional
shares under the 2003 Stock Incentive Plan (or any Prior Plan as defined in
the 2003 Stock Incentive Plan) may again be available for issuance: shares
that are settled for cash, expire, are tendered in satisfaction of an option
exercise price or tax withholding obligations, shares reacquired with cash
tendered in satisfaction of an option exercise price or with monies
attributable to any tax deduction enjoyed by Honeywell to the exercise of an
option, and shares under any outstanding awards assumed under any equity
compensation plan of an entity acquired by Honeywell. The remaining 172,000
shares included in column (c) are shares remaining for future grants under
the Stock Plan for Non-Employee Directors of Honeywell International Inc.
(footnotes continued on next page)
16
<PAGE>
(footnotes continued from previous page)
(4) Equity compensation plans not approved by shareowners that are included in
the table are the Supplemental Non-Qualified Savings Plans for Highly
Compensated Employees of Honeywell International Inc. and its Subsidiaries,
the AlliedSignal Incentive Compensation Plan for Executive Employees of
AlliedSignal Inc. and its Subsidiaries, and the Deferred Compensation Plan
for Non-Employee Directors of Honeywell International Inc.
The Supplemental Non-Qualified Savings Plans for Highly Compensated
Employees of Honeywell International Inc. and its Subsidiaries are unfunded,
nonqualified plans that provide benefits equal to the employee deferrals and
company matching allocations that would have been provided under Honeywell's
U.S. tax-qualified savings plan if the Internal Revenue Code limitations on
compensation and contributions did not apply. The company matching
contribution is credited to participants' accounts in the form of notional
shares of Honeywell common stock. Additional notional shares are credited to
participants' accounts equal to the value of any cash dividends payable on
actual shares of Honeywell common stock. The notional shares are distributed
in the form of actual shares of Honeywell common stock when payments are
made to participants under the plans.
The AlliedSignal Incentive Compensation Plan for Executive Employees of
AlliedSignal Inc. and its Subsidiaries was a cash incentive compensation
plan maintained by AlliedSignal Inc. This plan has expired. Employees were
permitted to defer receipt of a cash bonus payable under the plan and invest
the deferred bonus in notional shares of Honeywell common stock. The
notional shares are distributed in the form of actual shares of Honeywell
common stock when payments are made to participants under the plan. No
further deferrals can be made under this plan. The number of Honeywell
securities that remain to be issued under this expired plan is 55,910.
The Deferred Compensation Plan for Non-Employee Directors of Honeywell
International Inc. provides for mandatory and elective deferral of certain
payments to non-employee directors. Mandatory deferrals are invested in
notional shares of Honeywell common stock. Directors may also invest any
elective deferrals in notional shares of Honeywell common stock. Additional
notional shares are credited to participant accounts equal to the value of
any cash dividends payable on actual shares of Honeywell common stock.
Notional shares of Honeywell common stock are converted to an equivalent
amount of cash at the time the distributions are made from the plan to
directors. However, two former directors are entitled to receive periodic
distributions of actual shares of Honeywell common stock that were
notionally allocated to their accounts in years prior to 1992. The number of
Honeywell securities that remain to be issued to these two directors is
4,772.
(5) Column (b) does not include any exercise price for notional shares allocated
to employees under Honeywell's equity compensation plans not approved by
shareowners because all of these shares are notionally allocated as a
matching contribution under the non-qualified savings plans or as a notional
investment of deferred bonuses or fees under the cash incentive compensation
and directors' plans as described in note 4 and are only settled for shares
of Honeywell common stock on a one-for-one basis.
(6) No securities are available for future issuance under the AlliedSignal
Incentive Compensation Plan for Executive Employees of AlliedSignal Inc. and
its Subsidiaries and the Deferred Compensation Plan for Non-Employee
Directors of Honeywell International Inc. The cash incentive compensation
plan has expired. All notional investments in shares of Honeywell common
stock are converted to cash when payments are made under the directors' plan
(other than with respect to 4,772 shares of Honeywell common stock included
in column (a) that is payable to two former directors). The amount of
securities available for future issuance under the Supplemental
Non-Qualified Savings Plan for Highly Compensated Employees of Honeywell
International Inc. and its Subsidiaries is not determinable because the
number of securities that may be issued under these plans depends upon the
amount deferred to the plans by participants in future years.
The table does not contain information for the following plans and arrangements:
Employee benefit plans of Honeywell intended to meet the requirements
of Section 401(a) of the Internal Revenue Code and a small number of
foreign employee benefit plans which are similar to such Section 401(a)
plans.
17
<PAGE>
Equity compensation plans maintained by Honeywell Inc. immediately
prior to the merger of Honeywell Inc. and AlliedSignal Inc. on
December 1, 1999. The right to receive Honeywell International Inc.
securities was substituted for the right to receive Honeywell Inc.
securities under these plans. No new awards have been granted under
these plans after the merger date. The number of shares to be issued
under these plans upon exercise of outstanding options, warrants and
rights is 6,280,816 and their weighted-average exercise price is
$41.88.
The Honeywell Global Employee Stock Purchase Plan. This plan is
maintained solely for eligible employees of participating non-U.S.
affiliates. Eligible employees can contribute between 2 and 8 percent
of base pay from January through October of each year to purchase
shares of Honeywell common stock in November of that year at a 15
percent discount. Honeywell has historically purchased shares through
non-dilutive, open market purchases and intends to continue this
practice. Employees purchased 343,484 shares of common stock at $20.349
per share in 2002 and 351,283 shares of common stock at $21.233 per
share in 2003.
Item 13. Certain Relationships and Related Transactions
Information relating to certain relationships and related transactions is
contained in the Proxy Statement referred to above in 'Item 10. Directors and
Executive Officers of the Registrant,' and such information is incorporated
herein by reference.
Item 14. Principal Accountant Fees and Services
Information relating to fees paid to and services performed by
PricewaterhouseCoopers LLP in 2003 and 2002 and our Audit Committee's
pre-approval policies and procedures with respect to non-audit services are
contained in the Proxy Statement referred to above in 'Item 10. Directors and
Executive Officers of the Registrant,' and such information is incorporated
herein by reference.
Part IV.
Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
<Table>
<Caption>
Page Number in
Annual Report
(a)(1.) Consolidated Financial Statements: to Shareowners
--------------
<S> <C>
Incorporated by reference to the 2003 Annual
Report to Shareowners:
Consolidated Statement of Operations for the
years ended December 31, 2003, 2002 and
2001 45
Consolidated Balance Sheet at December 31,
2003 and 2002 46
Consolidated Statement of Cash Flows for the
years ended December 31, 2003, 2002 and
2001 47
Consolidated Statement of Shareowners'
Equity for the years ended December 31,
2003, 2002 and 2001 48
Notes to Financial Statements 49
Report of Independent Auditors 76
</Table>
<Table>
<Caption>
Page Number
(a)(2.) Consolidated Financial Statement Schedules: in Form 10-K
------------
<S> <C>
Report of Independent Auditors on Financial
Statement Schedule 23
Schedule II -- Valuation and Qualifying Accounts 24
</Table>
All other financial statement schedules have been omitted because they are
not applicable to us or the required information is shown in the consolidated
financial statements or notes thereto.
(a)(3.) Exhibits
See the Exhibit Index on pages 20 through 22 of this Annual Report on
Form 10-K.
(b) Reports on Form 8-K
During the three months ended December 31, 2003, Current Reports on Form 8-K
were filed on October 16, reporting third quarter 2003 financial results and on
November 17, reporting the expiration of a letter of intent to acquire our
automotive Bendix Friction Materials business.
18
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this annual report to be
signed on its behalf by the undersigned, thereunto duly authorized.
HONEYWELL INTERNATIONAL INC.
March 4, 2004 By: /s/ JOHN J. TUS
-------------------------------------
John J. Tus
Vice President and Controller
Pursuant to the requirements of the Securities Exchange Act of 1934, this
annual report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated:
<Table>
<Caption>
Name Name
---- ----
<S> <C>
* *
- ------------------------------------ -------------------------------------
David M. Cote Bruce Karatz
Chairman of the Board, Director
Chief Executive Officer
and Director
* *
- ------------------------------------ -------------------------------------
Hans W. Becherer Robert P. Luciano
Director Director
* *
- ------------------------------------ -------------------------------------
Gordon M. Bethune Russell E. Palmer
Director Director
* *
- ------------------------------------ -------------------------------------
Marshall N. Carter Ivan G. Seidenberg
Director Director
* *
- ------------------------------------ -------------------------------------
Jaime Chico Pardo Eric K. Shinseki
Director Director
* *
- ------------------------------------ -------------------------------------
Clive R. Hollick John R. Stafford
Director Director
* *
- ------------------------------------ -------------------------------------
James J. Howard Michael W. Wright
Director Director
/s/ DAVID J. ANDERSON /s/ JOHN J. TUS
- ------------------------------------ -------------------------------------------
David J. Anderson John J. Tus
Senior Vice President and Vice President and Controller
Chief Financial Officer (Principal Accounting Officer)
(Principal Financial Officer)
*By: /s/ DAVID J. ANDERSON
- ------------------------------------
(David J. Anderson
Attorney-in-fact)
</Table>
March 4, 2004
19
<PAGE>
EXHIBIT INDEX
<Table>
<Caption>
Exhibit No. Description
- ----------- -----------
<S> <C>
2 Omitted (Inapplicable)
3(i) Restated Certificate of Incorporation of Honeywell
(incorporated by reference to Exhibit 3(i) to Honeywell's
Form 8-K filed December 3, 1999)
3(ii) By-laws of Honeywell, as amended (incorporated by reference
to Exhibit 3(ii) to Honeywell's Form 10-Q for the quarter
ended September 30, 2001)
4 Honeywell is a party to several long-term debt instruments
under which, in each case, the total amount of securities
authorized does not exceed 10% of the total assets of
Honeywell and its subsidiaries on a consolidated basis.
Pursuant to paragraph 4(iii)(A) of Item 601(b) of
Regulation S-K, Honeywell agrees to furnish a copy of such
instruments to the Securities and Exchange Commission upon
request.
9 Omitted (Inapplicable)
10.1* 2003 Stock Incentive Plan of Honeywell International Inc.
and its Affiliates (incorporated by reference to
Honeywell's Proxy Statement, dated March 17, 2003, filed
pursuant to Rule 14a-6 of the Securities and Exchange Act
of 1934)
10.2* Deferred Compensation Plan for Non-Employee Directors of
Honeywell International Inc., as amended and restated
(incorporated by reference to Exhibit 10.2 to Honeywell's
Form 10-Q for the quarter ended June 30, 2003)
10.3* Stock Plan for Non-Employee Directors of AlliedSignal Inc.,
as amended (incorporated by reference to Exhibit 10.3 to
Honeywell's Form 10-Q for the quarter ended June 30, 2003)
10.4* 1985 Stock Plan for Employees of AlliedSignal Inc. and its
Subsidiaries, as amended (incorporated by reference to
Exhibit 19.3 to Honeywell's Form 10-Q for the quarter
ended September 30, 1991)
10.5* AlliedSignal Inc. Incentive Compensation Plan for Executive
Employees, as amended (incorporated by reference to
Exhibit B to Honeywell's Proxy Statement, dated March 10,
1994, filed pursuant to Rule 14a-6 of the Securities
Exchange Act of 1934, and to Exhibit 10.5 to Honeywell's
Form 10-Q for the quarter ended June 30, 1999)
10.6* Supplemental Non-Qualified Savings Plan for Highly
Compensated Employees of Honeywell International Inc. and
its Subsidiaries, as amended and restated (incorporated by
reference to Exhibit 10.6 to Honeywell's Form 10-Q for the
quarter ended June 30, 2003)
10.7* Honeywell International Inc. Severance Plan for Senior
Executives, as amended and restated (filed herewith)
10.8* Salary and Incentive Award Deferral Plan for Selected
Employees of Honeywell International Inc. and its
Affiliates, as amended and restated (incorporated by
reference to Exhibit 10.8 to Honeywell's Form 10-Q for the
quarter ended June 30, 2003)
</Table>
20
<PAGE>
<Table>
<Caption>
Exhibit No. Description
- ----------- -----------
<S> <C>
10.9* 1993 Stock Plan for Employees of Honeywell International
Inc. and its Affiliates, as amended (incorporated by
reference to Exhibit A to Honeywell's Proxy Statement,
dated March 10, 1994, filed pursuant to Rule 14a-6 of the
Securities Exchange Act of 1934) (amendment filed
herewith)
10.10 364-Day Credit Agreement dated as of November 26, 2003 among
Honeywell, the initial lenders named therein, Citibank,
N.A., as administrative agent, JPMorgan Chase Bank, as
syndication agent, and Deutsche Bank AG, New York Branch,
Bank of America, N.A. and Barclays Bank PLC, as
documentation agents, and CitiGroup Global Markets Inc.
and J.P. Morgan Securities Inc., as joint lead arrangers
and co-book managers (filed herewith)
10.11 Five-Year Credit Agreement dated as of November 26, 2003
among Honeywell, the initial lenders named therein,
Citibank, N.A., as administrative agent, JPMorgan Chase
Bank, as syndication agent, and Deutsche Bank AG, New York
Branch, Bank of America, N.A., and Barclays Bank PLC, as
documentation agents, and CitiGroup Global Markets Inc.
and J.P. Morgan Securities Inc., as joint lead arrangers
and co-book managers (filed herewith)
10.12* Honeywell International Inc. Supplemental Pension Plan, as
amended and restated (incorporated by reference to
Exhibit 10.13 to Honeywell's Form 10-K for the year ended
December 31, 2000)
10.13* Employment Separation Agreement and Release between J. Kevin
Gilligan and Honeywell International Inc. dated
February 10, 2004 (filed herewith)
10.14* Honeywell International Inc. Supplemental Executive
Retirement Plan for Executives in Career Band 6 and Above
(incorporated by reference to Exhibit 10.16 to Honeywell's
Form 10-K for the year ended December 31, 2000)
10.15* Honeywell Supplemental Defined Benefit Retirement Plan, as
amended and restated (incorporated by reference to
Exhibit 10.17 to Honeywell's Form 10-K for the year ended
December 31, 2000)
10.16* Letter between David J. Anderson and Honeywell International
Inc. dated June 12, 2003 (incorporated by reference to
Exhibit 10.26 to Honeywell's Form 10-Q for the quarter
ended June 30, 2003)
10.17* Employment Separation Agreement and Release between Richard
F. Wallman and Honeywell International Inc. dated July 17,
2003 (incorporated by reference to Exhibit 10.2 to
Honeywell's Form 10-Q for the quarter ended September 30,
2003)
10.18* Honeywell International Inc. Severance Plan for Corporate
Staff Employees (Involuntary Termination Following a
Change in Control), as amended and restated (incorporated
by reference to Exhibit 10.19 to Honeywell's Form 10-K for
the year ended December 31, 2002)
10.19* Employment Agreement dated as of February 18, 2002 between
Honeywell and David M. Cote (incorporated by reference to
Exhibit 10.24 to Honeywell's Form 8-K filed March 4, 2002)
11 Omitted (Inapplicable)
12 Statement re: Computation of Ratio of Earnings to Fixed
Charges (filed herewith)
</Table>
21
<PAGE>
<Table>
<Caption>
Exhibit No. Description
- ----------- -----------
<S> <C>
13 Pages 26 through 76 of Honeywell's 2003 Annual Report to
Shareowners (filed herewith)
16 Omitted (Inapplicable)
18 Omitted (Inapplicable)
21 Subsidiaries of the Registrant (filed herewith)
22 Omitted (Inapplicable)
23 Consent of PricewaterhouseCoopers LLP (filed herewith)
24 Powers of Attorney (filed herewith)
31.1 Certification of Principal Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002 (filed
herewith)
31.2 Certification of Principal Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002 (filed
herewith)
32.1 Certification of Principal Executive Officer Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 (filed herewith)
32.2 Certification of Principal Financial Officer Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 (filed herewith)
99 Omitted (Inapplicable)
</Table>
- ---------
The Exhibits identified above with an asterisk(*) are management contracts
or compensatory plans or arrangements.
22
<PAGE>
REPORT OF INDEPENDENT AUDITORS ON
FINANCIAL STATEMENT SCHEDULE
To the Board of Directors of
HONEYWELL INTERNATIONAL INC.
Our audits of the consolidated financial statements referred to in our
report dated February 5, 2004 appearing in the 2003 Annual Report to Shareowners
of Honeywell International Inc. (which report and consolidated financial
statements are incorporated by reference in this Annual Report on Form 10-K)
also included an audit of the Financial Statement Schedule listed in
Item 15(a)(2) of this Form 10-K. In our opinion, the Financial Statement
Schedule presents fairly, in all material respects, the information set forth
therein when read in conjunction with the related consolidated financial
statements.
/s/ PricewaterhouseCoopers LLP
Florham Park, New Jersey
February 5, 2004
23
<PAGE>
HONEYWELL INTERNATIONAL INC
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
Three Years Ended December 31, 2003
(In millions)
<Table>
<Caption>
Allowance for Doubtful Accounts:
<S> <C>
Balance December 31, 2000................................... $ 99
Provision charged to income............................. 84
Deductions from reserves(1)............................. (55)
----
Balance December 31, 2001................................... 128
Provision charged to income............................. 109
Deductions from reserves(1)............................. (90)
----
Balance December 31, 2002................................... 147
Provision charged to income............................. 72
Deductions from reserves(1)............................. (69)
----
Balance December 31, 2003................................... $150
----
----
</Table>
- ---------
(1) Represents uncollectible accounts written off, less recoveries, translation
adjustments and reserves acquired.
24
<PAGE>
STATEMENT OF DIFFERENCES
------------------------
The registered trademark symbol shall be expressed as..................... 'r'
The British pound sterling sign shall be expressed as..................... 'L'
The Japanese Yen sign shall be expressed as............................... 'Y'
The Euro sign shall be expressed as....................................... 'E'
The section symbol shall be expressed as.................................. 'SS'
Characters normally expressed as subscript shall be preceded by........... [u]
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>3
<FILENAME>ex10-7.txt
<DESCRIPTION>EXHIBIT 10.7
<TEXT>
<PAGE>
HONEYWELL INTERNATIONAL INC. SEVERANCE PLAN
FOR SENIOR EXECUTIVES
Amended and Restated
Effective as of
December 20, 2001
<PAGE>
PART I
GENERAL PROVISIONS
1. Purpose.
The purpose of the Honeywell International Inc. Severance Plan for Senior
Executives (the "Plan") is to provide severance related benefits to
selected eligible employees of a Honeywell International Employer (as
defined in Part II) who are employed in a position in Career Band 6 or
above and whose employment relationship is involuntarily terminated at the
initiative of the Employer for reasons other than Gross Cause (as defined
below). This Plan is intended to be an unfunded plan for a select group of
management or highly compensated employees for purposes of ERISA (as
defined below).
This Plan is comprised of Part I--general provisions relating to the
operation of the Plan, and Part II--special provisions that become
effective only upon a Change in Control (as defined below). As set forth
herein, this Plan constitutes the amendment and restatement, as of December
20, 2001, of the Severance Plan for Senior Executives established by Allied
Corporation on March 31, 1983 and amended and restated by AlliedSignal Inc.
as of April 25, 1988, January 1, 1990, April 29, 1991, January 1, 1994 and
May 1, 1999.
As used throughout the Plan unless otherwise clearly or necessarily
indicated by context:
(a) "Annual Base Salary" means an amount equal to the product of Base
Salary and twelve.
(b) "Annual Incentive Compensation" means, except as provided in Section
19(b), the product of (i) times (ii) where (i) is the target percentage
that would be utilized in determining the Incentive Award for the
Participant in the calendar year in which Participant's Covered
Termination occurs and (ii) is Annual Base Salary.
(c) "Base Salary" means the monthly base salary payable to a Participant at
the highest rate in effect during any of the thirty-six months
preceding a Covered Termination.
(d) "Board" means the Board of Directors of the Company.
(e) "Career Band" means the salary and position classification system
adopted by the Company for use after January 1, 1994.
(f) "Change in Control" is deemed to occur at the time (i) when any entity,
person or group (other than the Company, any subsidiary or any savings,
pension or other benefit plan for the benefit of employees of the
Company or its subsidiaries) which theretofore beneficially owned less
than 30% of the Common Stock then outstanding acquires shares of Common
Stock in a transaction or series of transactions that results in such
entity, person or group directly or indirectly
-1-
<PAGE>
owning beneficially 30% or more of the outstanding Common Stock, (ii)
of the purchase of shares of Common Stock pursuant to a tender offer or
exchange offer (other than an offer by the Company) for all, or any
part of, the Common Stock, (iii) of a merger in which the Company will
not survive as an independent, publicly owned corporation, (iv) of a
consolidation, or a sale, exchange or other disposition of all or
substantially all of the Company's assets, (v) of a substantial change
in the composition of the Board during any period of two consecutive
years such that individuals who at the beginning of such period were
members of the Board cease for any reason to constitute at least a
majority thereof, unless the election, or the nomination for election
by the shareowners of the Company, of each new director was approved by
a vote of at least two-thirds of the directors then still in office who
were directors at the beginning of the period, or (vi) of any
transaction or other event which the Management Development and
Compensation Committee of the Board, in its discretion, determines to
be a Change in Control for purposes of this Plan.
(g) "Code" means the Internal Revenue Code of 1986, as amended from time to
time.
(h) "Common Stock" means the common stock of the Company or such other
stock into which the common stock may be changed as a result of
split-ups, recapitalizations, reclassifications and any similar
transaction.
(i) "Company" means Honeywell International Inc., a Delaware corporation.
(j) "Covered Termination" means, except as provided in Section 19(c), a
Participant's Discharge. Notwithstanding the preceding sentence, in the
event of a sale or transfer of a facility or line of business that
causes a severance of the employment relationship with the Employer, a
Covered Termination shall be deemed to have occurred only if the
Participant is not offered substantially comparable employment with the
new employer, as determined by the Plan Administrator, in its sole
discretion. In addition, following a Change in Control, a Covered
Termination shall include any geographic relocation of the
Participant's position to a new location which is more than fifty (50)
miles from the location of the Participant's position immediately prior
to a Change in Control.
(k) "Discharge" means an involuntary termination of a Participant's
employment relationship by the Employer for reasons other than death or
Gross Cause.
(l) "Determination Year" means a calendar year within which performance is
measured for purposes of determining the amount of Incentive Awards
payable for that year.
(m) "Effective Date" means March 31, 1983.
-2-
<PAGE>
(n) "Employer" means the Company and its participating divisions,
subsidiaries, strategic business units and their respective successors.
(o) "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with applicable final regulations
thereunder.
(p) "Gross Cause" means, except as provided in Section 19(f), conduct by a
Participant which is a fraud, misappropriation of Employer property or
intentional misconduct damaging to such property or business of an
Employer, or the commission of a crime. Gross Cause shall be determined
by the Plan Administrator in its sole and absolute discretion.
(q) "Incentive Award" means an incentive compensation award or any other
annual incentive award determined under the AlliedSignal Inc. Incentive
Compensation Plan for Executive Employees , and any predecessor or
successor plan, but shall not include any performance improvement award
or any other long-term incentive award under any such plan.
(r) "Named Fiduciary" means the Plan Administrator and/or such other
committee, entity or person as the Company or the Plan Administrator
may designate to administer the terms and conditions of the Plan, as
the case may be.
(s) "Participant" means an Existing Participant, an Officer Participant or
a New Participant.
(i) "Existing Participant" means, except as further defined in Part
II an individual who, on July 1, 1993, was an employee of an
Employer in Salary Grade 20 or above or in a position comparable
to a position of Salary Grade 20 or above.
(ii) "Officer Participant" means, except as further defined in Part
II, an individual (other than an Existing Participant) who is an
officer of an Employer in Band 7 as determined by the Plan
Administrator in his or her sole discretion.
(iii) "New Participant" means an individual (other than an Existing
Participant and an Officer Participant) who is employed by an
Employer in a position evaluated in Career Band 6 or above or in
a position comparable to a position in Career Band 6 or above,
all as determined by the Plan Administrator in his or her sole
discretion.
(iv) Notwithstanding any Plan provisions to the contrary, if as a
result of the merger of AlliedSignal Inc. and Honeywell Inc., a
former employee of Honeywell Inc. who would otherwise satisfy
the definition of Participant remains covered by a severance
plan sponsored by Honeywell Inc. or an
-3-
<PAGE>
individual severance agreement between such individual and
Honeywell Inc., such individual shall not become a Participant
in this Plan until the earlier of the date (A) such individual
waives his or her rights to benefits under such other severance
plan or arrangement, or (B) such other plan or individual
severance agreement lapses or is otherwise terminated.
(t) "Pay Continuation" means the component of the severance benefit
described in Section 3(a)(i):
(u) "Plan Administrator" means the person defined in Section 7 and Section
22(a).
(v) "Pro Rata Factor" means (I) for the Determination Year in which a
Covered Termination occurs, a fraction the numerator of which is equal
to the number of calendar months which have elapsed from the first day
of the calendar month following the Covered Termination through
December 31st of the Determination Year, and the denominator of which
is twelve, and (ii) for any subsequent Determination Year shall mean a
fraction, the numerator of which is equal to the Severance Pay Factor,
reduced by the number of calendar months which have elapsed from the
first day of the calendar month following the Covered Termination
through December 31st of the year preceding the Determination Year, and
the denominator of which is twelve; provided, however, that the Pro
Rata Factor shall never be greater than 1.0.
(w) "Prorated Annual Incentive Compensation" means the component of the
severance benefit described in Section 3(a)(ii).
(x) "Salary Grade" means the salary and position classification used by the
Company prior to January 1, 1994, or any comparable salary and position
classification used by any other Employer.
(y) "Severance Pay Factor" means, with respect to any Participant, the
relevant factor specified in Section 3(a)(i)(A).
(z) "Severance Period" means the period, commencing on the first day of the
first month following a Covered Termination, which is comprised of the
number of consecutive months equal to the lesser of (i) the Severance
Pay Factor, or (ii) the number of months occurring before the first day
of the month following the Participant's attainment of age 65 or, if
later, eligibility to receive an unreduced retirement benefit under a
qualified defined benefit pension plan maintained by an Employer. In
the event of a Change in Control, the Severance Period will commence
immediately following the expiration of the Notice Period (if any) and
Vacation Period payments referenced in Section 4(b) hereof.
-4-
<PAGE>
2. Participation.
(a) An employee of an Employer who is at any time a Participant shall
continue to be a Participant in the Plan until the earlier of (i) the
date the employment relationship with the Employer is severed for
reasons other than a Covered Termination, or (ii) the date the employee
ceases to be employed in a position equivalent to Career Band 6 or
above; provided, however, any employee who ceases to be employed in a
position equivalent to Career Band 6 or above on or after a Change in
Control shall nevertheless continue to be a Participant in the Plan.
(b) A Participant in the Plan who is at any time the subject of a Covered
Termination shall continue to be a Participant until all of the
benefits for which he or she is entitled under Section 3, if any, have
been paid.
3. Severance Benefits.
(a) Eligibility for Benefits. Subject to subparagraph (b) below, a
Participant who is the subject of a Covered Termination shall receive
the benefits described in this Section 3.
(i) Pay Continuation.
(A) An Existing Participant shall receive a benefit in an amount
equal to his or her Base Salary multiplied by the relevant
Severance Pay Factor determined as follows (a detailed
schedule of each Existing Participant's Severance Pay Factor
is attached hereto as Exhibit A):
<TABLE>
<CAPTION>
Salary Grade as of July 1, 1993 Severance Pay Factor
------------------------------- --------------------
<S> <C>
20 and 21 18
22 and 23 24
24 and above 36
</TABLE>
Provided, however, that the Severance Pay Factor of an
Existing Participant, whose Salary Grade is reduced after a
Change in Control, shall not be reduced.
(B) An Officer Participant shall receive a benefit in an amount
equal to his or her Base Salary multiplied by a Severance Pay
Factor of 18 (or 36 in the case of an Officer Participant who
is an Executive Vice President or Senior Vice President), or
following a Change in Control, a Severance Pay Factor of 24
(36 in the case of an Officer Participant who is an Executive
Vice President or Senior Vice President).
-5-
<PAGE>
(C) A New Participant shall receive a benefit in an amount equal
to his or her Base Salary multiplied by a Severance Pay
Factor of 12.
(ii) Annual Incentive Compensation. An Existing Participant or an
Officer Participant shall receive a benefit in an amount equal to
his or her Annual Incentive Compensation multiplied by the
applicable Pro Rata Factor. The Pro Rata Factor shall be
determined for the calendar year in which a Covered Termination
occurs and each calendar year thereafter through the end of the
calendar year in which the Severance Period ends.
(iii) Benefit Continuation. For the duration of the Severance Period,
the Employer will continue the Participant's employee benefits
including, without limitation, continuation of the Participant's
savings plan participation (to the extent permissible under
Section 401(a) of the Code, provided, however that company
matching contributions for Participants shall be limited to
eighteen months and basic and contributory life and medical
insurance (including qualified dependents) ("welfare plan
coverage"), at the active employee coverage level and prevailing
employee contribution rate, if any; provided, however, (A) that
such level of welfare plan coverage shall not exceed the level of
welfare plan coverage in effect on the date of the Participant's
Covered Termination, (B) that such continuation of welfare plan
coverage will cease on the date similar benefits are provided the
Participant by a subsequent employer, (C) executive perquisites,
such as automobiles or memberships, will be governed by the terms
of the particular programs, and (D) that no employee benefit
shall be continued for a longer period of time than that provided
by the terms of the controlling employee benefit plan applicable
to the Participant on the date of such Participant's Covered
Termination. Notwithstanding the foregoing (but subject to
Sections 5 and 20(c)), to the extent that a Participant was
provided with a flex-perk allowance, executive liability and auto
insurance or an executive life insurance plan or policy
immediately prior to a Covered Termination, such benefit or
benefits shall be continued for the duration of the Severance
Period.
(iv) Pension Service Continuation. Except as otherwise provided by an
applicable pension plan and, subject to the requirements for
qualification of Section 401(a) of the Code, only the first
twelve (12) months of the Severance Period, Pay Continuation and
Prorated Annual Incentive Compensation will be recognized for
purposes of the vesting and pension calculation provisions of the
AlliedSignal Inc. Retirement Program or any other pension plan
sponsored by an Employer in which the Participant participates.
The normal policy for qualifying leaves remains applicable
thereafter.
-6-
<PAGE>
(b) Benefits Conditioned on Release. Notwithstanding anything in this
Section 3 to the contrary, all benefits under this Plan except benefits
provided pursuant to Part II, shall be provided in consideration for,
and conditioned upon, execution of a release by the Participant of all
current or future claims, known or unknown, arising on or before the
date of the release against the Employer, its subsidiaries, affiliates
and their respective officers, directors and employees in a form and
manner prescribed by the Plan Administrator. Additionally, no severance
benefits shall be payable under this Section 3 unless the Participant
has returned to the Employer all property of the Employer and any
information of a proprietary nature in his or her possession.
(c) Benefit Limitations.
(i) Except as provided in subparagraph (ii) below, any benefit
determined to be payable to a Participant under any other
severance plan sponsored or funded by an Employer shall be
reduced by the amount of any similar benefit payable to the
Participant under this Plan (excluding any benefit payable under
Section 20(a)) regardless of whether the benefit determined under
the Plan is payable at an earlier or a later date than payments
under such other severance plan.
(ii) Any benefit determined to be payable under this Plan (excluding
any benefit payable under Section 20(a)) to a Participant who was
not eligible to participate in this Plan prior to April 25, 1988
will be reduced to the extent of any duplication of benefits
between the Plan and any benefits that may be payable to the
Participant under arrangements existing prior to April 25, 1988.
4. Benefit Payments.
(a) Form and Timing of Payments. Except as provided in Sections 21(a) and
21(b), any Pay Continuation shall be paid in equal monthly installments
during the Severance Period, and any Prorated Annual Incentive
Compensation shall be paid annually as soon after the end of the
Determination Year as is practicable. No Prorated Annual Incentive
Compensation shall be payable for any Determination Year with respect
to which the Pro Rata Factor is less than or equal to zero.
(b) Interim Incentive Compensation Payments. In the event that a
Participant's employment is terminated pursuant to a Covered
Termination within two years following a Change in Control, the
Participant shall be paid an additional amount, with respect to any
notice period provided under applicable law (whether working or
non-working) ("Notice Period"), if any, and any periods of accrued and
unused vacation time (not including any 'grandfathered' transitional
vacation credited to a Participant), but only to the extent paid
periodically ("Vacation Period"), equal to the product of (1) the
amount of annual incentive compensation that such
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Participant would earn for the year of termination under the incentive
compensation plan in which such Participant participated immediately
prior to such termination (assuming performance at the target level of
performance), and (2) a fraction, the numerator of which is the sum of
the number of days in the Participant's Notice Period and Vacation
Period, and the denominator of which is 365; provided, however, the
numerator of such fraction shall not include any period for which you
have already received or will receive a short-term incentive
compensation award. Any amount payable pursuant to this Section 4(b)
shall be paid in the normal course pursuant to the terms of the
incentive compensation plan in which such Participant participated
immediately prior to such termination, unless specifically otherwise
provided in this Plan.
5. Forfeiture of Benefits.
Notwithstanding anything to the contrary in the Plan and except as provided
in Section 21(c), a Participant receiving benefits or otherwise entitled to
receive benefits under this Plan shall cease to receive such benefits under
the Plan and the right to receive any benefits in the future under the Plan
shall be forfeited, in the event the Participant, either before or after
termination of employment, as determined by the Named Fiduciary, in its
sole discretion (a) is convicted of a felony, (b) commits any fraud or
misappropriates property, proprietary information, intellectual property or
trade secrets of the Employer for personal gain or for the benefit of
another party, (c) actively recruits and offers employment to any
management employee of the Employer, or (d) engages in intentional
misconduct substantially damaging to the property or business of any
Employer, or (e) makes false or misleading statements about the Employer or
its products, officers or employees to competitors or customers or
potential customers of the Employer, or to current of former employees of
the Employer.
6. Payment of Benefits Upon Incompetence or Death.
In the event the Named Fiduciary is presented with evidence satisfactory to
it that a Participant receiving benefits or entitled to receive benefits is
adjudged to be legally incompetent, the remainder of such Participant's
unpaid benefits shall be paid to the Participant's conservator, legal
representative or any other person deemed by the Named Fiduciary to have
assumed responsibility for the maintenance of such person receiving or
entitled to receive benefits. In the event a Participant receiving benefits
or entitled to receive benefits dies, the remainder of such Participant's
unpaid benefits shall be paid to the Participant's designated beneficiary.
A Participant may designate a beneficiary in the form and manner prescribed
by the Named Fiduciary. Any designation of a beneficiary may be revoked by
filing a later designation or revocation. In the absence of an effective
designation of a beneficiary by a Participant or upon the death of all
beneficiaries on or before a Participant's death, the remainder of the
Participant's unpaid benefits shall be paid to the Participant's spouse or,
if none, to the Participant's estate. Any payment made pursuant to this
Section 6 shall be a discharge of any liability under the Plan therefor.
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7. Administration.
(a) Plan Administration. Except as provided in Section 22(a), the Plan
shall be administered by the Plan Administrator, who may act through
one or more Named Fiduciaries under this Plan who shall have the powers
and authorities as described in this Section 7. The Plan Administrator
shall be the Senior Vice President, Human Resources and Communications,
or such other person as the Board may appoint. The Plan Administrator
shall have the authority to appoint and remove any other Named
Fiduciary at his or her discretion.
Any person acting on behalf of the Named Fiduciary shall serve without
additional compensation. The Named Fiduciary shall keep or cause to be
kept such records and shall prepare or cause to be prepared such
returns or reports as may be required by law or necessary for the
proper administration of the Plan.
(b) Powers and Duties of Named Fiduciary. The Named Fiduciary shall have
the full discretionary power and authority to construe and interpret
the Plan (including, without limitation, supplying omissions from,
correcting deficiencies in, or resolving inconsistencies or ambiguities
in, the language of the Plan); to determine all questions of fact
arising under the Plan, including questions as to eligibility for and
the amount of benefits; to establish such rules and regulations
(consistent with the terms of the Plan) as it deems necessary or
appropriate for administration of the Plan; to delegate
responsibilities to others to assist it in administering the Plan; and
to perform all other acts it believes reasonable and proper in
connection with the administration of the Plan. The Named Fiduciary
shall be entitled to rely on the records of the Employer in determining
any Participant's entitlement to and the amount of benefits payable
under the Plan. Any determination of the Named Fiduciary, including
interpretations of the Plan and determinations of questions of fact,
shall be final and binding on all parties.
The Named Fiduciary may retain attorneys, consultants, accountants or
other persons (who may be employees of the Employer) to render advice
and assistance and may delegate any of the authorities conferred on
him under this Plan to such persons as he shall determine to be
necessary to effect the discharge of his duties hereunder. The Plan
Administrator, or other Named Fiduciary, the Employer, the Company and
its officers and directors shall be entitled to rely upon the advice,
opinions and determinations of any such persons. Any exercise of the
authorities set forth in this Section 7, whether by the Plan
Administrator, or other Named Fiduciary or his delegee, shall be final
and binding upon the Employer and all Participants.
(c) Plan Year. The plan year shall be the calendar year.
(d) Indemnification. To the extent permitted by law, the Employer shall
indemnify any Named Fiduciary from all claims for liability, loss, or
damage (including
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payment of expenses in connection with defense against such claims)
arising from any act or failure to act in connection with the Plan.
8. Claims and Appeals Procedures.
Except as provided in Sections 22(c)-(f), the Plan's benefit claims and
appeals procedures shall be as follows:
(a) Any request or claim for Plan benefits must be made in writing and
shall be deemed to be filed by a Participant when a written request is
made by the claimant or the claimant's authorized representative which
is reasonably calculated to bring the claim to the attention of the
Named Fiduciary.
(b) The Named Fiduciary shall provide notice in writing to any Participant
when a claim for benefits under the Plan has been denied in whole or in
part. Such notice shall be provided within 60 days of the receipt by
the Named Fiduciary of the Participant's claim or, if special
circumstances require, and the Participant is so notified in writing,
within 120 days of the receipt by the Named Fiduciary of the
Participant's claim. The notice shall be written in a manner calculated
to be understood by the claimant and shall:
(i) set forth the specific reasons for the denial of benefits;
(ii) contain specific references to Plan provisions relative to the
denial;
(iii) describe any material and information, if any, necessary for the
claim for benefits to be allowed, that had been requested, but
not received by the Named Fiduciary; and
(iv) advise the Participant that any appeal of the Named Fiduciary's
adverse determination must be made in writing to the Named
Fiduciary within 60 days after receipt of the initial denial
notification, and must set forth the facts upon which the appeal
is based.
(c) If notice of the denial of a claim is not furnished within the time
periods set forth above, the claim shall be deemed denied and the
claimant shall be permitted to proceed to the review procedures set
forth below. If the Participant fails to appeal the Named Fiduciary's
denial of benefits in writing and within 60 days after receipt by the
claimant of written notification of denial of the claim (or within 60
days after a deemed denial of the claim), the Named Fiduciary's
determination shall become final and conclusive.
(d) If the Participant appeals the Named Fiduciary's denial of benefits in
a timely fashion, the Plan Administrator shall re-examine all issues
relevant to the original denial of benefits. Any such claimant, or his
or her duly authorized representative
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may review any pertinent documents, as determined by the Plan
Administrator, and submit in writing any issues or comments to be
addressed on appeal.
(e) The Plan Administrator shall advise the Participant and such
individual's representative of its decision which shall be written in a
manner calculated to be understood by the claimant, and include
specific references to the pertinent Plan provisions on which the
decision is based. Such response shall be made within 60 days of
receipt of the written appeal, unless special circumstances require an
extension of such 60-day period for not more than an additional 60
days. Where such extension is necessary, the claimant shall be given
written notice of the delay. Any decision of the Plan Administrator
shall be binding on all persons affected thereby.
(f) Any dispute, controversy, or claim arising out of or relating to any
Plan benefit, including, without limitation, any dispute, controversy
or claim as to whether the decision of the Named Fiduciary respecting
the benefits under this Plan or interpretation of this Plan is
arbitrary and capricious, that is not settled in accordance with the
procedures outlined in Section 8, shall be settled by final and binding
arbitration in accordance with the American Arbitration Association
Employment Dispute Resolution or other applicable rules. Before
resorting to arbitration, an aggrieved Participant must first follow
the review procedure outlined in this Section of the Plan. If there is
still a dispute after the procedures in this Section have been
exhausted, the Participant must request arbitration in writing within
six (6) months after the issues, or is deemed to have issued, its
determination under subparagraph (e) above.
The arbitrator shall be selected by mutual agreement of the parties, if
possible. If the parties fail to reach agreement upon appointment of an
arbitrator within 30 days following receipt by one party of the other
party's notice of desire to arbitrate, the arbitrator shall be selected
from a panel or panels of persons submitted by the American Arbitration
Association (the "AAA"). The selection process shall be that which is
set forth in the AAA Employment Dispute Resolution Rules, except that,
if the parties fail to select an arbitrator from one or more panels,
AAA shall not have the power to make an appointment but shall continue
to submit additional panels until an arbitrator has been selected.
All fees and expenses of the arbitration, including a transcript if
requested, will be borne by the Company. The arbitrator shall have no
power to amend, add to or subtract from this Plan. The award shall be
admissible in any court or agency seeking to enforce or render
unenforceable this Plan or any portion thereof. Any action to enforce
or vacate the arbitrator's award shall be governed by the Federal
Arbitration Act if applicable.
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9. Unfunded Obligation.
All benefits payable under this Plan shall constitute an unfunded
obligation of the Employer. Payments shall be made, as due, from the
general funds of the Employer. This Plan shall constitute solely an
unsecured promise by the Employer to pay severance benefits to
employees to the extent provided herein.
10. Inalienability of Benefits.
No Participant shall have the power to transfer, assign, anticipate,
mortgage or otherwise encumber any rights or any amounts payable under
this Plan; nor shall any such rights or amounts payable under this Plan
be subject to seizure, attachment, execution, garnishment or other
legal or equitable process, or for the payment of any debts, judgments,
alimony, or separate maintenance, or be transferable by operation of
law in the event of bankruptcy, insolvency, or otherwise. In the event
a person who is receiving or is entitled to receive benefits under the
Plan attempts to assign, transfer or dispose of such right, or if an
attempt is made to subject such right to such process, such assignment,
transfer or disposition shall be null and void.
11. Withholding.
The Employer shall have the right to withhold any taxes required to be
withheld with respect to any payments due under this Plan.
12. Amendment or Termination.
Except to the extent otherwise provided in Section 22(i), the Company
reserves the right to amend or terminate the Plan at any time without
prior notice to or the consent of any employee. No amendment or
termination shall adversely affect the rights of any Participant whose
employment terminated prior to such amendment or termination. However,
except as provided in Section 22(i), any Participant whose employment
continues after amendment of the Plan shall be governed by the terms of
the Plan as so amended. Any Participant whose employment continues
after termination of the Plan shall have no right to a benefit under
the Plan.
13. Plan Not a Contract of Employment; Employer's Policies Control.
Nothing contained in this Plan shall give an employee the right to be
retained in the employment of an Employer. This Plan is not a contract
of employment between the Employer and any employee.
Any dispute involving issues of employment other than claims for
benefits under this Plan shall be governed by the appropriate
employment dispute resolution policies and procedures of the Employer.
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<PAGE>
14. Action by an Employer.
Unless expressly indicated to the contrary herein, any action required
to be taken by the Company may be taken by action of its Board or by
any appropriate officer or officers traditionally responsible for such
determination or actions, or such other individual or individuals as
may be designated by the Board or any such officer.
15. Governing Law.
The Plan is an employee welfare benefit plan within the meaning of
Section 3(1) of ERISA, and will be construed in accordance with the
provisions of ERISA.
16. Severability.
If any provision of this Plan shall be held illegal or invalid for any
reason, said illegality or invalidity shall not affect the remaining
parts of this Plan, but this Plan shall be construed and enforced as if
said illegal or invalid provision had never been included herein.
17. Coordination of Benefits.
In the event that (i) a Participant in the Plan is covered by another
severance plan of Honeywell International Inc. or an affiliate which
provides benefits similar to those provided under the Plan, and (ii)
such Participant becomes entitled to benefits under the Plan and such
other plan, each benefit to which the Participant is entitled shall
contain those rights and features which combine the most favorable
rights and features of such benefit under the Plan and such other plan;
provided, however, that in no event shall there be any duplication of
such benefit.
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PART II
SPECIAL PROVISIONS THAT BECOME EFFECTIVE
ONLY UPON CHANGE IN CONTROL
18. Change in Control.
(a) The provisions of this Part II become effective upon a Change in
Control and, in addition to the provisions of Part I that are not
superseded by provisions of this Part II, shall control (i) the
determination of eligibility for, the amount of, and the time of
payment of benefits under the Plan to any Existing Participant or
Officer Participant who is the subject of a Covered Termination which
occurs within the two-year period following the Change in Control, (ii)
the terms of payment for any Existing Participant or Officer
Participant whose Severance Period extends beyond the Change in
Control, and (iii) the determination of eligibility for, the amount of,
and the time of payment of benefits under Section 21 of the Plan to any
Existing Participant or Officer Participant.
(b) Without derogation to the effect the provisions of this Part II may
have on the determination of any Participant's eligibility for benefits
under the Plan or the amount of such benefits, it is intended that this
Part II will assure that the purposes of this Plan, as they may affect
Existing Participants or Officer Participants, will not be adversely
affected by the unique circumstances which may exist following a Change
in Control. The provisions of this Part II will have no effect
whatsoever prior to a Change in Control.
19. Definitions.
(a) "Honeywell Employer" means the Employer and any other person,
organization or entity that agrees in writing to be bound by the terms
of the Plan for a period of time that extends at least through the
two-year period following a Change in Control.
(b) "Annual Incentive Compensation" means, notwithstanding the provisions
of Section 1(b); the product of Annual Base Salary and the greater of
(i) the target percentage utilized in determining Incentive Awards as
in effect for the most recent Determination Year ended prior to the
Change in Control, or (ii) the average of the target percentages
applied in determining the Participant's Incentive Award in the last
three Determination Years prior to the date of Covered Termination (or
such lesser period as the Participant may have been employed).
(c) "Covered Termination" means, notwithstanding the provisions of Section
1(j), severance of the employment relationship (i) at the initiative of
the Participant for Good Reason, or (ii) at an Honeywell Employer's
initiative for reasons other than
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death or Gross Cause. Notwithstanding the preceding sentence, in the
event of a sale or transfer of a facility or line of business that
causes a severance of the employment relationship, a Covered
Termination shall be deemed to have occurred only if the new employer
has not agreed in writing to be an Honeywell Employer with respect to
the Participant or the Participant is not employed by the new
employer.
(d) "Existing Participant" for purposes of this Part II means (i) an
individual who, on July 1, 1993, was an employee of an Employer in
Salary Grade 20 or above or in a position comparable to Salary Grade 20
or above, or (ii) an individual who, as of April 1, 1999, is determined
by the Senior Vice President, Human Resources and Communications to be
in a position comparable to Salary Grade 20, and is or reports directly
to a functional Senior Vice President of the Company.
(e) "Good Reason" means any one or more of the following:
(i) A material change in the Participant's position, duties and/or
responsibilities as they existed in the period immediately
preceding the Change in Control.
(ii) Any significant reduction in Base Salary or Annual Incentive
Compensation.
(iii) Any significant reduction in benefit coverages available to the
Participant under the Company's medical benefit plans for active
employees or comparable medical benefit plans of any other
Honeywell Employer or any significant increase in premiums to be
paid by the Participant for such benefits.
(iv) Any reduction in the economic value of awards granted under the
Company's long-term incentive plan or comparable long-term
incentive plan of any other Honeywell Employer in which the
Participant participates.
(v) Any significant reduction in the rate of the Company's
contribution to its savings plan or of any other Honeywell
Employer's contribution to a savings plan comparable to the
Company's savings plans or any significant reduction in the rate
of benefit accrual under the AlliedSignal Inc. Retirement Program
or any other comparable pension plan sponsored by an Honeywell
Employer in which the Participant participates.
(vi) Any significant reduction in the benefit coverages available to
the Participant under the long-term disability plan of the
Company or any comparable long-term disability plan of any other
Honeywell Employer or
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any significant increase in premiums to be paid by the
Participant for such benefits.
(vii) Any significant reduction in the life insurance benefits
available to the Participant, including any change affecting the
Company's Executive Life Insurance Program or comparable program
of any other Honeywell Employer, or any significant increase in
premiums to be paid by the Participant for such benefits.
(viii) Any geographic relocation of the Participant's position to a new
location which is more than fifty (50) miles from the location of
the Participant's position immediately prior to a Change in
Control.
(ix) Any action by an Honeywell Employer that under applicable law
constitutes constructive discharge.
(x) Any failure to pay the benefit determined under Section 20(b)
within the time required under Sections 21(a) or 21(b).
(xi) The failure of any Honeywell Employer that is a successor to the
Company or any of its affiliates (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to expressly assume
and agree to honor this Plan, if such assumption is legally
required to make this Plan enforceable against the successor.
For purposes of this Section 19, the term "significant reduction" shall
mean a reduction or series of reductions with respect to the same form
of benefit or remuneration which are greater than 10% or which do not
affect all persons covered by the plan or program in question. For
purposes of this Section 19, the term "significant increase" shall mean
an increase or a series of increases in the Participant's percentage of
total premiums for a benefit which are greater than 10% or which do not
affect all persons covered by the plan or program in question.
(f) "Gross Cause" means, notwithstanding the provisions of Section 1(p),
any act or acts constituting a felony committed against an Honeywell
Employer, its property or business.
(g) "New Plan Administrator" shall mean such person or persons appointed
pursuant to Section 22 to administer the Plan upon the occurrence of a
Change in Control.
20. Enhancement Benefit.
(a) If, following a Change in Control, any payment to a Participant from an
Honeywell Employer or from any benefit or compensation plan or program
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sponsored or funded by an Honeywell Employer is determined to be an
"excess parachute payment" within the meaning of Section 280G or any
successor or substitute provision of the Code, with the effect that
either the Participant is liable for the payment of the tax described
in Section 4999 or any successor or substitute provision of the Code
(hereafter the "Section 4999 tax") or the Honeywell Employer has
withheld the amount of the Section 4999 tax, an additional benefit
(hereafter the "Enhancement Benefit") shall be paid from this Plan to
such affected Participant.
(b) The Enhancement Benefit payable shall be an amount, which when added to
all payments constituting "parachute payments" for purposes of Section
280G or any successor or substitute provision of the Code, is
sufficient to cause the remainder of (i) the sum of the "parachute
payments", including any Enhancement Benefit, less (ii) the amount of
all state, local and federal income taxes and the Section 4999 tax
attributable to such payments and penalties and interest on any amount
of Section 4999 tax, other than penalties and interest on any amount of
Section 4999 tax with respect to which an Enhancement Benefit was paid
to the Participant on or before the due date of the Participant's
federal income tax return on which such Section 4999 tax should have
been paid, to be equal to the remainder of (iii) sum of the "parachute
payments", excluding any Enhancement Benefit, less (iv) the amount of
all state, local and federal income taxes attributable to such payments
determined as though the Section 4999 tax and penalties and interest on
any amount of Section 4999 tax, other than penalties and interest on
any amount of Section 4999 tax with respect to which an Enhancement
Benefit was paid to the Participant on or before the due date of the
Participant's federal income tax return on which such Section 4999 tax
should have been paid, did not apply.
(c) In the event of a Change in Control, the provisions of this Section 20
shall be applicable to all Participants, as defined in Section 1(s).
21. Benefit Payments and Forfeitures.
(a) Benefit Payments. Notwithstanding the provisions of Section 4, benefits
that are determined to be payable to a Participant under Sections
3(a)(i) and 3(a)(ii) on or after a Change in Control shall be paid
within thirty days following the later of the Change in Control or the
Covered Termination, in a single payment equal to the sum of (i) the
total amount of the benefit remaining payable under Section 3(a)(i),
and (ii) the amount of the benefit remaining payable under Section
3(a)(ii) for all Determination Years which are coextensive, in whole or
part, with the Severance Period. The requirements of Section 3(b) shall
have no application to benefits payable after a Change in Control.
Benefits which are determined to be payable to a Participant under
Section 20(a) shall be paid within thirty days following the later of a
Change in Control or the date the "parachute payments" referred to in
Section 20 are made, in a single payment equal to the amount of the
benefit determined under Section 20(b). If any benefit is paid later
than the time provided
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in this Section 21(a), such late payment shall be credited with
interest for the period from the date payment should have been made to
the date actually made at a rate equal to the average quoted rate for
three-month U.S. Treasury Bills for the week preceding the date of
payment, as determined by the New Plan Administrator, plus six
percentage points.
(b) Subsequent Benefit Payments. Notwithstanding the provisions of Section
4, in the event the Internal Revenue Service assesses a Section 4999
tax due which is in excess of the amount determined by the Honeywell
Employer under Section 20(b), a Participant shall be paid within thirty
days following the date the Participant gives notice to the New Plan
Administrator of proof of payment of the Section 4999 tax in a single
payment equal to the amount of the additional benefit determined under
Section 20(b), based upon the amount of the Section 4999 tax paid in
excess of any Section 4999 tax with respect to which any Enhancement
Benefit was previously paid. If any benefit is paid later than the time
provided in this Section 21(b), such late payment shall be credited
with interest for the period from the date payment should have been
made to the date actually made at a rate equal to the average quoted
rate for three-month U.S. Treasury Bills for the week preceding the
date of payment, as determined by the New Plan Administrator, plus six
percentage points.
(c) Forfeiture of Benefits. Notwithstanding the provisions of Section 5, a
Participant receiving benefits or entitled to receive benefits under
the Plan shall cease to receive such benefits under the Plan and the
right to receive any benefits in the future under the Plan shall be
forfeited, in the event the Participant, as determined by the New Plan
Administrator, (i) is convicted of a felony committed against an
Honeywell Employer, its property or business, (ii) commits any fraud or
misappropriates property, proprietary information, intellectual
property or trade secrets of an Honeywell Employer for personal gain or
for the benefit of another party, or (iii) actively recruits and offers
employment to any management employee of an Honeywell Employer.
22. Administration.
(a) New Plan Administrator. On or before a Change in Control, the Company,
its successors, or persons operating under its control or on its behalf
(hereafter the "Corporation") shall appoint a person independent of the
Corporation to be the New Plan Administrator upon the occurrence of a
Change in Control and the Plan Administrator shall immediately provide
to the New Plan Administrator such information with respect to each
Participant in the Plan as shall be necessary to enable the New Plan
Administrator to determine the amount of any benefit which is then or
may thereafter become payable to such Participants.
(b) Authority. Upon the occurrence of a Change in Control, the New Plan
Administrator shall have exclusive authority to make initial
determinations of eligibility for the benefits under the Plan, subject
to the requirements of Section
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22(f). The New Plan Administrator may, in reviewing any recommendation
for benefit eligibility pursuant to this Section 22, rely on
representations made by the Corporation or an Honeywell Employer
pursuant to Section 22(c). However, in the event that none of the
recommendations are agreed to by the Participant, the New Plan
Administrator shall refer the disputed claim for benefits under this
Plan for resolution as provided in Section 22(f). Any recommendation
by the New Plan Administrator under this Section 22, any determination
by the New Plan Administrator as to the eligibility for or the amount
of benefits which are not in dispute and any judicial determination
pursuant to Section 22(f) shall be final and binding on the
Corporation and the Honeywell Employer. The Corporation and the
responsible Honeywell Employer shall make payments to Participants as
directed by the New Plan Administrator or pursuant to judicial
determination pursuant to Section 22(f).
(c) Corporation or Honeywell Employer Recommendations. Upon the occurrence
of a Change in Control, the Corporation and any Honeywell Employer may
make recommendations to the New Plan Administrator with respect to
benefit determinations for affected Participants under the Plan and the
New Plan Administrator shall immediately forward any such
recommendation to the affected Participant. If the recommendation is
agreed to in writing by the Participant, the New Plan Administrator
shall advise the Corporation and any responsible Honeywell Employer,
and the Corporation or Honeywell Employer, whichever is responsible,
shall immediately make payment.
(d) Independent Recommendations. In the case of a recommendation which is
not agreed to by the affected Participant, the New Plan Administrator
shall immediately review the recommendation of the Corporation or
responsible Honeywell Employer and within 15 days of notice of the
dispute from the Participant, determine whether it is in accordance
with the terms of the Plan and notify the Corporation or responsible
Honeywell Employer and the Participant of its findings. If the New Plan
Administrator determines that the recommendation is not in accordance
with the terms of the Plan and that an adjustment is necessary and the
Participant agrees in writing to such adjustment, the New Plan
Administrator shall advise the Corporation or responsible Honeywell
Employer, and the Corporation or responsible Honeywell Employer shall
immediately make payment. Any such adjustment determined by the New
Plan Administrator, whether agreed to by the Participant or not, shall
be final and binding upon the Corporation or responsible Honeywell
Employer and may not be challenged by either of them.
(e) Direct Application. Upon notice to the New Plan Administrator by an
affected Participant, as to whom the Corporation or responsible
Honeywell Employer has made no recommendation, that a Covered
Termination has occurred, the Corporation or responsible Honeywell
Employer shall be notified by the New Plan Administrator and given 15
days from the date the Participant gave notice to the new Plan
Administrator within which to make a recommendation as to benefit
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determination. The New Plan Administrator shall also make its own
independent determination as to the benefit payable under the terms of
the Plan. Within 21 days of receipt of the notice from the affected
Participant, the New Plan Administrator shall transmit to the
Participant its own recommendation and that of the Corporation or
responsible Honeywell Employer if such is available. If either
recommendation is accepted in writing by the affected Participant, the
New Plan Administrator shall advise the Corporation or responsible
Honeywell Employer, and the Corporation or responsible Honeywell
Employer shall immediately make payment. Any recommendation by the New
Plan Administrator shall be final and binding upon the Corporation or
responsible Honeywell Employer and may not be challenged by either of
them.
(f) Disputed Recommendation. If an affected Participant does not agree in
writing within 30 days of transmittal to accept any of the
recommendations made pursuant to Sections 22(c), 22(d) or 22(e), the
New Plan Administrator shall consider the amount in excess of the
highest recommendation to be a claim for benefits which is in dispute
and shall, with respect to such amount, initiate an action in
interpleader pursuant to Rule 22 of the Federal Rules of Civil
Procedure or analogous rules, before a court of competent jurisdiction.
The New Plan Administrator shall not assert any claim or take any
position in this proceeding based on its interpretation of the terms of
the Plan, other than the provisions of this Section 22.
(g) Attorneys Fees and Costs. If a Participant is paid or is determined to
be entitled to receive benefits (i) in excess of any recommendation
made by the Corporation or responsible Honeywell Employer pursuant to
Sections 22(c) or 22(e), or (ii) in a case where the Corporation or
responsible Honeywell Employer have made no recommendation pursuant to
Sections 22(c) or 22(e), the New Plan Administrator shall advise the
Corporation or responsible Honeywell Employer, and the Corporation or
responsible Honeywell Employer shall immediately pay or reimburse the
affected Participant for the full amount of any attorneys' fees and
other expenses the affected Participant incurred in pursuing his or her
claim for benefits. The payment or reimbursement shall include the
standard hourly rates charged by each such attorney, any and all other
expenses related to the action incurred by or on behalf of the affected
Participant, the costs and expenses of any experts utilized to prepare
the claim, and any court costs assessed against the affected
Participant.
(h) Undisputed Benefits. Prior to the resolution of amounts in dispute
under Section 22(f), the Participant shall be paid immediately by the
Corporation or responsible Honeywell Employer in accordance with the
terms of the Plan, the higher of (i) the amount recommended, if any, by
the Corporation or the responsible Honeywell Employer, or (ii) the
amount recommended by the New Plan Administrator.
-20-
<PAGE>
(i) Amendment or Termination. This Plan may not be amended or terminated
after a Change in Control; provided, however, the Plan may be amended
if the purpose of the amendment is to increase benefits hereunder.
(j) No Waiver. No waiver by a Participant at any time of any breach by the
Company of, or of any lack of compliance with, any condition or
provision of this Plan to be performed by the Company shall be deemed a
waiver of similar or dissimilar provisions or conditions at the same or
at any prior or subsequent time. In no event shall the failure by a
Participant to assert any right under the Plan (including, but not
limited to, failure to assert the existence of Good Reason conditions
which would enable a Participant to trigger his own termination under
clause (i) of Section 19(b)) be deemed a waiver of such right or any
other right provided under the Plan, it being intended that a
Participant who has perfected a right under the Plan (including, but
not limited to, a Participant's right to trigger his own termination
under clause (i) of Section 18(b)) shall be entitled to assert that
right in accordance with the terms of the Plan unless the Participant
affirmatively elects, in writing, to waive such right.
-21-
<PAGE>
HONEYWELL INTERNATIONAL INC. SEVERANCE PLAN
FOR SENIOR EXECUTIVES
Exhibit A
ACTIVE PARTICIPANTS IN SENIOR SEVERANCE PROGRAM
36 Months (base and target bonus)
- ---------------------------------
Daniel P. Burnham
Ralph E. Reins
Frederic M. Poses
John W. Barter
Lawrence A. Bossidy
Peter M. Kreindler
24 Months (base and target bonus)
- ---------------------------------
Robert A. Choulet
James A. Robinson
James J. Verrant
J. Thomas Zusi
Bill W. Wilcock
Nicholas A. Cameron
David C. Hill
Paul J. Norris
Hans B. Amell (1)
Isaac R. Barpal
G. Peter D'Aloia
David G. Powell
Donald J. Redlinger
Paul R. Schindler (1)
James E. Sierk
18 Months (base and target bonus)
- ---------------------------------
Gerald W. Brucker
James J. Griffin
William F. Grun
Paul J. Hoedeman
John D. Hofmeister
Jimmy (Jim) C. Houlditch
-22-
<PAGE>
HONEYWELL INTERNATIONAL INC. SEVERANCE PLAN
FOR SENIOR EXECUTIVES
Exhibit A (Continued)
18 Months (base and target bonus)
- ---------------------------------
Ken Kivenko
Ernest E. Linneman
Walter C. Miller
Kenneth Pickar
Mark Shimeionis
Louis W. Smith
David A. Tawfik
John R. Ayers
Don DeFosset
Michael A. Monti, Jr.
Gerard Mura
H. Donald Perkins, Jr.
Robert Ruffin
Daniel G. Henderson
Jay Kaplan
L. Ray Taunton
Edward W. Callahan
Martin B. Cohen
Kenneth W. Cole
Charles L. Griffin, Jr.
J. Paul McGrath
Kevin M. Salisbury
Andrew B. Samet
Raymond C. Stark
Hired/Promoted After 7/1/93:
- ----------------------------
Ronald N. Hoge
J. (Joe) B. Leonard
Gregory L. Summe
Mark P. Bulriss
Nancy A. Garvey
Jeffrey M. Lipshaw
NOTES: (1) Per offer letter commitment
-23-
<PAGE>
AMENDMENT OF THE
HONEYWELL INTERNATIONAL INC.
SEVERANCE PLAN FOR SENIOR EXECUTIVES
As Amended and Restated as of December 20, 2001
WITNESSETH
----------
WHEREAS, Honeywell International Inc. (the "Corporation") is the sponsor of the
Honeywell International Inc. Severance Plan for Senior Executives, as amended
and restated as of December 20, 2001 (the "Plan"); and
WHEREAS, Section 12 of the Plan reserves to the Corporation the right to amend
the Plan at any time; and
WHEREAS, the Corporation is desirous of amending the Plan in certain
particulars;
NOW, THEREFORE, the Plan is hereby amended, effective January 1, 2003, as
follows:
1. Section 3(c)(i) of the Plan shall be amended to read as follows:
(i) Except as provided in subparagraph (ii) below, any benefit determined
to be payable to a Participant under this Plan (excluding any benefit
payable under Section 19(a)) shall be reduced by the amount of any
severance, redundancy or employment termination benefit payable to the
Participant under (A) any other severance plan sponsored or funded by
an Employer, (B) any agreement, whether oral or written, express or
implied, or (C) any statutory, regulatory, court or other legally
mandated entitlement, regardless of whether the benefit determined
under such other plan, agreement or statutory or court mandated
entitlement is payable at an earlier or a later date than payments
under the Plan.
2. Section 17 of the Plan shall be amended to read as follows:
In the event that a Participant in the Plan becomes entitled to severance,
redundancy or employment termination benefits under another severance plan,
agreement or statutory, regulatory, court or other legally mandated
entitlement, each benefit to which the Participant is entitled shall
contain those rights and features which combine the most favorable rights
and features of such benefit under the Plan and such other plan, agreement
or statutory or court mandated entitlement; provided, however, that in no
event shall there be any duplication of such benefit.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>4
<FILENAME>ex10-9.txt
<DESCRIPTION>EXHIBIT 10.9
<TEXT>
<Page>
AMENDMENT TO THE
1993 STOCK PLAN FOR EMPLOYEES
OF HONEYWELL INTERNATIONAL INC.
[FORMERLY ALLIEDSIGNAL INC.]
AND ITS AFFILITATES
The 1993 Stock Plan for Employees of Honeywell International Inc. and
its Affiliates (the "1993 Plan") is hereby amended to clarify and conform the
1993 Plan to certain administrative practices and determinations, as follows:
1. The following definitions shall be added to paragraph 2 of the Plan:
Cause. Cause for termination by the Company of an employee's employment
shall have the meaning set forth in the severance plan of the Company
applicable to the employee, or, if the employee is not covered under
such a plan, Cause shall have the meaning set forth in the Severance
Pay Plan for Designated Employees of Honeywell International Inc.
(Career Bands 1-4).
Potential Change in Control Period. A "Potential Change in Control
Period" shall commence when: (a) the company enters into an agreement,
the consummation of which would result in the occurrence of a Change in
control or otherwise result in an Acceleration Date (other than solely
pursuant to Section 12(g) hereof); (b) the Company or any person or
group publicly announces an intention to take or to consider taking
actions which, if consummated, would constitute a Change in Control or
otherwise result in an Acceleration Date (other than solely pursuant to
Section 12(g) hereof); (c) any person or group (other than the Company,
any subsidiary or any savings, pension or other benefit plan for the
benefit of employees of the Company or its subsidiaries) becomes the
beneficial owner, directly or indirectly, of securities of the Company
representing 15% or more of either the then outstanding shares of
common stock of the company or the combined voting power of the
company's then outstanding securities (not including in the securities
beneficially owned by such person or group any securities acquired
directly from the Company or its Affiliates); or (d) the Board of
Directors of the company adopts a resolution to the effect that, for
purposes of the 1993 Plan, a Potential Change in Control Period has
commenced. The Potential Change in Control Period shall continue until
the earlier of (i) an Acceleration Date (other than an Acceleration
Date occurring solely pursuant to Section 129g0 hereof) of (ii) the
adoption by the Board of Directors of the Company of a resolution
stating that, for purposes of the 1993 Plan, the Potential Change in
Control Period has expired.
2. The 1993 Plan shall be amended by capitalizing each existing reference
to "cause" in the 1993 Plan, so that such references apply to the
defined term "Cause", which has been added to the 1993 Plan pursuant to
paragraph 1 of this Amendment.
3. The following sentence shall be added to the end of paragraph 15(b) of
the 1993 Plan:
1
<Page>
An employee participating in any tax-qualified retirement plan
of the Company or an Affiliate which does not specify an early
retirement age shall be deemed to have terminated due to a
Retirement for purposes of this paragraph 15(b) upon the
attainment by such employee of age 55 and 10 years of service
with the Company or an Affiliate.
4. Paragraph 19 of the 1993 Plan shall be amended by adding the following
sentence to the end thereof:
Further, during a Potential Change in Control Period and
during a period of two years following the occurrence of an
Acceleration Date (other than an Acceleration Date that is
deemed to occur with respect to an Award holder solely by
virtue of Section 12(g)), the Plan may not be amended in any
manner adverse to the interests of Plan Participants.
This Amendment to the 1993 Plan shall be effective as of December 21, 2001.
2
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>5
<FILENAME>ex10-10.txt
<DESCRIPTION>EXHIBIT 10.10
<TEXT>
<Page>
EXECUTION COPY
U.S. $1,000,000,000
364-DAY CREDIT AGREEMENT
Dated as of November 26, 2003
Among
HONEYWELL INTERNATIONAL INC.,
as Borrower,
and
THE INITIAL LENDERS NAMED HEREIN,
as Initial Lenders,
and
CITIBANK, N.A.,
as Administrative Agent
and
JPMORGAN CHASE BANK
as Syndication Agent
and
BANK OF AMERICA, N.A.
BARCLAYS BANK PLC
DEUTSCHE BANK AG NEW YORK BRANCH
and
UBS SECURITIES LLC
as Documentation Agents
and
CITIGROUP GLOBAL MARKETS INC.
and
J.P.MORGAN SECURITIES INC.
as Joint Lead Arrangers and Co-Book Managers
<Page>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I
SECTION 1.01. Certain Defined Terms...................................................1
SECTION 1.02. Computation of Time Periods............................................16
SECTION 1.03. Accounting Terms.......................................................16
ARTICLE II
SECTION 2.01. The Revolving Credit Advances..........................................16
SECTION 2.02. Making the Revolving Credit Advances...................................17
SECTION 2.03. The Competitive Bid Advances...........................................19
SECTION 2.04. Fees...................................................................24
SECTION 2.05. Termination or Reduction of the Commitments............................24
SECTION 2.06. Repayment of Advances..................................................26
SECTION 2.07. Interest on Revolving Credit Advances..................................26
SECTION 2.08. Interest Rate Determination............................................27
SECTION 2.09. Prepayments of Revolving Credit Advances...............................29
SECTION 2.10. Increased Costs........................................................30
SECTION 2.11. Illegality.............................................................31
SECTION 2.12. Payments and Computations..............................................31
SECTION 2.13. Taxes..................................................................32
SECTION 2.14. Sharing of Payments, Etc...............................................35
SECTION 2.15. Use of Proceeds........................................................35
SECTION 2.16. Extension of Termination Date..........................................36
SECTION 2.17. Evidence of Debt.......................................................37
</TABLE>
i
<Page>
<TABLE>
<S> <C>
ARTICLE III
SECTION 3.01. Conditions Precedent to Effectiveness of Sections 2.01 and 2.03........38
SECTION 3.02. Conditions Precedent to Initial Borrowing..............................39
SECTION 3.03. Initial Loan to Each Designated Subsidiary.............................40
SECTION 3.04. Conditions Precedent to Each Revolving Credit Borrowing................40
SECTION 3.05. Conditions Precedent to Each Competitive Bid Borrowing.................41
SECTION 3.06. Determinations Under Section 3.01......................................42
ARTICLE IV
SECTION 4.01. Representations and Warranties of the Company..........................42
ARTICLE V
SECTION 5.01. Affirmative Covenants..................................................45
SECTION 5.02. Negative Covenants.....................................................48
ARTICLE VI
SECTION 6.01. Events of Default......................................................50
ARTICLE VII
SECTION 7.01. Unconditional Guarantee................................................54
SECTION 7.02. Guarantee Absolute.....................................................54
SECTION 7.03. Waivers................................................................55
SECTION 7.04. Remedies...............................................................55
SECTION 7.05. No Stay................................................................55
SECTION 7.06. Survival...............................................................55
ARTICLE VIII
SECTION 8.01. Authorization and Action...............................................56
SECTION 8.02. Agent's Reliance, Etc..................................................56
SECTION 8.03. Citibank and Affiliates................................................57
</TABLE>
ii
<Page>
<TABLE>
<S> <C>
SECTION 8.04. Lender Credit Decision.................................................57
SECTION 8.05. Indemnification........................................................57
SECTION 8.06. Successor Agent........................................................57
SECTION 8.07. Sub-Agent..............................................................58
ARTICLE IX
SECTION 9.01. Amendments, Etc........................................................58
SECTION 9.02. Notices, Etc...........................................................58
SECTION 9.03. No Waiver; Remedies....................................................59
SECTION 9.04. Costs and Expenses.....................................................60
SECTION 9.05. Binding Effect.........................................................61
SECTION 9.06. Assignments and Participations.........................................61
SECTION 9.07. Designated Subsidiaries................................................64
SECTION 9.08. Confidentiality........................................................64
SECTION 9.09. Mitigation of Yield Protection.........................................65
SECTION 9.10. Governing Law..........................................................65
SECTION 9.11. Execution in Counterparts..............................................65
SECTION 9.12. Jurisdiction, Etc......................................................65
SECTION 9.13. Substitution of Currency...............................................66
SECTION 9.14. Final Agreement........................................................66
SECTION 9.15. Judgment...............................................................66
SECTION 9.16. Waiver of Jury Trial...................................................68
</TABLE>
iii
<Page>
SCHEDULES
Schedule I - List of Applicable Lending Offices
Schedule 3.01(b) - Disclosed Litigation
EXHIBITS
<TABLE>
<S> <C>
Exhibit A-1 - Form of Revolving Credit Note
Exhibit A-2 - Form of Competitive Bid Note
Exhibit B-1 - Form of Notice of Revolving Credit Borrowing
Exhibit B-2 - Form of Notice of Competitive Bid Borrowing
Exhibit C - Form of Assignment and Acceptance
Exhibit D - Form of Assumption Agreement
Exhibit E - Form of Designation Letter
Exhibit F - Form of Acceptance by Process Agent
Exhibit G - Form of Opinion of Gail E. Lehman, Assistant General Counsel of the
Company
Exhibit H - Form of Opinion of Counsel to a Designated Subsidiary
Exhibit I - Form of Opinion of Shearman & Sterling LLP, Counsel to the Agent
</TABLE>
iv
<Page>
364-DAY CREDIT AGREEMENT
Dated as of November 26, 2003
HONEYWELL INTERNATIONAL INC., a Delaware corporation (the "Company"),
the banks, financial institutions and other institutional lenders (the "Initial
Lenders") listed on the signature pages hereof, and CITIBANK, N.A. ("Citibank"),
as administrative agent (the "Agent") for the Lenders (as hereinafter defined),
JPMORGAN CHASE BANK, as syndication agent, BANK OF AMERICA, N.A., BARCLAYS BANK
PLC, DEUTSCHE BANK AG NEW YORK BRANCH and UBS SECURITIES LLC, as documentation
agents, and CITIGROUP GLOBAL MARKETS INC. and J.P.MORGAN SECURITIES INC., as
joint lead arrangers and co-book managers, hereby agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms.
As used in this Agreement, the following terms shall have the
following meanings (such meanings to be equally applicable to both the singular
and plural forms of the terms defined):
"Advance" means a Revolving Credit Advance or a Competitive Bid
Advance.
"Affiliate" means, as to any Person, any other Person that, directly
or indirectly, controls, is controlled by or is under common control with
such Person or is a director or officer of such Person. For purposes of
this definition, the term "control" (including the terms "controlling",
"controlled by" and "under common control with") of a Person means the
possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of such Person, whether through
the ownership of Voting Stock, by contract or otherwise.
"Agent's Account" means (a) in the case of Advances denominated in
Dollars, the account of the Agent maintained by the Agent at Citibank at
its office at 388 Greenwich Street, New York, New York 10013, Account No.
36852248, Attention: Bank Loan Syndications, (b) in the case of Advances
denominated in any Foreign Currency, the account of the Sub-Agent
designated in writing from time to time by the Agent to the Company and the
Lenders for such purpose and (c) in any such case, such other account of
the Agent as is designated in writing from time to time by the Agent to the
Company and the Lenders for such purpose.
"Alternate Currency" means any lawful currency other than Dollars and
the Major Currencies that is freely transferrable and convertible into
Dollars.
"Applicable Lending Office" means, with respect to each Lender, such
Lender's Domestic Lending Office in the case of a Base Rate Advance and
such Lender's
<Page>
Eurocurrency Lending Office in the case of a Eurocurrency Rate Advance and,
in the case of a Competitive Bid Advance, the office of such Lender
notified by such Lender to the Agent as its Applicable Lending Office with
respect to such Competitive Bid Advance.
"Applicable Margin" means (a) for Base Rate Advances, 0% per annum and
(b) for Eurocurrency Rate Advances, as of any date, a percentage per annum
determined by reference to the Public Debt Rating in effect on such date as
set forth below:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
Applicable Margin for Applicable Margin for
Eurocurrency Rate Eurocurrency Rate
Public Debt Rating Advances Prior to Term Advances On and After
S&P/Moody's Loan Conversion Date Term Loan Conversion Date
---------------------------------------------------------------------------
<S> <C> <C>
Level 1
A+ or A1 or above 0.200% 0.550%
---------------------------------------------------------------------------
Level 2
Lower than Level 1 but
at least A or A2 0.240% 0.600%
---------------------------------------------------------------------------
Level 3
Lower than Level 2 but
at least A- or A3 0.280% 0.700%
---------------------------------------------------------------------------
Level 4
Lower than Level 3 but
at least BBB+ or Baa1 0.400% 0.875%
---------------------------------------------------------------------------
Level 5
Lower than Level 4 0.625% 1.375%
---------------------------------------------------------------------------
</TABLE>
"Applicable Percentage" means, as of any date prior to the Term Loan
Conversion Date, a percentage per annum determined by reference to the
Public Debt Rating in effect on such date as set forth below:
<TABLE>
<CAPTION>
-----------------------------------
Public Debt Rating Applicable
S&P/Moody's Percentage
-----------------------------------
<S> <C>
Level 1
A+ or A1 or above 0.050%
-----------------------------------
Level 2
Lower than Level 1 but
at least A or A2 0.060%
-----------------------------------
Level 3
Lower than Level 2 but
at least A- or A3 0.070%
-----------------------------------
Level 4
Lower than Level 3 but
at least BBB+ or Baa1 0.100%
-----------------------------------
</TABLE>
2
<Page>
<TABLE>
-----------------------------------
<S> <C>
Level 5
Lower than Level 4 0.125%
-----------------------------------
</TABLE>
"Applicable Utilization Fee" means, as of any date prior to the Term
Loan Conversion Date that the aggregate Advances exceed 50% of the
aggregate Commitments, a percentage per annum determined by reference to
the Public Debt Rating in effect on such date as set forth below:
<TABLE>
<CAPTION>
----------------------------------------
Public Debt Rating Applicable
S&P/Moody's Utilization Fee
----------------------------------------
<S> <C>
Level
A+ or A1 or above 0.050%
----------------------------------------
Level 2
Lower than Level 1 but
at least A or A2 0.050%
----------------------------------------
Level 3
Lower than Level 2 but
at least A- or A3 0.100%
----------------------------------------
Level 4
Lower than Level 3 but
at least BBB+ or Baa1 0.125%
----------------------------------------
Level 5
Lower than Level 4 0.125%
----------------------------------------
</TABLE>
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and an Eligible Assignee, and accepted by the Agent, in
substantially the form of Exhibit C hereto.
"Assuming Lender" means an Eligible Assignee not previously a Lender
that becomes a Lender hereunder pursuant to Section 2.16.
"Assumption Agreement" means an agreement in substantially the form of
Exhibit D hereto by which an Eligible Assignee agrees to become a Lender
hereunder pursuant to Section 2.16, in each case agreeing to be bound by
all obligations of a Lender hereunder.
"Base Rate" means a fluctuating interest rate per annum in effect from
time to time, which rate per annum shall at all times be equal to the
highest of:
(a) the rate of interest announced publicly by Citibank in New
York, New York, from time to time, as Citibank's base rate;
(b) the sum (adjusted to the nearest 1/32 of 1% or, if there is
no nearest 1/32 of 1%, to the next higher 1/32 of 1%) of (i) 1/2 of 1%
per annum, plus (ii) the rate obtained by dividing (A) the latest
three-week moving average of secondary market morning offering rates
in the United States for three-month
3
<Page>
certificates of deposit of major United States money market banks,
such three-week moving average (adjusted to the basis of a year of 360
days) being determined weekly on each Monday (or, if such day is not a
Business Day, on the next succeeding Business Day) for the three-week
period ending on the previous Friday by Citibank on the basis of such
rates reported by certificate of deposit dealers to and published by
the Federal Reserve Bank of New York or, if such publication shall be
suspended or terminated, on the basis of quotations for such rates
received by Citibank from three New York certificate of deposit
dealers of recognized standing selected by Citibank, by (B) a
percentage equal to 100% minus the average of the daily percentages
specified during such three-week period by the Board of Governors of
the Federal Reserve System (or any successor) for determining the
maximum reserve requirement (including, but not limited to, any
emergency, supplemental or other marginal reserve requirement) for
Citibank with respect to liabilities consisting of or including (among
other liabilities) three-month Dollar non-personal time deposits in
the United States, plus (iii) the average during such three-week
period of the annual assessment rates estimated by Citibank for
determining the then current annual assessment payable by Citibank to
the Federal Deposit Insurance Corporation (or any successor) for
insuring Dollar deposits of Citibank in the United States; and
(c) 1/2 of one percent per annum above the Federal Funds Rate.
"Base Rate Advance" means a Revolving Credit Advance denominated in
Dollars that bears interest as provided in Section 2.07(a)(i).
"Borrower" means the Company or any Designated Subsidiary, as the
context requires.
"Borrowing" means a Revolving Credit Borrowing or a Competitive Bid
Borrowing.
"Business Day" means a day of the year on which banks are not required
or authorized by law to close in New York City and, if the applicable
Business Day relates to any Eurocurrency Rate Advance or LIBO Rate Advance,
on which dealings are carried on in the London interbank market and banks
are open for business in London and in the country of issue of the currency
of such Eurocurrency Rate Advance or LIBO Rate Advance (or, in the case of
an Advance denominated in Euros, on which the Trans-European Automated
Real-Time Gross Settlement Express Transfer (TARGET) System is open) and,
if the applicable Business Day relates to any Local Rate Advance, on which
banks are open for business in the country of issue of the currency of such
Local Rate Advance.
"Change of Control" means that (i) any Person or group of Persons
(within the meaning of Section 13 or 14 of the Securities Exchange Act of
1934, as amended (the "Act")) (other than the Company, any Subsidiary of
the Company or any savings, pension or other benefit plan for the benefit
of employees of the Company or its Subsidiaries) which theretofore
beneficially owned less than 30% of the Voting Stock of the Company
4
<Page>
then outstanding shall have acquired beneficial ownership (within the
meaning of Rule 13d-3 promulgated by the Securities and Exchange Commission
under the Act) of 30% or more in voting power of the outstanding Voting
Stock of the Company or (ii) during any period of twelve consecutive
calendar months commencing at the Effective Date, individuals who at the
beginning of such twelve-month period were directors of the Company shall
cease to constitute a majority of the Board of Directors of the Company.
"Commitment" means as to any Lender (i) the Dollar amount set forth
opposite its name on the signature pages hereof, (ii) if such Lender has
become a Lender hereunder pursuant to an Assumption Agreement, the Dollar
amount set forth as its Commitment in such Assumption Agreement or (iii) if
such Lender has entered into any Assignment and Acceptance, the Dollar
amount set forth for such Lender in the Register maintained by the
Administrative Agent pursuant to Section 9.06(d), in each case as the same
may be terminated or reduced, as the case may be, pursuant to Section 2.05.
"Competitive Bid Advance" means an advance by a Lender to any Borrower
as part of a Competitive Bid Borrowing resulting from the competitive
bidding procedure described in Section 2.03 and refers to a Fixed Rate
Advance, a LIBO Rate Advance or a Local Rate Advance (each of which shall
be a "Type" of Competitive Bid Advance).
"Competitive Bid Borrowing" means a borrowing consisting of
simultaneous Competitive Bid Advances from each of the Lenders whose offer
to make one or more Competitive Bid Advances as part of such borrowing has
been accepted under the competitive bidding procedure described in Section
2.03.
"Competitive Bid Note" means a promissory note of any Borrower payable
to the order of any Lender, in substantially the form of Exhibit A-2
hereto, evidencing the indebtedness of such Borrower to such Lender
resulting from a Competitive Bid Advance made by such Lender to such
Borrower.
"Competitive Bid Reduction" has the meaning specified in Section 2.01.
"Consenting Lenders" has the meaning specified in Section 2.16(b).
"Consolidated" refers to the consolidation of accounts in accordance
with GAAP.
"Consolidated Subsidiary" means, at any time, any Subsidiary the
accounts of which are required at that time to be included on a
Consolidated basis in the Consolidated financial statements of the Company,
assuming that such financial statements are prepared in accordance with
GAAP.
"Convert", "Conversion" and "Converted" each refers to a conversion of
Revolving Credit Advances of one Type into Revolving Credit Advances of the
other Type pursuant to Section 2.08 or 2.11.
"Debt" means, with respect to any Person: (i) indebtedness of such
Person, which is not limited as to recourse to such Person, for borrowed
money (whether by loan or the issuance and sale of debt securities) or for
the deferred (for 90 days or more) purchase or
5
<Page>
acquisition price of property or services; (ii) indebtedness or obligations
of others which such Person has assumed or guaranteed; (iii) indebtedness
or obligations of others secured by a lien, charge or encumbrance on
property of such Person whether or not such Person shall have assumed such
indebtedness or obligations; (iv) obligations of such Person in respect of
letters of credit (other than performance letters of credit, except to the
extent backing an obligation of any Person which would be Debt of such
Person), acceptance facilities, or drafts or similar instruments issued or
accepted by banks and other financial institutions for the account of such
Person; and (v) obligations of such Person under leases which are required
to be capitalized on a balance sheet of such Person in accordance with
GAAP.
"Default" means any Event of Default or any event that would
constitute an Event of Default but for the requirement that notice be given
or time elapse or both.
"Designated Subsidiary" means any corporate Subsidiary of the Company
designated for borrowing privileges under this Agreement pursuant to
Section 9.07.
"Designation Letter" means, with respect to any Designated Subsidiary,
a letter in the form of Exhibit E hereto signed by such Designated
Subsidiary and the Company.
"Disclosed Litigation" has the meaning specified in Section 3.01(b).
"Dollars" and the "$" sign each mean lawful money of the United States
of America.
"Domestic Lending Office" means, with respect to any Initial Lender,
the office of such Lender specified as its "Domestic Lending Office"
opposite its name on Schedule I hereto and, with respect to any other
Lender, the office of such Lender specified as its "Domestic Lending
Office" in the Assumption Agreement or in the Assignment and Acceptance
pursuant to which it became a Lender, or such other office of such Lender
as such Lender may from time to time specify to the Company and the Agent.
"Domestic Subsidiary" means any Subsidiary whose operations are
conducted primarily in the United States excluding any Subsidiary whose
assets consist primarily of the stock of Subsidiaries whose operations are
conducted outside the United States of America.
"Effective Date" has the meaning specified in Section 3.01.
"Eligible Assignee" means (i) a Lender; (ii) an Affiliate of a Lender;
(iii) a commercial bank organized under the laws of the United States, or
any State thereof, and having total assets in excess of $10,000,000,000;
(iv) a savings and loan association or savings bank organized under the
laws of the United States, or any State thereof, and having a net worth of
at least $500,000,000, calculated in accordance with GAAP; (v) a commercial
bank organized under the laws of any other country that is a member of the
Organization for Economic Cooperation and Development or has concluded
special lending arrangements with the International Monetary Fund
associated with its General
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Arrangements to Borrow, or a political subdivision of any such country, and
having total assets in excess of $10,000,000,000, so long as such bank is
acting through a branch or agency located in the country in which it is
organized or another country that is described in this clause (v); and (vi)
the central bank of any country that is a member of the Organization for
Economic Cooperation and Development.
"Environmental Action" means any action, suit, demand, demand letter,
claim, notice of non-compliance or violation, notice of liability or
potential liability, investigation, proceeding, consent order or consent
agreement relating in any way to any Environmental Law, Environmental
Permit or Hazardous Materials or arising from alleged injury or threat of
injury to health, safety or the environment, including, without limitation,
(a) by any governmental or regulatory authority for enforcement, cleanup,
removal, response, remedial or other actions or damages and (b) by any
governmental or regulatory authority or any third party for damages,
contribution, indemnification, cost recovery, compensation or injunctive
relief.
"Environmental Law" means any federal, state, local or foreign
statute, law, ordinance, rule, regulation, code, order, judgment, decree or
judicial or agency interpretation, policy or guidance relating to pollution
or protection of the environment, health, safety or natural resources,
including, without limitation, those relating to the use, handling,
transportation, treatment, storage, disposal, release or discharge of
Hazardous Materials.
"Environmental Permit" means any permit, approval, identification
number, license or other authorization required under any Environmental
Law.
"Equivalent" in Dollars of any Foreign Currency on any date means the
equivalent in Dollars of such Foreign Currency determined by using the
quoted spot rate at which the Sub-Agent's principal office in London offers
to exchange Dollars for such Foreign Currency in London prior to 4:00 P.M.
(London time) (unless otherwise indicated by the terms of this Agreement)
on such date as is required pursuant to the terms of this Agreement, and
the "Equivalent" in any Foreign Currency of Dollars means the equivalent in
such Foreign Currency of Dollars determined by using the quoted spot rate
at which the Sub-Agent's principal office in London offers to exchange such
Foreign Currency for Dollars in London prior to 4:00 P.M. (London time)
(unless otherwise indicated by the terms of this Agreement) on such date as
is required pursuant to the terms of this Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"ERISA Affiliate" of any Person means any other Person that for
purposes of Title IV of ERISA is a member of such Person's controlled
group, or under common control with such Person, within the meaning of
Section 414 of the Internal Revenue Code.
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"ERISA Event" with respect to any Person means (a) (i) the occurrence
of a reportable event, within the meaning of Section 4043 of ERISA, with
respect to any Plan of such Person or any of its ERISA Affiliates unless
the 30-day notice requirement with respect to such event has been waived by
the PBGC, or (ii) an event described in paragraph (9), (10), (11), (12) or
(13) of Section 4043(c) of ERISA is reasonably expected to occur with
respect to a Plan of such Person or any of its ERISA Affiliates within the
following 30 days, and the contributing sponsor, as defined in Section
4001(a)(13) of ERISA, of such Plan is required under Section 4043(b)(3) of
ERISA (taking into account Section 4043(b)(2) of ERISA) to notify the PBGC
that the event is about to occur; (b) the application for a minimum funding
waiver with respect to a Plan of such Person or any of its ERISA
Affiliates; (c) the provision by the administrator of any Plan of such
Person or any of its ERISA Affiliates of a notice of intent to terminate
such Plan in a distress termination pursuant to Section 4041(a)(2) of ERISA
(including any such notice with respect to a plan amendment referred to in
Section 4041(e) of ERISA); (d) the cessation of operations at a facility of
such Person or any of its ERISA Affiliates in the circumstances described
in Section 4062(e) of ERISA; (e) the withdrawal by such Person or any of
its ERISA Affiliates from a Multiple Employer Plan during a plan year for
which it was a substantial employer, as defined in Section 4001(a)(2) of
ERISA; (f) the conditions for the imposition of a lien under Section 302(f)
of ERISA shall have been met with respect to any Plan of such Person or any
of its ERISA Affiliates; (g) the adoption of an amendment to a Plan of such
Person or any of its ERISA Affiliates requiring the provision of security
to such Plan pursuant to Section 307 of ERISA; or (h) the institution by
the PBGC of proceedings to terminate a Plan of such Person or any of its
ERISA Affiliates pursuant to Section 4042 of ERISA, or the occurrence of
any event or condition described in Section 4042 of ERISA that constitutes
grounds for the termination of, or the appointment of a trustee to
administer, such Plan.
"Escrow" means an escrow established with an independent escrow agent
pursuant to an escrow agreement reasonably satisfactory in form and
substance to the Person or Persons asserting the obligation of one or more
Borrowers to make a payment to it or them hereunder.
"EURIBO Rate" means, for any Interest Period for each Eurocurrency
Rate Advance comprising part of the same Borrowing, the rate per annum
appearing on Page 248 of the Moneyline Telerate Service (or on any
successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the Agent
from time to time for purposes of providing quotations of interest rates
applicable to deposits in Euro by reference to the Banking Federation of
the European Union Settlement Rates for deposits in Euro) at approximately
10:00 a.m., London time, two Business Days prior to the commencement of
such Interest Period, as the rate for deposits in Euros with a maturity
comparable to such Interest Period or, if for any reason such rate is not
available, the average (rounded upward to the nearest whole multiple of
1/16 of 1% per annum, if such average is not such a multiple) of the
respective rates per annum at which deposits in Euros are offered by the
principal office of each of the Reference Banks in London, England to prime
banks in the London interbank market at 11:00 A.M. (London time) two
Business Days before the first day of such Interest Period
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in an amount substantially equal to such Reference Bank's Eurocurrency Rate
Advance comprising part of such Borrowing to be outstanding during such
Interest Period and for a period equal to such Interest Period (subject,
however, to the provisions of Section 2.07).
"Euro" means the lawful currency of the European Union as constituted
by the Treaty of Rome which established the European Community, as such
treaty may be amended from time to time and as referred to in the EMU
legislation.
"Eurocurrency Lending Office" means, with respect to any Initial
Lender, the office of such Lender specified as its "Eurocurrency Lending
Office" opposite its name on Schedule I hereto and, with respect to any
other Lender, the office of such Lender specified as its "Eurocurrency
Lending Office" in the Assumption Agreement or in the Assignment and
Acceptance pursuant to which it became a Lender (or, if no such office is
specified, its Domestic Lending Office), or such other office of such
Lender as such Lender may from time to time specify to the Company and the
Agent.
"Eurocurrency Liabilities" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"Eurocurrency Rate" means, for any Interest Period for each
Eurocurrency Rate Advance comprising part of the same Revolving Credit
Borrowing, an interest rate per annum equal to the rate per annum obtained
by dividing (a) (i) in the case of any Advance denominated in Dollars or
any Major Currency other than Euros, the rate per annum (rounded upwards,
if necessary, to the nearest 1/100 of 1%) appearing on the applicable
Telerate Page as the London interbank offered rate for deposits in Dollars
or in the relevant Major Currency at approximately 11:00 A.M. (London time)
two Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period or, if for any reason such rate is not
available, the average (rounded upward to the nearest whole multiple of
1/32 of 1% per annum, if such average is not such a multiple) of the rate
per annum at which deposits in Dollars or in the relevant Major Currency
are offered by the principal office of each of the Reference Banks in
London, England to prime banks in the London interbank market at 11:00 A.M.
(London time) two Business Days before the first day of such Interest
Period in an amount substantially equal to such Reference Bank's
Eurocurrency Rate Advance comprising part of such Revolving Credit
Borrowing to be outstanding during such Interest Period and for a period
equal to such Interest Period or, (ii) in the case of any Advance
denominated in Euros, the EURIBO Rate by (b) a percentage equal to 100%
minus the Eurocurrency Rate Reserve Percentage for such Interest Period. If
the Telerate Page is unavailable, the Eurocurrency Rate for any Interest
Period for each Eurocurrency Rate Advance comprising part of the same
Revolving Credit Borrowing shall be determined by the Agent on the basis of
applicable rates furnished to and received by the Agent from the Reference
Banks two Business Days before the first day of such Interest Period,
subject, however, to the provisions of Section 2.08.
"Eurocurrency Rate Advance" means a Revolving Credit Advance
denominated in Dollars or in a Major Currency that bears interest as
provided in Section 2.07(a)(ii).
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"Eurocurrency Rate Reserve Percentage" for any Interest Period for all
Eurocurrency Rate Advances or LIBO Rate Advances comprising part of the
same Borrowing means the reserve percentage applicable two Business Days
before the first day of such Interest Period under regulations issued from
time to time by the Board of Governors of the Federal Reserve System (or
any successor) for determining the maximum reserve requirement (including,
without limitation, any emergency, supplemental or other marginal reserve
requirement) for a member bank of the Federal Reserve System in New York
City with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities (or with respect to any other category of
liabilities that includes deposits by reference to which the interest rate
on Eurocurrency Rate Advances or LIBO Rate Advances is determined) having a
term equal to such Interest Period.
"Events of Default" has the meaning specified in Section 6.01.
"Extension Date" has the meaning specified in Section 2.16(a).
"Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum 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 that is a Business Day, the
average of the quotations for such day on such transactions received by the
Agent from three Federal funds brokers of recognized standing selected by
it.
"Fixed Rate Advance" has the meaning specified in Section 2.03(a)(i),
which Advance shall be denominated in Dollars or in any Foreign Currency.
"Foreign Currency" means any Major Currency or any Alternate Currency.
"GAAP" has the meaning specified in Section 1.03.
"Hazardous Materials" means (a) petroleum and petroleum products,
byproducts or breakdown products, radioactive materials,
asbestos-containing materials, polychlorinated biphenyls and radon gas and
(b) any other chemicals, materials or substances designated, classified or
regulated as hazardous or toxic or as a pollutant or contaminant under any
Environmental Law.
"Insufficiency" means, with respect to any Plan, the amount, if any,
of its unfunded benefit liabilities, as defined in Section 4001(a)(18) of
ERISA.
"Interest Period" means, for each Eurocurrency Rate Advance comprising
part of the same Revolving Credit Borrowing and each LIBO Rate Advance
comprising part of the same Competitive Bid Borrowing, the period
commencing on the date of such Eurocurrency Rate Advance or LIBO Rate
Advance or the date of the Conversion of any Base Rate Advance into such
Eurocurrency Rate Advance and ending on the last day of the period selected
by the Borrower requesting such Borrowing pursuant to the provisions below
and, thereafter, with respect to Eurocurrency Rate Advances, each
subsequent
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period commencing on the last day of the immediately preceding Interest
Period and ending on the last day of the period selected by such Borrower
pursuant to the provisions below. The duration of each such Interest Period
shall be one, two, three or six months and, if available to all Lenders,
nine months, as the Borrower requesting the Borrowing may, upon notice
received by the Agent not later than 11:00 A.M. (New York City time) on the
third Business Day prior to the first day of such Interest Period, select;
provided, however, that:
(i) such Borrower may not select any Interest Period that ends
after the scheduled Termination Date or, if the Revolving Credit
Advances have been converted to a term loan pursuant to Section 2.06
prior to such selection, that ends after the Maturity Date;
(ii) Interest Periods commencing on the same date for
Eurocurrency Rate Advances comprising part of the same Revolving
Credit Borrowing or for LIBO Rate Advances comprising part of the same
Competitive Bid Borrowing shall be of the same duration;
(iii) whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last day of
such Interest Period shall be extended to occur on the next succeeding
Business Day, provided, however, that, if such extension would cause
the last day of such Interest Period to occur in the next following
calendar month, the last day of such Interest Period shall occur on
the next preceding Business Day; and
(iv) whenever the first day of any Interest Period occurs on a
day of an initial calendar month for which there is no numerically
corresponding day in the calendar month that succeeds such initial
calendar month by the number of months equal to the number of months
in such Interest Period, such Interest Period shall end on the last
Business Day of such succeeding calendar month.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"Lenders" means, collectively, (i) Initial Lenders, (ii) each Assuming
Lender that shall become a party hereto pursuant to Section 2.16 and (iii)
each Eligible Assignee that shall become a party hereto pursuant to Section
9.06(a), (b) and (c).
"LIBO Rate" means, for any Interest Period for all LIBO Rate Advances
comprising part of the same Competitive Bid Borrowing, an interest rate per
annum equal to the rate per annum obtained by dividing (a) (i) in the case
of any Advance denominated in Dollars or any Foreign Currency other than
Euro, the rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) appearing on the applicable Telerate Page as the London
interbank offered rate for deposits in Dollars or in the relevant Foreign
Currency at approximately 11:00 A.M. (London time) two Business Days prior
to the first day of such Interest Period or, if for any reason such rate is
not available, the average (rounded upward to the nearest whole multiple of
1/32 of 1% per
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annum, if such average is not such a multiple) of the rate per annum at
which deposits in Dollars or in the relevant Foreign Currency are offered
by the principal office of each of the Reference Banks in London, England
to prime banks in the London interbank market at 11:00 A.M. (London time)
two Business Days before the first day of such Interest Period in an amount
substantially equal to the amount that would be the Reference Banks'
respective ratable shares of such Borrowing if such Borrowing were to be a
Revolving Credit Borrowing to be outstanding during such Interest Period
and for a period equal to such Interest Period or, (ii) in the case of any
Advance denominated in Euros, the EURIBO Rate by (b) a percentage equal to
100% minus the Eurocurrency Rate Reserve Percentage for such Interest
Period. If the Telerate Page is unavailable, the LIBO Rate for any Interest
Period for each LIBO Rate Advance comprising part of the same Competitive
Bid Borrowing shall be determined by the Agent on the basis of applicable
rates furnished to and received by the Agent from the Reference Banks two
Business Days before the first day of such Interest Period, subject,
however, to the provisions of Section 2.08.
"LIBO Rate Advance" means a Competitive Bid Advance denominated in
Dollars or in any Foreign Currency and bearing interest based on the LIBO
Rate.
"Lien" means any lien, mortgage, pledge, security interest or other
charge or encumbrance of any kind.
"Local Rate Advance" means a Competitive Bid Advance denominated in
any Foreign Currency sourced from the jurisdiction of issuance of such
Foreign Currency and bearing interest at a fixed rate.
"Major Currencies" means lawful currency of the United Kingdom of
Great Britain and Northern Ireland, lawful currency of Japan and Euros.
"Majority Lenders" means at any time Lenders holding at least 51% of
the then aggregate principal amount (based on the Equivalent in Dollars at
such time) of the Revolving Credit Advances owing to Lenders, or, if no
such principal amount is then outstanding, Lenders having at least 51% of
the Commitments.
"Material Adverse Change" means any material adverse change in the
financial condition or results of operations of the Company and its
Consolidated Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on (a) the
financial condition or results of operations of the Company and its
Consolidated Subsidiaries taken as a whole, (b) the rights and remedies of
the Agent or any Lender under this Agreement or any Note or (c) the ability
of the Borrowers to perform their obligations under this Agreement or any
Note.
"Maturity Date" means the earlier of (a) the first anniversary of the
Termination Date and (b) the date of termination in whole of the aggregate
Commitments pursuant to Section 2.05 or 6.01.
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"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" of any Person means a multiemployer plan, as
defined in Section 4001(a)(3) of ERISA, to which such Person or any of its
ERISA Affiliates is making or accruing an obligation to make contributions,
or has within any of the preceding five plan years made or accrued an
obligation to make contributions.
"Multiple Employer Plan" of any Person means a single employer plan,
as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for
employees of such Person or any of its ERISA Affiliates and at least one
Person other than such Person or any of its ERISA Affiliates or (b) was so
maintained and in respect of which such Person or any of its ERISA
Affiliates could have liability under Section 4064 or 4069 of ERISA in the
event such plan has been or were to be terminated.
"Net Tangible Assets of the Company and its Consolidated
Subsidiaries", as at any particular date of determination, means the total
amount of assets (less applicable reserves and other properly deductible
items) after deducting therefrom (a) all current liabilities (excluding any
thereof which are by their terms extendible or renewable at the option of
the obligor thereon to a time more than 12 months after the time as of
which the amount thereof is being computed) and (b) all goodwill, trade
names, trademarks, patents, unamortized debt discount and expense and other
like intangible assets, as set forth in the most recent balance sheet of
the Company and its Consolidated Subsidiaries and computed in accordance
with GAAP.
"Non-Consenting Lender" has the meaning specified in Section 2.16(b).
"Note" means a Revolving Credit Note or a Competitive Bid Note.
"Notice of Competitive Bid Borrowing" has the meaning specified in
Section 2.03(a).
"Notice of Revolving Credit Borrowing" has the meaning specified in
Section 2.02(a).
"Obligations" has the meaning specified in Section 7.01(b).
"Payment Office" means, for any Foreign Currency, such office of
Citibank as shall be from time to time selected by the Agent and notified
by the Agent to the Borrowers and the Lenders.
"PBGC" means the Pension Benefit Guaranty Corporation (or any
successor).
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association,
joint venture, limited liability company or other entity, or a government
or any political subdivision or agency thereof.
"Plan" means a Single Employer Plan or a Multiple Employer Plan.
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"Process Agent" has the meaning specified in Section 9.12(a).
"Public Debt Rating" means, as of any date, the highest rating that
has been most recently announced by either S&P or Moody's, as the case may
be, for any class of non-credit enhanced long-term senior unsecured debt
issued by the Company. For purposes of the foregoing, (a) if only one of
S&P and Moody's shall have in effect a Public Debt Rating, the Applicable
Margin, the Applicable Utilization Fee and the Applicable Percentage shall
be determined by reference to the available rating; (b) if neither S&P nor
Moody's shall have in effect a Public Debt Rating, the Applicable Margin,
the Applicable Utilization Fee and the Applicable Percentage will be set in
accordance with Level 5 under the definition of "Applicable Margin",
"Applicable Utilization Fee" or "Applicable Percentage", as the case may
be; (c) if the ratings established by S&P and Moody's shall fall within
different levels, the Applicable Margin, the Applicable Utilization Fee and
the Applicable Percentage shall be based upon the higher rating, provided
that if the lower of such ratings is more than one level below the higher
of such ratings, the Applicable Margin, the Applicable Utilization Fee and
the Applicable Percentage shall be determined by reference to the level
that is one level above such lower rating; (d) if any rating established by
S&P or Moody's shall be changed, such change shall be effective as of the
date on which such change is first announced publicly by the rating agency
making such change; and (e) if S&P or Moody's shall change the basis on
which ratings are established, each reference to the Public Debt Rating
announced by S&P or Moody's, as the case may be, shall refer to the then
equivalent rating by S&P or Moody's, as the case may be.
"Rating Condition" has the meaning specified in Section 2.05(c)(ii).
"Rating Condition Notice" has the meaning specified in Section
2.05(c)(ii).
"Reference Banks" means Citibank, Bank of America, N.A., JPMorgan
Chase Bank and Deutsche Bank AG New York Branch.
"Register" has the meaning specified in Section 9.06(d).
"Restricted Property" means (a) any property of the Company located
within the United States of America that, in the opinion of the Company's
Board of Directors, is a principal manufacturing property or (b) any shares
of capital stock or Debt of any Subsidiary owning any such property.
"Revolving Credit Advance" means an advance by a Lender to any
Borrower as part of a Revolving Credit Borrowing and refers to a Base Rate
Advance or a Eurocurrency Rate Advance (each of which shall be a "Type" of
Revolving Credit Advance).
"Revolving Credit Borrowing" means a borrowing consisting of
simultaneous Revolving Credit Advances of the same Type made by each of the
Lenders pursuant to Section 2.01.
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"Revolving Credit Note" means a promissory note of any Borrower
payable to the order of any Lender, delivered pursuant to a request made
under Section 2.17 in substantially the form of Exhibit A-1 hereto,
evidencing the aggregate indebtedness of such Borrower to such Lender
resulting from the Revolving Credit Advances made by such Lender to such
Borrower.
"Sale and Leaseback Transaction" means any arrangement with any Person
(other than the Company or a Subsidiary of the Company), or to which any
such Person is a party, providing for the leasing to the Company or to a
Subsidiary of the Company owning Restricted Property for a period of more
than three years of any Restricted Property that has been or is to be sold
or transferred by the Company or such Subsidiary to such Person, or to any
other Person (other than the Company or a Subsidiary of the Company) to
which funds have been or are to be advanced by such Person on the security
of the leased property. It is understood that arrangements pursuant to
Section 168(f)(8) of the Internal Revenue Code of 1954, as amended, or any
successor provision having similar effect, are not included within this
definition of "Sale and Leaseback Transaction".
"Single Employer Plan" of any Person means a single employer plan, as
defined in Section 4001(a)(15) of ERISA, that (a) is maintained for
employees of such Person or any of its ERISA Affiliates and no Person other
than such Person and its ERISA Affiliates or (b) was so maintained and in
respect of which such Person or any of its ERISA Affiliates could have
liability under Section 4069 of ERISA in the event such plan has been or
were to be terminated.
"S&P" means Standard & Poor's Ratings Group, a division of The McGraw
Hill Companies, Inc.
"Sub-Agent" means Citibank International plc.
"Subsidiary" of any Person means any corporation, partnership, joint
venture, limited liability company, trust or estate of which (or in which)
more than 50% of (a) the issued and outstanding capital stock having
ordinary voting power to elect a majority of the Board of Directors of such
corporation (irrespective of whether at the time capital stock of any other
class or classes of such corporation shall or might have voting power upon
the occurrence of any contingency), (b) the interest in the capital or
profits of such limited liability company, partnership or joint venture or
(c) the beneficial interest in such trust or estate is at the time directly
or indirectly owned or controlled by such Person, by such Person and one or
more of its other Subsidiaries or by one or more of such Person's other
Subsidiaries.
"Telerate Page" means, as applicable, page 3740 or 3750 (or any
successor pages, respectively) of Moneyline Telerate Service.
"Term Loan Conversion Date" means the Termination Date on which all
Revolving Credit Advances outstanding on such date are converted into a
term loan pursuant to Section 2.06.
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"Term Loan Election" has the meaning specified in Section 2.06.
"Termination Date" means the earlier of (a) November 24, 2004, or such
later date to which it may be extended pursuant to Section 2.16, and (b)
the date of termination in whole of the Commitments pursuant to Section
2.05(a) or Section 6.01 or, if all Lenders elect to terminate their
Commitments as provided therein, Section 2.05(d).
"Threatened" means, with respect to any action, suit, investigation,
litigation or proceeding, a written communication to the Company or a
Designated Subsidiary, as the case may be, expressing an intention to
immediately bring such action, suit, investigation, litigation or
proceeding.
"Voting Stock" means capital stock issued by a corporation, or
equivalent interests in any other Person, the holders of which are
ordinarily, in the absence of contingencies, entitled to vote for the
election of directors (or persons performing similar functions) of such
Person, even if the right so to vote has been suspended by the happening of
such a contingency.
"Withdrawal Liability" has the meaning specified in Part I of Subtitle
E of Title IV of ERISA.
SECTION 1.02. Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding".
SECTION 1.03. Accounting Terms. All accounting terms not specifically
defined herein shall be construed, and all financial computations and
determinations pursuant hereto shall be made, in accordance with generally
accepted accounting principles consistent with those applied in the preparation
of the financial statements referred to in Section 4.01(e) ("GAAP"); provided,
however, that, if any changes in accounting principles from those used in the
preparation of such financial statements have been required by the rules,
regulations, pronouncements or opinions of the Financial Accounting Standards
Board or the American Institute of Certified Public Accountants (or successors
thereto or agencies with similar functions) and have been adopted by the Company
with the agreement of its independent certified public accountants, the Lenders
agree to consider a request by the Company to amend this Agreement to take
account of such changes.
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. The Revolving Credit Advances. Each Lender severally
agrees, on the terms and conditions hereinafter set forth, to make Revolving
Credit Advances to any Borrower from time to time on any Business Day during the
period from the Effective Date until the Termination Date in an aggregate amount
(based in respect of any Revolving Credit Advance denominated in a Major
Currency on the Equivalent in Dollars determined on the date of delivery of the
applicable Notice of Revolving Credit Borrowing), not to exceed at any time
outstanding such Lender's Commitment, provided that the aggregate amount of the
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Commitments of the Lenders shall be deemed used from time to time to the extent
of the aggregate amount (based in respect of any Competitive Bid Advance
denominated in a Foreign Currency on the Equivalent in Dollars at such time) of
the Competitive Bid Advances then outstanding and such deemed use of the
aggregate amount of the Commitments shall be allocated among the Lenders ratably
according to their respective Commitments (such deemed use of the aggregate
amount of the Commitments being a "Competitive Bid Reduction"). Each Revolving
Credit Borrowing shall be in an aggregate amount not less than $10,000,000 (or
the Equivalent thereof in any Major Currency determined on the date of delivery
of the applicable Notice of Revolving Credit Borrowing) or an integral multiple
of $1,000,000 (or the Equivalent thereof in any Major Currency determined on the
date of delivery of the applicable Notice of Revolving Credit Borrowing) in
excess thereof and shall consist of Revolving Credit Advances of the same Type
made on the same day by the Lenders ratably according to their respective
Commitments; provided, however, that if there is no unused portion of the
Commitment of one or more Lenders at the time of any requested Revolving Credit
Borrowing such Borrowing shall consist of Revolving Credit Advances of the same
Type made on the same day by the Lender or Lenders who do then have an unused
portion of their Commitments ratably according to the unused portion of such
Commitments. Notwithstanding anything herein to the contrary, no Revolving
Credit Borrowing may be made in a Major Currency if, after giving effect to the
making of such Revolving Credit Borrowing, the Equivalent in Dollars of the
aggregate amount of outstanding Revolving Credit Advances denominated in Major
Currencies, together with the Equivalent in Dollars of the aggregate amount of
outstanding Competitive Bid Advances denominated in Foreign Currencies, would
exceed $500,000,000. Within the limits of each Lender's Commitment, any Borrower
may borrow under this Section 2.01, prepay pursuant to Section 2.09 and reborrow
under this Section 2.01.
SECTION 2.02. Making the Revolving Credit Advances. (a) Each Revolving
Credit Borrowing shall be made on notice, given not later than (x) 10:00 A.M.
(New York City time) on the third Business Day prior to the date of the proposed
Revolving Credit Borrowing in the case of a Revolving Credit Borrowing
consisting of Eurocurrency Rate Advances denominated in any Major Currency, (y)
11:00 A.M. (New York City time) on the third Business Day prior to the date of
the proposed Revolving Credit Borrowing in the case of a Revolving Credit
Borrowing consisting of Eurocurrency Rate Advances denominated in Dollars or (z)
9:00 A.M. (New York City time) on the day of the proposed Revolving Credit
Borrowing in the case of a Revolving Credit Borrowing consisting of Base Rate
Advances, by any Borrower to the Agent (and the Agent shall, in the case of a
Revolving Credit Borrowing consisting of Eurocurrency Rate Advances, immediately
relay such notice to the Sub-Agent), which shall give to each Lender prompt
notice thereof by telecopier or telex. Each such notice of a Revolving Credit
Borrowing (a "Notice of Revolving Credit Borrowing") shall be by telephone,
confirmed immediately in writing, or telecopier or telex in substantially the
form of Exhibit B-1 hereto, specifying therein the requested (i) date of such
Revolving Credit Borrowing, (ii) Type of Advances comprising such Revolving
Credit Borrowing, (iii) aggregate amount of such Revolving Credit Borrowing, and
(iv) in the case of a Revolving Credit Borrowing consisting of Eurocurrency Rate
Advances, initial Interest Period and currency for each such Revolving Credit
Advance. Each Lender shall, before 11:00 A.M. (New York City time) on the date
of such Revolving Credit Borrowing, in the case of a Revolving Credit Borrowing
consisting of Advances denominated in Dollars, and before 11:00 A.M. (London
time) on the date of such Revolving Credit Borrowing, in the case of a Revolving
Credit Borrowing consisting of
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Eurocurrency Rate Advances denominated in any Major Currency, make available for
the account of its Applicable Lending Office to the Agent at the applicable
Agent's account, in same day funds, such Lender's ratable portion (as determined
in accordance with Section 2.01) of such Revolving Credit Borrowing. After the
Agent's receipt of such funds and upon fulfillment of the applicable conditions
set forth in Article III, the Agent will make such funds available to the
Borrower requesting the Revolving Credit Borrowing at the Agent's aforesaid
address or at the applicable Payment Office, as the case may be.
(b) Anything in subsection (a) above to the contrary notwithstanding,
a Borrower may not select Eurocurrency Rate Advances for any proposed Revolving
Credit Borrowing if the obligation of the Lenders to make Eurocurrency Rate
Advances shall then be suspended pursuant to Section 2.08 or 2.11.
(c) Each Notice of Revolving Credit Borrowing of any Borrower shall be
irrevocable and binding on such Borrower. In the case of any Revolving Credit
Borrowing that the related Notice of Revolving Credit Borrowing specifies is to
be comprised of Eurocurrency Rate Advances, the Borrower requesting such
Revolving Credit Borrowing shall indemnify each Lender against any loss, cost or
expense incurred by such Lender as a result of any failure by such Borrower to
fulfill on or before the date specified in such Notice of Revolving Credit
Borrowing for such Revolving Credit Borrowing the applicable conditions set
forth in Article III, including, without limitation, any loss (including loss of
anticipated profits), cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender to fund the
Revolving Credit Advance to be made by such Lender as part of such Revolving
Credit Borrowing when such Revolving Credit Advance, as a result of such
failure, is not made on such date.
(d) Unless the Agent shall have received notice from a Lender prior to
the date of any Revolving Credit Borrowing that such Lender will not make
available to the Agent such Lender's ratable portion of such Revolving Credit
Borrowing, the Agent may assume that such Lender has made such portion available
to the Agent on the date of such Revolving Credit Borrowing in accordance with
subsection (a) of this Section 2.02 and the Agent may, in reliance upon such
assumption, make available to the Borrower proposing such Revolving Credit
Borrowing on such date a corresponding amount. If and to the extent that such
Lender shall not have so made such ratable portion available to the Agent, such
Lender and such Borrower severally agree to repay to the Agent forthwith on
demand such corresponding amount together with interest thereon, for each day
from the date such amount is made available to such Borrower until the date such
amount is repaid to the Agent, at (i) in the case of such Borrower, the higher
of (A) the interest rate applicable at the time to Revolving Credit Advances
comprising such Revolving Credit Borrowing and (B) the cost of funds incurred by
the Agent in respect of such amount and (ii) in the case of such Lender, (A) the
Federal Funds Rate in the case of Advances denominated in Dollars or (B) the
cost of funds incurred by the Agent in respect of such amount in the case of
Advances denominated in any Major Currency. If such Lender shall repay to the
Agent such corresponding amount, such amount so repaid shall constitute such
Lender's Revolving Credit Advance as part of such Revolving Credit Borrowing for
purposes of this Agreement.
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(e) The failure of any Lender to make the Revolving Credit Advance to
be made by it as part of any Revolving Credit Borrowing shall not relieve any
other Lender of its obligation, if any, hereunder to make its Revolving Credit
Advance on the date of such Revolving Credit Borrowing, but no Lender shall be
responsible for the failure of any other Lender to make the Revolving Credit
Advance to be made by such other Lender on the date of any Revolving Credit
Borrowing.
SECTION 2.03. The Competitive Bid Advances. (a) Each Lender severally
agrees that any Borrower may request Competitive Bid Borrowings under this
Section 2.03 from time to time on any Business Day during the period from the
date hereof until the date occurring seven days prior to the Termination Date in
the manner set forth below; provided that, following the making of each
Competitive Bid Borrowing, the aggregate amount (based in respect of any Advance
denominated in a Foreign Currency on the Equivalent in Dollars on such Business
Day) of the Advances then outstanding shall not exceed the aggregate amount of
the Commitments of the Lenders (computed without regard to any Competitive Bid
Reduction). Notwithstanding anything herein to the contrary, no Competitive Bid
Borrowing may be made in a Foreign Currency if, after giving effect to the
making of such Revolving Credit Borrowing, the Equivalent in Dollars of the
aggregate amount of outstanding Competitive Bid Advances denominated in Foreign
Currencies, together with the Equivalent in Dollars of the aggregate amount of
outstanding Revolving Credit Advances denominated in Major Currencies, would
exceed $500,000,000.
(i) Any Borrower may request a Competitive Bid Borrowing under this
Section 2.03 by delivering to the Agent (and the Agent shall, in the case
of a Competitive Bid Borrowing not consisting of Fixed Rate Advances or
LIBO Rate Advances to be denominated in Dollars, immediately notify the
Sub-Agent), by telecopier or telex, a notice of a Competitive Bid Borrowing
(a "Notice of Competitive Bid Borrowing"), in substantially the form of
Exhibit B-2 hereto, specifying therein the requested (A) date of such
proposed Competitive Bid Borrowing, (B) aggregate amount of such proposed
Competitive Bid Borrowing, (C) interest rate basis and day count convention
to be offered by the Lenders, (D) currency of such proposed Competitive Bid
Borrowing, (E) in the case of a Competitive Bid Borrowing consisting of
LIBO Rate Advances, Interest Period of each Competitive Bid Advance to be
made as part of such Competitive Bid Borrowing, or in the case of a
Competitive Bid Borrowing consisting of Fixed Rate Advances or Local Rate
Advances, maturity date for repayment of each Fixed Rate Advance or Local
Rate Advance to be made as part of such Competitive Bid Borrowing (which
maturity date may not be earlier than the date occurring five days after
the date of such Competitive Bid Borrowing or later than the Termination
Date), (F) interest payment date or dates relating thereto, (G) location of
such Borrower's account to which funds are to be advanced, and (H) other
terms (if any) to be applicable to such Competitive Bid Borrowing, not
later than (w) 10:00 A.M. (New York City time) at least one Business Day
prior to the date of the proposed Competitive Bid Borrowing, if such
Borrower shall specify in its Notice of Competitive Bid Borrowing that the
rates of interest to be offered by the Lenders shall be fixed rates per
annum (each Advance comprising any such Competitive Bid Borrowing being
referred to herein as a "Fixed Rate Advance") and that the Advances
comprising such proposed Competitive Bid Borrowing shall be denominated in
Dollars, (x) 10:00 A.M. (New York City time) at
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least four Business Days prior to the date of the proposed Competitive Bid
Borrowing, if such Borrower shall instead specify in its Notice of
Competitive Bid Borrowing that the Advances comprising such Competitive Bid
Borrowing shall be LIBO Rate Advances denominated in Dollars, (y) 3:00 P.M.
(New York City time) atleast three Business Days prior to the date of the
proposed Competitive Bid Borrowing, if such Borrower shall specify in the
Notice of Competitive Bid Borrowing that the Advances comprising such
proposed Competitive Bid Borrowing shall be either Fixed Rate Advances
denominated in any Foreign Currency or Local Rate Advances denominated in
any Foreign Currency and (z) 3:00 P.M. (New York City time) at least five
Business Days prior to the date of the proposed Competitive Bid Borrowing,
if such Borrower shall instead specify in its Notice of Competitive Bid
Borrowing that the Advances comprising such Competitive Bid Borrowing shall
be LIBO Rate Advances denominated in any Foreign Currency. Each Notice of
Competitive Bid Borrowing shall be irrevocable and binding on such
Borrower. Any Notice of Competitive Bid Borrowing by a Designated
Subsidiary shall be given to the Agent in accordance with the preceding
sentence through the Company on behalf of such Designated Subsidiary. The
Agent shall in turn promptly notify each Lender of each request for a
Competitive Bid Borrowing received by it from such Borrower by sending such
Lender a copy of the related Notice of Competitive Bid Borrowing.
(ii) Each Lender may, if, in its sole discretion, it elects to do so,
irrevocably offer to make one or more Competitive Bid Advances to the
Borrower proposing the Competitive Bid Borrowing as part of such proposed
Competitive Bid Borrowing at a rate or rates of interest specified by such
Lender in its sole discretion, by notifying the Agent (which shall give
prompt notice thereof to such Borrower and to the Sub-Agent, if
applicable), (A) before 9:30 A.M. (New York City time) on the date of such
proposed Competitive Bid Borrowing, in the case of a Competitive Bid
Borrowing consisting of Fixed Rate Advances denominated in Dollars, (B)
before 10:00 A.M. (New York City time) three Business Days before the date
of such proposed Competitive Bid Borrowing, in the case of a Competitive
Bid Borrowing consisting of LIBO Rate Advances denominated in Dollars, (C)
before 10:00 A.M. (New York City time) on the second Business Day prior to
the date of such proposed Competitive Bid Borrowing, in the case of a
Competitive Bid Borrowing consisting of either Fixed Rate Advances
denominated in any Foreign Currency or Local Rate Advances denominated in
any Foreign Currency and (D) before 10:00 A.M. (New York City time) four
Business Days before the date of such proposed Competitive Bid Borrowing,
in the case of a Competitive Bid Borrowing consisting of LIBO Rate Advances
denominated in any Foreign Currency, of the minimum amount and maximum
amount of each Competitive Bid Advance which such Lender would be willing
to make as part of such proposed Competitive Bid Borrowing (which amounts,
or the Equivalent thereof in Dollars, as the case may be, may, subject to
the proviso to the first sentence of this Section 2.03(a), exceed such
Lender's Commitment, if any), the rate or rates of interest therefor and
such Lender's Applicable Lending Office with respect to such Competitive
Bid Advance; provided that if the Agent in its capacity as a Lender shall,
in its sole discretion, elect to make any such offer, it shall notify such
Borrower of such offer at least 30 minutes before the time and on the date
on which notice of such election is to be given to the Agent, by the other
Lenders. If any Lender shall elect not to make such an offer, such Lender
shall so notify the Agent,
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before 10:00 A.M. (New York City time) (and the Agent shall notify the
Sub-Agent, if applicable) on the date on which notice of such election is
to be given to the Agent by the other Lenders, and such Lender shall not be
obligated to, and shall not, make any Competitive Bid Advance as part of
such Competitive Bid Borrowing; provided that the failure by any Lender to
give such notice shall not cause such Lender to be obligated to make any
Competitive Bid Advance as part of such proposed Competitive Bid Borrowing.
(iii) The Borrower proposing the Competitive Bid Advance shall, in
turn, (A) before 10:30 A.M. (New York City time) on the date of such
proposed Competitive Bid Borrowing, in the case of a Competitive Bid
Borrowing consisting of Fixed Rate Advances denominated in Dollars, (B)
before 11:00 A.M. (New York City time) three Business Days before the date
of such proposed Competitive Bid Borrowing, in the case of a Competitive
Bid Borrowing consisting of LIBO Rate Advances denominated in Dollars, (C)
before 10:00 A.M. (New York City time) on the Business Day prior to the
date of such Competitive Bid Borrowing, in the case of a Competitive Bid
Borrowing consisting of either Fixed Rate Advances denominated in any
Foreign Currency or Local Rate Advances denominated in any Foreign Currency
and (D) before 10:00 A.M. (New York City time) three Business Days before
the date of such proposed Competitive Bid Borrowing, in the case of a
Competitive Bid Borrowing consisting of LIBO Rate Advances denominated in
any Foreign Currency, either:
(x) cancel such Competitive Bid Borrowing by giving the Agent
notice to that effect, or
(y) accept one or more of the offers made by any Lender or
Lenders pursuant to paragraph (ii) above, in its sole discretion, by
giving notice to the Agent (and the Agent shall give notice to the
Sub-Agent, if applicable) of the amount of each Competitive Bid
Advance (which amount shall be equal to or greater than the minimum
amount, and equal to or less than the maximum amount, notified to such
Borrower by the Agent on behalf of such Lender for such Competitive
Bid Advance pursuant to paragraph (ii) above) to be made by each
Lender as part of such Competitive Bid Borrowing, and reject any
remaining offers made by Lenders pursuant to paragraph (ii) above by
giving the Agent notice to that effect; provided, however, that such
Borrower shall not accept any offer in excess of the requested bid
amount for any maturity. Such Borrower shall accept the offers made by
any Lender or Lenders to make Competitive Bid Advances in order of the
lowest to the highest rates of interest offered by such Lenders. If
two or more Lenders have offered the same interest rate, the amount to
be borrowed at such interest rate will be allocated among such Lenders
in proportion to the amount that each such Lender offered at such
interest rate.
(iv) If the Borrower proposing the Competitive Bid Borrowing notifies
the Agent that such Competitive Bid Borrowing is canceled pursuant to
paragraph (iii)(x) above, the Agent shall give prompt notice thereof to the
Lenders and such Competitive Bid Borrowing shall not be made.
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(v) If the Borrower proposing the Competitive Bid Borrowing accepts
one or more of the offers made by any Lender or Lenders pursuant to
paragraph (iii)(y) above, the Agent shall in turn promptly notify (A) each
Lender that has made an offer as described in paragraph (ii) above, of the
date and aggregate amount of such Competitive Bid Borrowing and whether or
not any offer or offers made by such Lender pursuant to paragraph (ii)
above have been accepted by the Borrower, (B) each Lender that is to make a
Competitive Bid Advance as part of such Competitive Bid Borrowing, of the
amount of each Competitive Bid Advance to be made by such Lender as part of
such Competitive Bid Borrowing, and (C) each Lender that is to make a
Competitive Bid Advance as part of such Competitive Bid Borrowing, upon
receipt, that the Agent has received forms of documents appearing to
fulfill the applicable conditions set forth in Article III. Each Lender
that is to make a Competitive Bid Advance as part of such Competitive Bid
Borrowing shall, before 11:00 A.M. (New York City time), in the case of
Competitive Bid Advances to be denominated in Dollars or 11:00 A.M. (London
time), in the case of Competitive Bid Advances to be denominated in any
Foreign Currency, on the date of such Competitive Bid Borrowing specified
in the notice received from the Agent pursuant to clause (A) of the
preceding sentence or any later time when such Lender shall have received
notice from the Agent pursuant to clause (C) of the preceding sentence,
make available for the account of its Applicable Lending Office to the
Agent (x) in the case of a Competitive Bid Borrowing denominated in
Dollars, at its address referred to in Section 9.02, in same day funds,
such Lender's portion of such Competitive Bid Borrowing in Dollars, and (y)
in the case of a Competitive Bid Borrowing in a Foreign Currency, at the
Payment Office for such Foreign Currency as shall have been notified by the
Agent to the Lenders prior thereto, in same day funds, such Lender's
portion of such Competitive Bid Borrowing in such Foreign Currency. Upon
fulfillment of the applicable conditions set forth in Article III and after
receipt by the Agent of such funds, the Agent will make such funds
available to such Borrower's account at the location specified by such
Borrower in its Notice of Competitive Bid Borrowing. Promptly after each
Competitive Bid Borrowing the Agent will notify each Lender of the amount
of such Competitive Bid Borrowing, the consequent Competitive Bid Reduction
and the dates upon which such Competitive Bid Reduction commenced and will
terminate.
(vi) If the Borrower proposing the Competitive Bid Borrowing notifies
the Agent that it accepts one or more of the offers made by any Lender or
Lenders pursuant to paragraph (iii)(y) above, such notice of acceptance
shall be irrevocable and binding on such Borrower. Such Borrower shall
indemnify each Lender against any loss, cost or expense incurred by such
Lender as a result of any failure by such Borrower to fulfill on or before
the date specified in the related Notice of Competitive Bid Borrowing for
such Competitive Bid Borrowing the applicable conditions set forth in
Article III, including, without limitation, any loss (including loss of
anticipated profits), cost or expense incurred by reason of the liquidation
or reemployment of deposits or other funds acquired by such Lender to fund
the Competitive Bid Advance to be made by such Lender as part of such
Competitive Bid Borrowing when such Competitive Bid Advance, as a result of
such failure, is not made on such date.
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(b) Each Competitive Bid Borrowing shall be in an aggregate amount not
less than $10,000,000 (or the Equivalent thereof in any Foreign Currency,
determined as of the time of the applicable Notice of Competitive Bid Borrowing)
or an integral multiple of $1,000,000 (or the Equivalent thereof in any Foreign
Currency, determined as of the time of the applicable Notice of Competitive Bid
Borrowing) in excess thereof and, following the making of each Competitive Bid
Borrowing, the Borrower that has borrowed such Competitive Bid Borrowing shall
be in compliance with the limitation set forth in the proviso to the first
sentence of subsection (a) above.
(c) Within the limits and on the conditions set forth in this Section
2.03, any Borrower may from time to time borrow under this Section 2.03, repay
or prepay pursuant to subsection (d) below, and reborrow under this Section
2.03, provided that a Competitive Bid Borrowing shall not be made within three
Business Days of the date of any other Competitive Bid Borrowing.
(d) Any Borrower that has borrowed through a Competitive Bid Borrowing
shall repay to the Agent for the account of each Lender that has made a
Competitive Bid Advance, on the maturity date of such Competitive Bid Advance
(such maturity date being that specified by such Borrower for repayment of such
Competitive Bid Advance in the related Notice of Competitive Bid Borrowing
delivered pursuant to subsection (a)(i) above and provided in the Competitive
Bid Note evidencing such Competitive Bid Advance), the then unpaid principal
amount of such Competitive Bid Advance. Such Borrower shall have no right to
prepay any principal amount of any Competitive Bid Advance unless, and then only
on the terms, specified by such Borrower for such Competitive Bid Advance in the
related Notice of Competitive Bid Borrowing delivered pursuant to subsection
(a)(i) above and set forth in the Competitive Bid Note evidencing such
Competitive Bid Advance.
(e) Each Borrower that has borrowed through a Competitive Bid
Borrowing shall pay interest on the unpaid principal amount of each Competitive
Bid Advance comprising such Competitive Bid Borrowing from the date of such
Competitive Bid Advance to the date the principal amount of such Competitive Bid
Advance is repaid in full, at the rate of interest for such Competitive Bid
Advance specified by the Lender making such Competitive Bid Advance in its
notice with respect thereto delivered pursuant to subsection (a)(ii) above,
payable on the interest payment date or dates specified by such Borrower for
such Competitive Bid Advance in the related Notice of Competitive Bid Borrowing
delivered pursuant to subsection (a)(i) above, as provided in the Competitive
Bid Note evidencing such Competitive Bid Advance. Upon the occurrence and during
the continuance of an Event of Default under Section 6.01(a), such Borrower
shall pay interest on the amount of unpaid principal of and interest on each
Competitive Bid Advance owing to a Lender, payable in arrears on the date or
dates interest is payable thereon, at a rate per annum equal at all times to 1%
per annum above the rate per annum required to be paid on such Competitive Bid
Advance under the terms of the Competitive Bid Note evidencing such Competitive
Bid Advance unless otherwise agreed in such Competitive Bid Note.
(f) The indebtedness of any Borrower resulting from each Competitive
Bid Advance made to such Borrower as part of a Competitive Bid Borrowing shall
be evidenced by a
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separate Competitive Bid Note of the Borrower payable to the order of the Lender
making such Competitive Bid Advance.
SECTION 2.04. Fees. (a) Facility Fee. The Company agrees to pay to the
Agent for the account of each Lender a facility fee on the aggregate amount of
such Lender's Commitment from the date hereof in the case of each Initial Lender
and from the effective date specified in the Assumption Agreement or the
Assignment and Acceptance, as the case may be, pursuant to which it became a
Lender in the case of each other Lender until the Termination Date at a rate per
annum equal to the Applicable Percentage in effect from time to time, payable in
arrears quarterly on the last day of each March, June, September and December,
commencing December 31, 2003, and on the Termination Date.
(b) Agent's Fees. The Company shall pay to the Agent for its own
account such fees, and at such times, as the Company and the Agent may
separately agree.
SECTION 2.05. Termination or Reduction of the Commitments. (a)
Optional Ratable Termination or Reduction. The Company shall have the right,
upon at least three Business Days' notice to the Agent, to terminate in whole or
reduce ratably in part the unused portions of the respective Commitments of the
Lenders, provided that each partial reduction shall be in an aggregate amount
not less than $10,000,000 or an integral multiple of $1,000,000 in excess
thereof and provided further that the aggregate amount of the Commitments of the
Lenders shall not be reduced to an amount that is less than the sum of the
aggregate principal amount of the Competitive Bid Advances denominated in
Dollars then outstanding plus the Equivalent in Dollars (determined as of the
date of the notice of prepayment) of the aggregate principal amount of the
Competitive Bid Advances denominated in Foreign Currencies then outstanding. The
aggregate amount of the Commitments, once reduced as provided in this Section
2.05(a), may not be reinstated.
(b) Non-Ratable Termination by Assignment. The Company shall have the
right, upon at least ten Business Days' written notice to the Agent (which shall
then give prompt notice thereof to the relevant Lender), to require any Lender
to assign, pursuant to and in accordance with the provisions of Section 9.06,
all of its rights and obligations under this Agreement and under the Notes to an
Eligible Assignee selected by the Company; provided, however, that (i) no Event
of Default shall have occurred and be continuing at the time of such request and
at the time of such assignment; (ii) the assignee shall have paid to the
assigning Lender the aggregate principal amount of, and any interest accrued and
unpaid to the date of such assignment on, the Note or Notes of such Lender;
(iii) the Company shall have paid to the assigning Lender any and all facility
fees and other fees payable to such Lender and all other accrued and unpaid
amounts owing to such Lender under any provision of this Agreement (including,
but not limited to, any increased costs or other additional amounts owing under
Section 2.10 and any indemnification for Taxes under Section 2.13) as of the
effective date of such assignment; and (iv) if the assignee selected by the
Company is not an existing Lender, such assignee or the Company shall have paid
the processing and recordation fee required under Section 9.06(a) for such
assignment; provided further that the Company shall have no right to replace
more than three Lenders in any calendar year pursuant to this Section 2.05(b);
and provided further that the assigning Lender's rights under Sections 2.10,
2.13 and 9.04, and its
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obligations under Section 8.05, shall survive such assignment as to matters
occurring prior to the date of assignment.
(c) Non-Ratable Reduction. (i) The Company shall have the right, at
any time other than during any Rating Condition, upon at least ten Business
Days' notice to a Lender (with a copy to the Agent), to terminate in whole such
Lender's Commitment (determined without giving effect to any Competitive Bid
Reduction). Such termination shall be effective, (i) with respect to such
Lender's unused Commitment, on the date set forth in such notice, provided,
however, that such date shall be no earlier than ten Business Days after receipt
of such notice and (ii) with respect to each Advance outstanding to such Lender,
on the last day of the then current Interest Period relating to such Advance;
provided further, however, that such termination shall not be effective, if,
after giving effect to such termination, the Company would, under this Section
2.05(c), reduce the Lenders' Commitments in any calendar year by an amount in
excess of the Commitments of any three Lenders or $480,000,000, whichever is
greater on the date of such termination. Notwithstanding the preceding proviso,
the Company may terminate in whole the Commitment of any Lender in accordance
with the terms and conditions set forth in Section 2.05(b) or 2.16(b). Upon
termination of a Lender's Commitment under this Section 2.05(c), the Company
will pay or cause to be paid all principal of, and interest accrued to the date
of such payment on, Advances owing to such Lender and pay any facility fees or
other fees payable to such Lender pursuant to the provisions of Section 2.04,
and all other amounts payable to such Lender hereunder (including, but not
limited to, any increased costs or other amounts owing under Section 2.10 and
any indemnification for Taxes under Section 2.13); and upon such payments, the
obligations of such Lender hereunder shall, by the provisions hereof, be
released and discharged; provided, however, that such Lender's rights under
Sections 2.10, 2.13 and 9.04, and its obligations under Section 8.05 shall
survive such release and discharge as to matters occurring prior to such date.
The aggregate amount of the Commitments of the Lenders once reduced pursuant to
this Section 2.05(c) may not be reinstated.
(ii) For purposes of this Section 2.05(c) only, the term "Rating
Condition" shall mean a period commencing with notice (a "Rating Condition
Notice") by the Agent to the Company and the Lenders to the effect that the
Agent has been informed that the rating of the senior public Debt of the Company
is unsatisfactory under the standard set forth in the next sentence, and ending
with notice by the Agent to the Company and the Lenders to the effect that such
condition no longer exists. The Agent shall give a Rating Condition Notice
promptly upon receipt from the Company or any Lender of notice stating, in
effect, that both of S&P and Moody's (or any successor by merger or
consolidation to the business of either thereof), respectively, then rate the
senior public Debt of the Company lower than BBB- and Baa3. The Company agrees
to give notice to the Agent forthwith upon any change in a rating by either such
organization of the senior public Debt of the Company; the Agent shall have no
duty whatsoever to verify the accuracy of any such notice from the Company or
any Lender or to monitor independently the ratings of the senior public Debt of
the Company and no Lender shall have any duty to give any such notice. The Agent
shall give notice to the Lenders and the Company as to the termination of a
Rating Condition promptly upon receiving a notice from the Company to the Agent
(which notice the Agent shall promptly notify to the Lenders) stating that the
rating of the senior public Debt of the Company does not meet the standard set
forth in the second sentence of this clause (ii), and requesting that the Agent
notify the Lenders of the termination of the Rating Condition. The Rating
Condition shall terminate upon the giving of such notice by the Agent.
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(d) Termination by a Lender. In the event that a Change of Control
occurs, each Lender may, by notice to the Company and the Agent given not later
than 50 calendar days after such Change of Control, terminate its Commitment,
which Commitment shall be terminated effective as of the later of (i) the date
that is 60 calendar days after such Change of Control or (ii) the end of the
Interest Period for any Advance outstanding at the time of such Change of
Control or for any Advance made pursuant to the next sentence of this Section
2.05(d). Upon the occurrence of a Change of Control, each Borrower's right to
make a Borrowing under this Agreement shall be suspended for a period of 60
calendar days, except for Advances having an interest period ending not later
than 90 calendar days after such Change of Control. A notice of termination
pursuant to this Section 2.05(d) shall not have the effect of accelerating any
outstanding Advance of such Lender and the Notes of such Lender.
(e) Mandatory Reduction. On the Termination Date, if the Company has
made the Term Loan Election in accordance with Section 2.06 prior to such date,
and from time to time thereafter upon each prepayment of the Revolving Credit
Advances, the Commitments of the Lenders shall be automatically and permanently
reduced on a pro rata basis by an amount equal to the amount by which (i) the
aggregate Commitments immediately prior to such reduction exceeds (ii) the
aggregate unpaid principal amount of all Revolving Credit Advances outstanding
at such time.
SECTION 2.06. Repayment of Advances. (a) Revolving Credit Advances.
Each Borrower shall, subject to the next succeeding sentence, repay to the Agent
for the ratable account of the Lenders on the Termination Date the aggregate
principal amount of the Revolving Credit Advances then outstanding. The Company
may, upon not less than 15 days' notice to the Agent, elect (the "Term Loan
Election") to convert all of the Revolving Credit Advances outstanding on the
Termination Date in effect at such time into a term loan which the Borrowers
shall repay in full ratably to the Lenders on the Maturity Date; provided that
the Term Loan Election may not be exercised if on the date of notice of the Term
Loan Election or on the date on which the Term Loan Election is to be effected
(x) a Default has occurred and is continuing or (y) the representations and
warranties in Section 4.01 (other than the representations set forth in the last
sentence of subsection (e) thereof and in subsections (f), (h)-(l) and (n)
thereof) are not true and correct as though made on and as of such date. All
Revolving Credit Advances converted into a term loan pursuant to this Section
2.06(a) shall continue to constitute Revolving Credit Advances except that the
Borrowers may not reborrow pursuant to Section 2.01 after all or any portion of
such Revolving Credit Advances have been prepaid pursuant to Section 2.09.
(b) Competitive Bid Advances. Each Borrower shall repay to the
Administrative Agent, for the account of each Lender that has made a Competitive
Bid Advance, the aggregate outstanding principal amount of each Competitive Bid
Advance made to such Borrower and owing to such Lender on the earlier of (i) the
maturity date therefor, specified in the related Notice of Competitive Bid
Borrowing delivered pursuant to Section 2.03(a)(i) and (ii) the Termination
Date.
SECTION 2.07. Interest on Revolving Credit Advances. (a) Scheduled
Interest. Each Borrower shall pay interest on the unpaid principal amount of
each Revolving Credit Advance owing by such Borrower to each Lender from the
date of such Revolving Credit Advance until such principal amount shall be paid
in full, at the following rates per annum:
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(i) Base Rate Advances. During such periods as such Revolving Credit
Advance is a Base Rate Advance, a rate per annum equal at all times to the
sum of (x) the Base Rate in effect from time to time plus (y) the
Applicable Margin in effect from time to time plus (z) the Applicable
Utilization Fee, if any, in effect from time to time, payable in arrears
quarterly on the last day of each March, June, September and December
during such periods and on the date such Base Rate Advance shall be paid in
full.
(ii) Eurocurrency Rate Advances. During such periods as such Revolving
Credit Advance is a Eurocurrency Rate Advance, a rate per annum equal at
all times during each Interest Period for such Revolving Credit Advance to
the sum of (x) the Eurocurrency Rate for such Interest Period for such
Revolving Credit Advance plus (y) the Applicable Margin in effect from time
to time plus (z) the Applicable Utilization Fee, if any, in effect from
time to time, payable in arrears on the last day of such Interest Period
and, if such Interest Period has a duration of more than three months, on
each day that occurs during such Interest Period every three months from
the first day of such Interest Period and on the date such Eurocurrency
Rate Advance shall be Converted or paid in full.
(b) Default Interest. Upon the occurrence and during the continuance
of an Event of Default under Section 6.01(a), each Borrower shall pay interest
on (i) the unpaid principal amount of each Revolving Credit Advance owing by
such Borrower to each Lender, payable in arrears on the dates referred to in
clause (a)(i) or (a)(ii) above, at a rate per annum equal at all times to 1% per
annum above the rate per annum required to be paid on such Revolving Credit
Advance pursuant to clause (a)(i) or (a)(ii) above and (ii) to the fullest
extent permitted by law, the amount of any interest, fee or other amount payable
hereunder by such Borrower that is not paid when due, from the date such amount
shall be due until such amount shall be paid in full, payable in arrears on the
date such amount shall be paid in full and on demand, at a rate per annum equal
at all times to 1% per annum above the rate per annum required to be paid on
such Revolving Credit Advance pursuant to clause (a)(i) or (a)(ii) above.
SECTION 2.08. Interest Rate Determination. (a) Each Reference Bank
agrees to furnish to the Agent timely information for the purpose of determining
each Eurocurrency Rate and each LIBO Rate if the applicable Telerate Page is
unavailable. If any one or more of the Reference Banks shall not furnish such
timely information to the Agent for the purpose of determining any such interest
rate, the Agent shall determine such interest rate on the basis of timely
information furnished by the remaining Reference Banks. The Agent shall give
prompt notice to the Company and the Lenders of the applicable interest rate
determined by the Agent for purposes of Section 2.07(a)(i) or (ii), and the
rate, if any, furnished by each Reference Bank for the purpose of determining
the interest rate under Section 2.07(a)(ii).
(b) If, with respect to any Eurocurrency Rate Advances, the Majority
Lenders notify the Agent that (i) they are unable to obtain matching deposits in
the London interbank market at or about 11:00 A.M. (London time) on the second
Business Day before the making of a Borrowing in sufficient amounts to fund
their respective Revolving Credit Advances as part of such Borrowing during its
Interest Period or (ii) the Eurocurrency Rate for any Interest Period for such
Advances will not adequately reflect the cost to such Majority Lenders of
making, funding or maintaining their respective Eurocurrency Rate Advances for
such Interest Period, the
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Agent shall forthwith so notify each Borrower and the Lenders, whereupon (A) the
Borrower will, on the last day of the then existing Interest Period therefor,
(1) if such Eurocurrency Rate Advances are denominated in Dollars, either (x)
prepay such Advances or (y) Convert such Advances into Base Rate Advances and
(2) if such Eurocurrency Rate Advances are denominated in any Major Currency,
either (x) prepay such Advances or (y) redenominate such Advances into an
Equivalent amount of Dollars and Convert such Advances into Base Rate Advances,
and (B) the obligation of the Lenders to make Eurocurrency Rate Advances in the
same currency as such Eurocurrency Rate Advances shall be suspended until the
Agent shall notify each Borrower and the Lenders that the circumstances causing
such suspension no longer exist.
(c) If any Borrower, in requesting a Revolving Credit Borrowing
comprised of Eurocurrency Rate Advances, shall fail to select the duration of
the Interest Period for such Eurocurrency Rate Advances in accordance with the
provisions contained in the definition of "Interest Period" in Section 1.01, the
Agent will forthwith so notify the Borrower and the Lenders and such Advances
will (to the extent such Eurocurrency Rate Advances remain outstanding on such
day) automatically, on the last day of the then existing Interest Period
therefor, (i) if such Eurocurrency Rate Advances are denominated in Dollars,
Convert into Base Rate Advances and (ii) if such Eurocurrency Rate Advances are
denominated in any Major Currency, be redenominated into an Equivalent amount of
Dollars and be Converted into Base Rate Advances.
(d) Upon the occurrence and during the continuance of any Event of
Default under Section 6.01(a), (i) each Eurocurrency Rate Advance will (to the
extent such Eurocurrency Rate Advance remains outstanding on such day)
automatically, on the last day of the then existing Interest Period therefor,
(A) if such Eurocurrency Rate Advance is denominated in Dollars, be Converted
into a Base Rate Advance and (B) if such Eurocurrency Rate Advance is
denominated in any Major Currency, be redenominated into an Equivalent amount of
Dollars and Converted into a Base Rate Advance and (ii) the obligation of the
Lenders to make Eurocurrency Rate Advances shall be suspended.
(e) If the applicable Telerate Page is unavailable and fewer than two
Reference Banks furnish timely information to the Agent for determining the
Eurocurrency Rate or LIBO Rate for any Eurocurrency Rate Advances or LIBO Rate
Advances, as the case may be,
(i) the Agent shall forthwith notify the relevant Borrower and the
Lenders that the interest rate cannot be determined for such Eurocurrency
Rate Advances or LIBO Rate Advances, as the case may be,
(ii) with respect to Eurocurrency Rate Advances, each such Advance
will (to the extent such Eurocurrency Rate Advance remains outstanding on
such day) automatically, on the last day of the then existing Interest
Period therefor, (A) if such Eurocurrency Rate Advance is denominated in
Dollars, be prepaid by the applicable Borrower or be automatically
Converted into a Base Rate Advance and (B) if such Eurocurrency Rate
Advance is denominated in any Major Currency, be prepaid by the applicable
Borrower or be automatically redenominated into an Equivalent amount of
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Dollars and Converted into a Base Rate Advance (or if such Advance is then
a Base Rate Advance, will continue as a Base Rate Advance), and
(iii) the obligation of the Lenders to make Eurocurrency Rate Advances
or LIBO Rate Advances shall be suspended until the Agent shall notify the
Borrowers and the Lenders that the circumstances causing such suspension no
longer exist.
SECTION 2.09. Prepayments of Revolving Credit Advances. (a) Optional
Prepayments. Each Borrower may, upon notice to the Agent stating the proposed
date and aggregate principal amount of the prepayment, given not later than
11:00 A.M. (New York City time) on the second Business Day prior to the date of
such proposed prepayment, in the case of Eurocurrency Rate Advances, and not
later than 11:00 A.M. (New York City time) on the day of such proposed
prepayment, in the case of Base Rate Advances, and, if such notice is given,
such Borrower shall, prepay the outstanding principal amount of the Revolving
Credit Advances comprising part of the same Revolving Credit Borrowing in whole
or ratably in part, together with accrued interest to the date of such
prepayment on the principal amount prepaid; provided, however, that (x) each
partial prepayment shall be in an aggregate principal amount not less than
$10,000,000 or the Equivalent thereof in a Major Currency (determined on the
date notice of prepayment is given) or an integral multiple of $1,000,000 or the
Equivalent thereof in a Major Currency (determined on the date notice of
prepayment is given) in excess thereof and (y) in the event of any such
prepayment of a Eurocurrency Rate Advance other than on the last day of the
Interest Period therefor, such Borrower shall be obligated to reimburse the
Lenders in respect thereof pursuant to Section 9.04(c). Each notice of
prepayment by a Designated Subsidiary shall be given to the Administrative Agent
through the Company.
(b) Mandatory Prepayments. (i) If, on any date, the sum of (A) the
aggregate principal amount of all Advances denominated in Dollars then
outstanding plus (B) the Equivalent in Dollars (determined on the third Business
Day prior to such date) of the aggregate principal amount of all Advances
denominated in Foreign Currencies then outstanding exceeds 103% of the aggregate
Commitments of the Lenders on such date, the Company and each other Borrower, if
any, shall thereupon promptly prepay the outstanding principal amount of any
Advances owing by such Borrower in an aggregate amount sufficient to reduce such
sum to an amount not to exceed 100% of the aggregate Commitments of the Lenders
on such date, together with any interest accrued to the date of such prepayment
on the principal amounts prepaid and, in the case of any prepayment of a
Eurocurrency Rate Advance, a LIBO Rate Advance or a Local Rate Advance on a date
other than the last day of an Interest Period or at its maturity, any additional
amounts which such Borrower shall be obligated to reimburse to the Lenders in
respect thereof pursuant to Section 9.04(c). The Agent shall give prompt notice
of any prepayment required under this Section 2.09(b)(i) to the Borrowers and
the Lenders.
(ii) If, on any date, the sum of (A) the Equivalent in Dollars of the
aggregate principal amount of all Eurocurrency Rate Advances denominated in
Major Currencies then outstanding plus (B) the Equivalent in Dollars of the
aggregate principal amount of all Competitive Bid Advances denominated in
Foreign Currencies then outstanding (in each case, determined on the third
Business Day prior to such date), shall exceed 110% of $500,000,000, the Company
and each other Borrower shall prepay the outstanding principal amount of any
such Eurocurrency Rate Advances or any such LIBO Rate Advances owing by such
Borrower, on the
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last day of the Interest Periods relating to such Advances, in
an aggregate amount sufficient to reduce such sum to an amount not to exceed
$500,000,000, together with any interest accrued to the date of such prepayment
on the principal amounts prepaid. The Agent shall give prompt notice of any
prepayment required under this Section 2.09(b)(ii) to the Borrowers and the
Lenders.
SECTION 2.10. Increased Costs. (a) If, due to either (i) the
introduction of or any change in or in the interpretation of any law or
regulation or (ii) the compliance with any guideline or request from any central
bank or other governmental authority including, without limitation, any agency
of the European Union or similar monetary or multinational authority (whether or
not having the force of law), there shall be any increase in the cost to any
Lender of agreeing to make or making, funding or maintaining Eurocurrency Rate
Advances or LIBO Rate Advances (excluding for purposes of this Section 2.10 any
such increased costs resulting from (i) Taxes or Other Taxes (as to which
Section 2.13 shall govern) and (ii) changes in the basis of taxation of overall
net income or overall gross income by the United States or by the foreign
jurisdiction or state under the laws of which such Lender is organized or has
its Applicable Lending Office or any political subdivision thereof), then the
Borrower of such Advances shall from time to time, upon demand by such Lender
(with a copy of such demand to the Agent), pay to the Agent for the account of
such Lender additional amounts sufficient to compensate such Lender for such
increased cost. A certificate as to the amount of such increased cost, submitted
to such Borrower and the Agent by such Lender, shall be conclusive and binding
for all purposes, absent manifest error.
(b) If any Lender determines that compliance with any law or
regulation or any guideline or request from any central bank or other
governmental authority including, without limitation, any agency of the European
Union or similar monetary or multinational authority (whether or not having the
force of law) affects or would affect the amount of capital required or expected
to be maintained by such Lender or any corporation controlling such Lender and
that the amount of such capital is increased by or based upon the existence of
such Lender's commitment to lend hereunder and other commitments of this type,
then, upon demand by such Lender (with a copy of such demand to the Agent), the
Company shall pay to the Agent for the account of such Lender, from time to time
as specified by such Lender, additional amounts sufficient to compensate such
Lender or such corporation in the light of such circumstances, to the extent
that such Lender reasonably determines such increase in capital to be allocable
to the existence of such Lender's commitment to lend hereunder. A certificate as
to such amounts submitted to the Company and the Agent by such Lender shall be
conclusive and binding for all purposes, absent manifest error.
(c) Any Lender claiming any additional amounts payable pursuant to
this Section 2.10 shall, upon the written request of the Company delivered to
such Lender and the Agent, assign, pursuant to and in accordance with the
provisions of Section 9.06, all of its rights and obligations under this
Agreement and under the Notes to an Eligible Assignee selected by the Company;
provided, however, that (i) no Default shall have occurred and be continuing at
the time of such request and at the time of such assignment; (ii) the assignee
shall have paid to the assigning Lender the aggregate principal amount of, and
any interest accrued and unpaid to the date of such assignment on, the Note or
Notes of such Lender; (iii) the Company shall have paid to the assigning Lender
any and all facility fees and other fees payable to such Lender and all
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other accrued and unpaid amounts owing to such Lender under any provision of
this Agreement (including, but not limited to, any increased costs or other
additional amounts owing under this Section 2.10, and any indemnification for
Taxes under Section 2.13) as of the effective date of such assignment and (iv)
if the assignee selected by the Company is not an existing Lender, such assignee
or the Company shall have paid the processing and recordation fee required under
Section 9.06(a) for such assignment; provided further that the assigning
Lender's rights under Sections 2.10, 2.13 and 9.04, and its obligations under
Section 8.05, shall survive such assignment as to matters occurring prior to the
date of assignment.
SECTION 2.11. Illegality. Notwithstanding any other provision of this
Agreement, if any Lender shall notify the Agent that the introduction of or any
change in or in the interpretation of any law or regulation makes it unlawful,
or any central bank or other governmental authority asserts that it is unlawful,
for any Lender or its Eurocurrency Lending Office to perform its obligations
hereunder to make Eurocurrency Rate Advances in Dollars or any Major Currency or
LIBO Rate Advances in Dollars or in any Foreign Currency or to fund or maintain
Eurocurrency Rate Advances in Dollars or in any Major Currency or LIBO Rate
Advances in Dollars or in any Foreign Currency hereunder, (a) each such
Eurocurrency Rate Advance or such LIBO Rate Advance, as the case may be, will
automatically, upon such demand, (i) if such Eurocurrency Rate Advance or LIBO
Rate Advance is denominated in Dollars, be Converted into a Base Rate Advance or
an Advance that bears interest at the rate set forth in Section 2.07(a)(i), as
the case may be, and (ii) if such Eurocurrency Rate Advance or LIBO Rate Advance
is denominated in any Foreign Currency, be redenominated into an Equivalent
amount of Dollars and Converted into a Base Rate Advance or an Advance that
bears interest at the rate set forth in Section 2.07(a)(i), as the case may be,
and (b) the obligation of the Lenders to make such Eurocurrency Rate Advances or
such LIBO Rate Advances shall be suspended until the Agent shall notify the
Borrower and the Lenders that the circumstances causing such suspension no
longer exist.
SECTION 2.12. Payments and Computations. (a) Each Borrower shall make
each payment hereunder and under any Notes, except with respect to principal of,
interest on, and other amounts relating to, Advances denominated in a Foreign
Currency, not later than 11:00 A.M. (New York City time) on the day when due in
Dollars to the Agent at the applicable Agent's Account in same day funds. Each
Borrower shall make each payment hereunder and under any Notes with respect to
principal of, interest on, and other amounts relating to Advances denominated in
a Foreign Currency not later than 12:00 Noon (at the Payment Office for such
Foreign Currency) on the day when due in such Foreign Currency to the Agent in
same day funds by deposit of such funds to the applicable Agent's Account. The
Agent will promptly thereafter cause to be distributed like funds relating to
the payment of principal or interest or facility fees ratably (other than
amounts payable pursuant to Section 2.03, 2.05(b), 2.05(c), 2.10, 2.13, 2.16 or
9.04(c)) to the Lenders for the account of their respective Applicable Lending
Offices, and like funds relating to the payment of any other amount payable to
any Lender to such Lender for the account of its Applicable Lending Office, in
each case to be applied in accordance with the terms of this Agreement. Upon its
acceptance of an Assignment and Acceptance and recording of the information
contained therein in the Register pursuant to Section 9.06(c), from and after
the effective date specified in such Assignment and Acceptance, the Agent shall
make all payments hereunder and under any Notes in respect of the interest
assigned thereby to the Lender assignee thereunder, and the parties to such
Assignment and
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Acceptance shall make all appropriate adjustments in such payments for periods
prior to such effective date directly between themselves. Upon any Assuming
Lender becoming a Lender hereunder as a result of the effectiveness of an
extension of the Termination Date pursuant to Section 2.16, and upon the Agent's
receipt of such Lender's Assumption Agreement and recording the information
contained therein in the Register, from and after the Increase Date or the
Extension Date, as the case may be, the Agent shall make all payments hereunder
and under any Notes in respect of the interest assumed thereby to the Assuming
Lender.
(b) All computations of interest based on the Base Rate and of
facility fees shall be made by the Agent on the basis of a year of 365 or 366
days, as the case may be, all computations of interest based on the Eurocurrency
Rate or the Federal Funds Rate shall be made by the Agent on the basis of a year
of 360 days and all computations in respect of Competitive Bid Advances shall be
made by the Agent or the Sub-Agent, as the case may be, as specified in the
applicable Notice of Competitive Bid Borrowing (or, in each case of Advances
denominated in Foreign Currencies where market practice differs, in accordance
with market practice), in each case for the actual number of days (including the
first day but excluding the last day) occurring in the period for which such
interest or facility fees are payable. Each determination by the Agent of an
interest rate hereunder shall be conclusive and binding for all purposes, absent
manifest error.
(c) Whenever any payment hereunder or under the Notes shall be stated
to be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or facility fee, as the case
may be; provided, however, that, if such extension would cause payment of
interest on or principal of Eurocurrency Rate Advances or LIBO Rate Advances to
be made in the next following calendar month, such payment shall be made on the
next preceding Business Day.
(d) Unless the Agent shall have received notice from any Borrower
prior to the date on which any payment is due to the Lenders hereunder that such
Borrower will not make such payment in full, the Agent may assume that such
Borrower has made such payment in full to the Agent on such date and the Agent
may, in reliance upon such assumption, cause to be distributed to each Lender on
such due date an amount equal to the amount then due such Lender. If and to the
extent such Borrower shall not have so made such payment in full to the Agent,
each Lender shall repay to the Agent forthwith on demand such amount distributed
to such Lender together with interest thereon, for each day from the date such
amount is distributed to such Lender until the date such Lender repays such
amount to the Agent, at (i) the Federal Funds Rate in the case of Advances
denominated in Dollars or (ii) the cost of funds incurred by the Agent in
respect of such amount in the case of Advances denominated in Foreign
Currencies.
SECTION 2.13. Taxes. (a) Any and all payments by any Borrower
(including the Company in its capacity as a guarantor under Article VII hereof)
hereunder or under the Notes shall be made, in accordance with Section 2.12,
free and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding, in the case of each Lender and the Agent, net income
taxes imposed by the United States or any State thereof and taxes imposed on its
overall net income, and franchise taxes imposed on it in lieu of net income
taxes, by the jurisdiction
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under the laws of which such Lender or the Agent (as the case may be) is
organized or any political subdivision thereof and, in the case of each Lender,
taxes imposed on its overall net income, and franchise taxes imposed on it in
lieu of net income taxes, by the jurisdiction of such Lender's Applicable
Lending Office or any political subdivision thereof (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities in
respect of payments hereunder or under the Notes being hereinafter referred to
as "Taxes"). If any Borrower (including the Company in its capacity as a
guarantor under Article VII hereof) shall be required by law to deduct any Taxes
from or in respect of any sum payable hereunder or under any Note to any Lender
or the Agent, (i) the sum payable shall be increased as may be necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.13) such Lender or the Agent (as
the case may be) receives an amount equal to the sum it would have received had
no such deductions been made, (ii) such Borrower shall make such deductions and
(iii) such Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law.
(b) In addition, each Borrower agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies that arise from any payment made hereunder or under the Notes or
from the execution, delivery or registration of, performing under, or otherwise
with respect to, this Agreement or the Notes (hereinafter referred to as "Other
Taxes").
(c) Each Borrower shall indemnify each Lender and the Agent for the
full amount of Taxes or Other Taxes (including, without limitation, any taxes
imposed by any jurisdiction on amounts payable under this Section 2.13) imposed
on or paid by such Lender or the Agent (as the case may be) and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto; provided, however, that a Borrower shall not be obligated to pay any
amounts in respect of penalties, interest or expenses pursuant to this paragraph
that are payable solely as a result of (i) the failure on the part of the
pertinent Lender or the Agent to pay over those amounts received from the
Borrowers under this clause (c) or (ii) the gross negligence or willful
misconduct on the part of the pertinent Lender or the Agent. This
indemnification shall be made within 30 days from the date such Lender or the
Agent (as the case may be) makes written demand therefor. Each Lender agrees to
provide reasonably prompt notice to the Agent, the Company and any Borrower of
any imposition of Taxes or Other Taxes against such Lender; provided that
failure to give such notice shall not affect such Lender's rights to
indemnification hereunder. Each Lender agrees that it will, promptly upon a
request by the Company or a Borrower having made an indemnification payment
hereunder, furnish to the Company or such Borrower, as the case may be, such
evidence as is reasonably available to such Lender as to the payment of the
relevant Taxes or Other Taxes, and that it will, if requested by the Company or
such Borrower, cooperate with the Company or such Borrower, as the case may be,
in its efforts to obtain a refund or similar relief in respect of such payment.
(d) Within 30 days after the date of any payment of Taxes by a
Borrower under subsection (a) above, each Borrower shall furnish to the Agent,
at its address referred to in Section 9.02, the original or a certified copy of
a receipt evidencing payment thereof. In the case of any payment hereunder or
under the Notes by or on behalf of any Borrower through an account or branch
outside the United States or by or on behalf of any Borrower by a payor that is
not a United States person, if such Borrower determines that no Taxes are
payable in respect
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thereof, such Borrower shall furnish, or shall cause such payor to furnish, to
the Agent, at such address, an opinion of counsel acceptable to the Agent
stating that such payment is exempt from Taxes. For purposes of this subsection
(d) and subsection (e), the terms "United States" and "United States person"
shall have the meanings specified in Section 7701 of the Internal Revenue Code.
(e) Each Lender organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Initial Lender, on the date of the Assignment and
Acceptance pursuant to which it becomes a Lender in the case of each other
Lender and on the date it changes its Applicable Lending Office in the case of
any Lender, and from time to time thereafter as requested in writing by any
Borrower (unless a change in law renders such Lender unable lawfully to do so),
shall provide the Agent and each Borrower with two original Internal Revenue
Service forms W-8ECI or W-8BEN, as appropriate, or any successor or other form
prescribed by the Internal Revenue Service, certifying that such Lender is
exempt from or entitled to a reduced rate of United States withholding tax on
payments pursuant to this Agreement or the Notes. In addition, each Lender
further agrees to provide any Borrower with any form or document as any Borrower
may reasonably request which is required by any taxing authority outside the
United States in order to secure an exemption from, or reduction in the rate of,
withholding tax in such jurisdiction, if available to such Lender. If the forms
provided by a Lender at the time such Lender first becomes a party to this
Agreement or changes its Applicable Lending Office indicate a United States
interest withholding tax rate in excess of zero, withholding tax at such rate
shall be considered excluded from Taxes unless and until such Lender provides
the appropriate forms certifying that a lesser rate applies, whereupon
withholding tax at such lesser rate only shall be considered excluded from Taxes
for periods governed by such form; provided, however, that, in the case of a
Lender that initially becomes a party to this Agreement pursuant to an
assignment in accordance with Section 9.06 or a Lender that undertakes a change
in its Applicable Lending Office, the term Taxes shall include (in addition to
withholding taxes that may be imposed in the future or other amounts otherwise
includable in Taxes) United States withholding tax, if any, applicable on the
date of such assignment or change with respect to the assignee Lender or Lender
after the change in Applicable Lending Office, but only to the extent of United
States withholding tax included in Taxes, if any, applicable on the date of such
assignment or change with respect to the assignor Lender or Lender prior to such
change in Applicable Lending Office . If any form or document referred to in
this subsection (e) requires the disclosure of information, other than
information necessary to compute the tax payable and information required on the
date hereof by Internal Revenue Service form W-8ECI or W-8BEN, that a Lender
reasonably considers to be confidential, such Lender shall give notice thereof
to each Borrower and shall not be obligated to include in such form or document
such confidential information.
(f) For any period with respect to which a Lender has failed to
provide each Borrower with the appropriate form described in Section 2.13(e)
(other than if such failure is due to a change in law occurring subsequent to
the date on which a form originally was required to be provided), such Lender
shall not be entitled to indemnification under Section 2.13(a) or (c) with
respect to Taxes imposed by the United States by reason of such failure;
provided, however, that should a Lender become subject to Taxes because of its
failure to deliver a form required
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hereunder, each Borrower shall take such steps as such Lender shall reasonably
request to assist such Lender to recover such Taxes.
(g) If any Borrower is required to pay any additional amount to any
Lender or to the Agent or on behalf of any of them to any taxing authority
pursuant to this Section 2.13, such Lender shall, upon the written request of
the Company delivered to such Lender and the Agent, assign, pursuant to and in
accordance with the provisions of Section 9.06, all of its rights and
obligations under this Agreement and under the Notes to an Eligible Assignee
selected by the Company; provided, however, that (i) no Default shall have
occurred and be continuing at the time of such request and at the time of such
assignment; (ii) the assignee shall have paid to the assigning Lender the
aggregate principal amount of, and any interest accrued and unpaid to the date
of such assignment on, the Note or Notes of such Lender; (iii) the Company shall
have paid to the assigning Lender any and all facility fees and other fees
payable to such Lender and all other accrued and unpaid amounts owing to such
Lender under any provision of this Agreement (including, but not limited to, any
increased costs or other additional amounts owing under Section 2.10, and any
indemnification for Taxes under this Section 2.13) as of the effective date of
such assignment; and (iv) if the assignee selected by the Company is not an
existing Lender, such assignee or the Company shall have paid the processing and
recordation fee required under Section 9.06(a) for such assignment; provided
further that the assigning Lender's rights under Sections 2.10, 2.13 and 9.04,
and its obligations under Section 8.05, shall survive such assignment as to
matters occurring prior to the date of assignment.
SECTION 2.14. Sharing of Payments, Etc. If any Lender shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
setoff, if any, or otherwise) on account of the Revolving Credit Advances owing
to it (other than pursuant to Section 2.03, 2.05(b), 2.05(c), 2.10, 2.13, 2.16
or 9.04(c)) in excess of its ratable share of payments on account of the
Revolving Credit Advances obtained by all the Lenders, such Lender shall
forthwith purchase from the other Lenders such participations in the Revolving
Credit Advances owing to them as shall be necessary to cause such purchasing
Lender to share the excess payment ratably with each of them; provided, however,
that if all or any portion of such excess payment is thereafter recovered from
such purchasing Lender, such purchase from each Lender shall be rescinded and
such Lender shall repay to the purchasing Lender the purchase price to the
extent of such recovery together with an amount equal to such Lender's ratable
share (according to the proportion of (i) the amount of such Lender's required
repayment to (ii) the total amount so recovered from the purchasing Lender) of
any interest or other amount paid or payable by the purchasing Lender in respect
of the total amount so recovered. Each Borrower agrees that any Lender so
purchasing a participation from another Lender pursuant to this Section 2.14
may, to the fullest extent permitted by law, exercise all its rights of payment
(including the right of setoff, if any) with respect to such participation as
fully as if such Lender were the direct creditor of such Borrower in the amount
of such participation.
SECTION 2.15. Use of Proceeds. The proceeds of the Advances shall be
available (and each Borrower agrees that it shall use such proceeds) for general
corporate purposes of such Borrower and its Subsidiaries, including, without
limitation, backstop of commercial paper.
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SECTION 2.16. Extension of Termination Date. (a) At least 45 (but no
earlier than 60) days prior to the Termination Date then in effect and provided
all representations and warranties are true and correct in all material respects
and no Event of Default has occurred and is continuing, the Company may, at its
option, by written notice to the Agent, request that the Lenders extend the
Termination Date for an additional 364 days from the Termination Date then in
effect; provided, however, that the Company shall not have made the Term Loan
Election for Revolving Credit Advances outstanding on such Termination Date
prior to such time. Each Lender, in its sole discretion, shall consent or not
consent to such extension and shall notify the Agent of its consent or
nonconsent to such extension within 20 Business Days of notice of such request
from the Agent. If all of the Lenders consent in writing, the then applicable
Termination Date shall, effective as at such Termination Date (the "Extension
Date"), be extended for a period of 364 days from such Extension Date.
(b) If not all of the Lenders consent, pursuant to subsection (a) of
this Section 2.16, to an extension of the Termination Date then in effect (the
Lenders so consenting in writing being the "Consenting Lenders", and any Lender
not so consenting being a "Non-Consenting Lender"), the Company may:
(i) arrange for one or more Consenting Lenders or other Eligible
Assignees as Assuming Lenders to assume, effective on the Extension Date,
any Non-Consenting Lender's Commitment and all of the obligations of such
Lender under this Agreement thereafter arising, and effective on such
Extension Date, each such Consenting Lender or such Assuming Lender will be
substituted for such Non-Consenting Lender under this Agreement; provided,
however, that the amount of the Commitment of any such Assuming Lender as a
result of such substitution shall in no event be less than $10,000,000;
provided further that (i) any such Consenting Lender or Assuming Lender
shall have paid to such Non-Consenting Lender the aggregate principal
amount of, and any interest accrued and unpaid to the date of the
assignment on, the Advances of such Non-Consenting Lender; (ii) the Company
shall have paid to such Non-Consenting Lender any and all facility fees and
other fees payable to such Non-Consenting Lender and all other accrued and
unpaid amounts owing to such Non-Consenting Lender under any provision of
this Agreement (including, but not limited to, any increased costs or other
additional amounts owing under Section 2.10, and any indemnification for
Taxes under this Section 2.13) as of the effective date of such assignment;
and (iii) with respect to any such Assuming Lender, such Assuming Lender or
the Company shall have paid the applicable processing and recordation fee
required under Section 9.06(a) for such assignment; provided further that
such Non-Consenting Lender's rights under Sections 2.10, 2.13 and 9.04, and
its obligations under Section 8.05, shall survive such substitution as to
matters occurring prior to the date of substitution; provided further that,
on or prior to the tenth day prior to the Extension Date, (x) any such
Assuming Lender shall have delivered to the Company and the Agent an
Assumption Agreement in substantially the form of Exhibit D hereto, duly
executed by such Assuming Lender, such Non-Consenting Lender and the
Company, (y) any such Consenting Bank shall have delivered confirmation in
writing satisfactory to the Agent as to its increased Commitment and (z)
each Non-Consenting Lender being replaced pursuant to this clause (i) shall
have delivered to the Agent any Revolving Credit Note or Notes held by such
Non-Consenting Lender; and provided further that, if requested by any
Assuming Lender, each Borrower,
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at its own expense, shall have executed and delivered to the Agent no later
than 10:00 A.M. (New York City time) on the Extension Date, Revolving
Credit Notes payable to the order of each such Assuming Lender, if any,
dated as of the Extension Date and substantially in the form of Exhibit A-1
hereto; or
(ii) subject to the giving of notice to such Non-Consenting Lender at
least four days prior to the Extension Date, pay, prepay or cause to be
prepaid, on and effective as of the Extension Date, all principal of, and
interest accrued to the date of such payment on, Advances and all other
amounts owing to such Non-Consenting Lender hereunder (including, but not
limited to, any increased costs or other additional amounts owing under
Section 2.10 and any indemnification for Taxes under Section 2.13) and
terminate in whole any Non-Consenting Lender's Commitment, notwithstanding
the provisions of Section 2.05; and, upon such payment or prepayment, the
obligations of such Non-Consenting Lender hereunder shall, by the
provisions hereof, be released and discharged; provided, however, that such
Non-Consenting Lender's rights under Sections 2.10, 2.13 and 9.04, and its
obligations under Section 8.05 shall survive such release and discharge as
to matters occurring prior to the Extension Date.
(c) In the event that, on or prior to the then applicable Extension
Date, all Non-Consenting Lenders shall have been superseded by Consenting
Lenders or Assuming Lenders or shall have had their Commitments terminated
pursuant to subsection (b)(i) or (b)(ii) above, the Termination Date then in
effect shall be extended for the additional one-year period as described in
subsection (a) above, each Non-Consenting Lender shall have no further
Commitment hereunder, and each Assuming Lender, if any, shall thereafter be
substituted as a party to this Agreement and be a Lender for the purposes of
this Agreement, without any further acknowledgment by or the consent of the
Lenders. The Agent shall thereupon promptly deliver the new Revolving Credit
Notes to the respective Assuming Lenders requesting such Notes and record in the
Register the relevant information with respect to each Consenting Lender and
each such Assuming Lender.
(d) In the event that (x) as to a Non-Consenting Lender, neither
procedure contemplated by subsection (b)(i) or (b)(ii) above is implemented in a
timely basis or (y) the Company shall, by written notice to the Agent at least
four days prior to the Extension Date, withdraw its request for the extension of
the Termination Date then in effect, such request by the Company shall be deemed
not to have been made, all actions theretofore taken under subsection (b)(i) or
(b)(ii) above shall be deemed to be of no effect, the Agent shall return any
Revolving Credit Notes received from any Non-Consenting Lender to such
Non-Consenting Lender and all the rights and obligations of the parties shall
continue as if no such request had been made.
SECTION 2.17. Evidence of Debt. (a) Each Lender shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of each Borrower to such Lender resulting from each Revolving
Credit Advance owing to such Lender from time to time, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder in respect of Revolving Credit Advances. Each Borrower agrees that
upon request of any Lender to such Borrower (with a copy of such notice to the
Agent) that such Lender receive a Revolving Credit Note to evidence (whether for
purposes of pledge, enforcement or otherwise) the Revolving Credit Advances
owing to, or to be made by,
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such Lender, such Borrower shall promptly execute and deliver to such Lender a
Revolving Credit Note payable to the order of such Lender in a principal amount
up to the Commitment of such Lender.
(b) The Register maintained by the Agent pursuant to Section 9.06(d)
shall include a control account, and a subsidiary account for each Lender, in
which accounts (taken together) shall be recorded (i) the date and amount of
each Borrowing made hereunder, the Type of Advances comprising such Borrowing
and, if appropriate, the Interest Period applicable thereto, (ii) the terms of
each Assumption Agreement and each Assignment and Acceptance delivered to and
accepted by it, (iii) the amount of any principal or interest due and payable or
to become due and payable from each Borrower to each Lender hereunder and (iv)
the amount of any sum received by the Agent from each Borrower hereunder and
each Lender's share thereof.
(c) Entries made in good faith by the Agent in the Register pursuant
to subsection (b) above, and by each Lender in its account or accounts pursuant
to subsection (a) above, shall be prima facie evidence of the amount of
principal and interest due and payable or to become due and payable from the
Borrowers to, in the case of the Register, each Lender and, in the case of such
account or accounts, such Lender, under this Agreement, absent manifest error;
provided, however, that the failure of the Agent or such Lender to make an
entry, or any finding that an entry is incorrect, in the Register or such
account or accounts shall not limit or otherwise affect the obligations of any
Borrower under this Agreement.
ARTICLE III
CONDITIONS TO EFFECTIVENESS AND LENDING
SECTION 3.01. Conditions Precedent to Effectiveness of Sections 2.01
and 2.03. Sections 2.01 and 2.03 of this Agreement shall become effective on and
as of the first date (the "Effective Date") on which the following conditions
precedent have been satisfied:
(a) There shall have occurred no Material Adverse Change since
December 31, 2002, except as otherwise publicly disclosed prior to the date
hereof.
(b) There shall exist no action, suit, investigation, litigation or
proceeding affecting the Company or any of its Subsidiaries pending or to
the knowledge of the Company Threatened before any court, governmental
agency or arbitrator that (i) is reasonably likely to have a Material
Adverse Effect, other than the matters described on Schedule 3.01(b) hereto
(the "Disclosed Litigation") or (ii) purports to affect the legality,
validity or enforceability of this Agreement or any Note of the Company or
the consummation of the transactions contemplated hereby, and there shall
have been no adverse change in the status, or financial effect on the
Company or any of its Subsidiaries, of the Disclosed Litigation from that
described on Schedule 3.01(b) hereto.
(c) The Company shall have paid all accrued fees and expenses of the
Agent and the Lenders in respect of this Agreement.
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(d) On the Effective Date, the following statements shall be true and
the Agent shall have received a certificate signed by a duly authorized
officer of the Company, dated the Effective Date, stating that:
(i) The representations and warranties contained in Section 4.01
are correct on and as of the Effective Date, and
(ii) No event has occurred and is continuing that constitutes a
Default.
(e) The Agent shall have received on or before the Effective Date the
following, each dated such day, in form and substance satisfactory to the
Agent:
(i) The Revolving Credit Notes of the Company to the order of the
Lenders to the extent requested by any Lender pursuant to Section
2.17.
(ii) Certified copies of the resolutions of the Board of
Directors of the Company approving this Agreement and the Notes of the
Company, and of all documents evidencing other necessary corporate
action and governmental approvals, if any, with respect to this
Agreement and such Notes.
(iii) A certificate of the Secretary or an Assistant Secretary of
the Company certifying the names and true signatures of the officers
of the Company authorized to sign this Agreement and the Notes of the
Company and the other documents to be delivered hereunder.
(iv) A favorable opinion of Gail E. Lehman, Assistant General
Counsel of the Company, substantially in the form of Exhibit G hereto
and as to such other matters as any Lender through the Agent may
reasonably request.
(v) A favorable opinion of Shearman & Sterling LLP, counsel for
the Agent, substantially in the form of Exhibit I hereto.
(vi) Such other approvals, opinions or documents as any Lender,
through the Agent, may reasonably request.
SECTION 3.02. Conditions Precedent to Initial Borrowing. The
obligation of each Lender to make an Advance on the occasion of the initial
Borrowing hereunder is subject to the following conditions precedent:
(a) The Effective Date shall have occurred.
(b) The Company shall have terminated the commitments and paid in full
all outstanding obligations under the 364-Day Credit Agreement dated as of
November 27, 2002 among the Company, the lenders parties thereto and
Citibank, as administrative agent, as amended, and each Lender that is a
party to said credit agreement hereby waives any requirement of prior
notice to the termination of commitments or prepayment of obligations under
said credit agreement.
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(c) The Company shall have paid all accrued fees and expenses of the
Agent (including the billed fees and expenses of counsel to the Agent).
SECTION 3.03. Initial Loan to Each Designated Subsidiary. The
obligation of each Lender to make an initial Advance to each Designated
Subsidiary following any designation of such Designated Subsidiary as a Borrower
hereunder pursuant to Section 9.07 is subject to the Agent's receipt on or
before the date of such initial Advance of each of the following, in form and
substance satisfactory to the Agent and dated such date, and (except for the
Revolving Credit Notes) in sufficient copies for each Lender:
(a) The Revolving Credit Notes of such Borrower to the order of the
Lenders to the extent requested by any Lender pursuant to Section 2.17.
(b) Certified copies of the resolutions of the Board of Directors of
such Borrower (with a certified English translation if the original thereof
is not in English) approving this Agreement and the Notes of such Borrower,
and of all documents evidencing other necessary corporate action and
governmental approvals, if any, with respect to this Agreement and such
Notes.
(c) A certificate of the Secretary or an Assistant Secretary of such
Borrower certifying the names and true signatures of the officers of such
Borrower authorized to sign this Agreement and the Notes of such Borrower
and the other documents to be delivered hereunder.
(d) A certificate signed by a duly authorized officer of the Company,
dated as of the date of such initial Advance, certifying that such Borrower
shall have obtained all governmental and third party authorizations,
consents, approvals (including exchange control approvals) and licenses
required under applicable laws and regulations necessary for such Borrower
to execute and deliver this Agreement and the Notes and to perform its
obligations thereunder.
(e) The Designation Letter of such Designated Subsidiary,
substantially in the form of Exhibit E hereto.
(f) Evidence of the Process Agent's acceptance of its appointment
pursuant to Section 9.12(a) as the agent of such Borrower, substantially in
the form of Exhibit F hereto.
(g) A favorable opinion of counsel to such Designated Subsidiary,
dated the date of such initial Advance, substantially in the form of
Exhibit H hereto.
(h) Such other approvals, opinions or documents as any Lender, through
the Agent, may reasonably request.
SECTION 3.04. Conditions Precedent to Each Revolving Credit Borrowing.
The obligation of each Lender to make a Revolving Credit Advance on the occasion
of each Revolving Credit Borrowing shall be subject to the conditions precedent
that the Effective Date shall have occurred and on the date of such Revolving
Credit Borrowing (a) the following
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statements shall be true (and each of the giving of the applicable Notice of
Revolving Credit Borrowing and the acceptance by the Borrower requesting such
Revolving Credit Borrowing of the proceeds of such Revolving Credit Borrowing
shall constitute a representation and warranty by such Borrower that on the date
of such Borrowing such statements are true):
(i) the representations and warranties of the Company contained in
Section 4.01 (except the representations set forth in the last sentence of
subsection (e) thereof and in subsections (f), (h)-(l) and (n) thereof) are
correct on and as of the date of such Revolving Credit Borrowing, before
and after giving effect to such Revolving Credit Borrowing and to the
application of the proceeds therefrom, as though made on and as of such
date, and additionally, if such Revolving Credit Borrowing shall have been
requested by a Designated Subsidiary, the representations and warranties of
such Designated Subsidiary contained in its Designation Letter are correct
on and as of the date of such Revolving Credit Borrowing, before and after
giving effect to such Revolving Credit Borrowing and to the application of
the proceeds therefrom, as though made on and as of such date, and
(ii) no event has occurred and is continuing, or would result from
such Revolving Credit Borrowing or from the application of the proceeds
therefrom, that constitutes a Default;
and (b) the Agent shall have received such other approvals, opinions or
documents as any Lender through the Agent may reasonably request.
SECTION 3.05. Conditions Precedent to Each Competitive Bid Borrowing.
The obligation of each Lender that is to make a Competitive Bid Advance on the
occasion of a Competitive Bid Borrowing to make such Competitive Bid Advance as
part of such Competitive Bid Borrowing is subject to the conditions precedent
that (i) the Agent shall have received the written confirmatory Notice of
Competitive Bid Borrowing with respect thereto, (ii) on or before the date of
such Competitive Bid Borrowing, but prior to such Competitive Bid Borrowing, the
Agent shall have received a Competitive Bid Note payable to the order of such
Lender and substantially in the form of Exhibit A-2 hereto for each of the one
or more Competitive Bid Advances to be made by such Lender as part of such
Competitive Bid Borrowing, in a principal amount equal to the principal amount
of the Competitive Bid Advance to be evidenced thereby and otherwise on such
terms as were agreed to for such Competitive Bid Advance in accordance with
Section 2.03, and (iii) on the date of such Competitive Bid Borrowing the
following statements shall be true (and each of the giving of the applicable
Notice of Competitive Bid Borrowing and the acceptance by the Borrower
requesting such Competitive Bid Borrowing of the proceeds of such Competitive
Bid Borrowing shall constitute a representation and warranty by such Borrower
that on the date of such Competitive Bid Borrowing such statements are true):
(a) the representations and warranties of the Company contained in
Section 4.01 (except the representations set forth in the last sentence of
subsection (e) thereof and in subsections (f), (h)-(l) and (n) thereof) are
correct on and as of the date of such Competitive Bid Borrowing, before and
after giving effect to such Competitive Bid Borrowing and to the
application of the proceeds therefrom, as though made on and as of such
date, and, if such Competitive Bid Borrowing shall have been requested by a
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Designated Subsidiary, the representations and warranties of such
Designated Subsidiary contained in its Designation Letter are correct on
and as of the date of such Competitive Bid Borrowing, before and after
giving effect to such Competitive Bid Borrowing and to the application of
the proceeds therefrom, as though made on and as of such date,
(b) no event has occurred and is continuing, or would result from such
Competitive Bid Borrowing or from the application of the proceeds
therefrom, that constitutes a Default, and
(c) no event has occurred and no circumstance exists as a result of
which the information concerning such Borrower that has been provided to
the Agent and each Lender by such Borrower in connection herewith would
include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements contained therein, in the
light of the circumstances under which they were made, not misleading,
and (iv) the Agent shall have received such other approvals, opinions or
documents as any Lender through the Agent may reasonably request.
SECTION 3.06. Determinations Under Section 3.01. For purposes of
determining compliance with the conditions specified in Section 3.01, each
Lender shall be deemed to have consented to, approved or accepted or to be
satisfied with each document or other matter required thereunder to be consented
to or approved by or acceptable or satisfactory to the Lenders unless an officer
of the Agent responsible for the transactions contemplated by this Agreement
shall have received notice from such Lender prior to the date that the Company,
by notice to the Lenders, designates as the proposed Effective Date, specifying
its objection thereto. The Agent shall promptly notify the Lenders of the
occurrence of the Effective Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Company. The
Company represents and warrants as follows:
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware.
(b) The execution, delivery and performance by the Company of this
Agreement and the Notes of the Company, and the consummation of the
transactions contemplated hereby, are within the Company's corporate
powers, have been duly authorized by all necessary corporate action, and do
not and will not cause or constitute a violation of any provision of law or
regulation or any provision of the Certificate of Incorporation or By-Laws
of the Company or result in the breach of, or constitute a default or
require any consent under, or result in the creation of any lien, charge or
encumbrance upon any of the properties, revenues, or assets of the Company
pursuant to, any indenture or other agreement or instrument to which the
Company is a party or by which the Company or its property may be bound or
affected.
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(c) No authorization, consent, approval (including any exchange
control approval), license or other action by, and no notice to or filing
or registration with, any governmental authority, administrative agency or
regulatory body or any other third party is required for the due execution,
delivery and performance by the Company of this Agreement or the Notes of
the Company.
(d) This Agreement has been, and each of the Notes when delivered
hereunder will have been, duly executed and delivered by the Company. This
Agreement is, and each of the Notes of the Company when delivered hereunder
will be, the legal, valid and binding obligation of the Company enforceable
against the Company in accordance with their respective terms, except to
the extent that such enforcement may be limited by applicable bankruptcy,
insolvency and other similar laws affecting creditors' rights generally.
(e) The Consolidated balance sheet of the Company and its Consolidated
Subsidiaries as at December 31, 2002, and the related Consolidated
statements of income and cash flows of the Company and its Consolidated
Subsidiaries for the fiscal year then ended (together with the notes to the
financial statements of the Company and its Consolidated Subsidiaries and
the Consolidated statements of cash flows of the Company and its
Consolidated Subsidiaries), accompanied by an opinion of one or more
nationally recognized firms of independent public accountants, and the
Consolidated balance sheet of the Company and its Consolidated Subsidiaries
as at September 30, 2003, and the related Consolidated statements of income
and cash flows of the Company and its Consolidated Subsidiaries for the
nine months then ended, duly certified by the principal financial officer
of the Company, copies of which have been furnished to each Lender, are
materially complete and correct, and fairly present, subject, in the case
of said balance sheet as at September 30, 2003, and said statements of
income and cash flows for the nine months then ended, to year-end audit
adjustments, the Consolidated financial condition of the Company and its
Consolidated Subsidiaries as at such dates and the Consolidated results of
the operations of the Company and its Consolidated Subsidiaries for the
periods ended on such dates, all in accordance with GAAP consistently
applied, except as otherwise noted therein; the Company and its
Consolidated Subsidiaries do not have on such date any material contingent
liabilities, liabilities for taxes, unusual forward or long-term
commitments or unrealized or anticipated losses from any unfavorable
commitments, except as referred to or reflected or provided for in such
balance sheet or the notes thereto as at such date. No Material Adverse
Change has occurred since December 31, 2002, except as otherwise publicly
disclosed prior to the date hereof.
(f) There is no action, suit, investigation, litigation or proceeding,
including, without limitation, any Environmental Action, pending or to the
knowledge of the Company Threatened affecting the Company or any of its
Subsidiaries before any court, governmental agency or arbitrator that (i)
is reasonably likely to have a Material Adverse Effect (other than the
Disclosed Litigation), or (ii) purports to affect the legality, validity or
enforceability of this Agreement or any Note or the consummation of the
transactions contemplated hereby, and there has been no adverse change in
the status, or financial effect on the Company or any of its Subsidiaries,
of the Disclosed Litigation from that described on Schedule 3.01(b) hereto.
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(g) Following application of the proceeds of each Advance, not more
than 25 percent of the value of the assets (either of the Borrower of such
Advance or of such Borrower and its Subsidiaries on a Consolidated basis)
subject to the provisions of Section 5.02(a) or subject to any restriction
contained in any agreement or instrument between such Borrower and any
Lender or any Affiliate of any Lender relating to Debt and within the scope
of Section 6.01(e) will be margin stock (within the meaning of Regulation U
issued by the Board of Governors of the Federal Reserve System).
(h) The Company and each wholly-owned direct Subsidiary of the Company
have, in the aggregate, met their minimum funding requirements under ERISA
with respect to their Plans in all material respects and have not incurred
any material liability to the PBGC, other than for the payment of premiums,
in connection with such Plans.
(i) No ERISA Event has occurred or is reasonably expected to occur
with respect to any Plan of the Company or any of its ERISA Affiliates that has
resulted in or is reasonably likely to result in a material liability of the
Company or any of its ERISA Affiliates.
(j) The Schedules B (Actuarial Information) to the 2002 annual reports
(Form 5500 Series) with respect to each Plan of the Company or any of its ERISA
Affiliates, copies of which have been filed with the Internal Revenue Service
(and which will be furnished to any Bank through the Administrative Agent upon
the request of such Bank through the Administrative Agent to the Company), are
complete and accurate in all material respects and fairly present in all
material respects the funding status of such Plans at such date, and since the
date of each such Schedule B there has been no material adverse change in
funding status.
(k) Neither the Company nor any of its ERISA Affiliates has incurred
or reasonably expects to incur any Withdrawal Liability to any Multiemployer
Plan in an annual amount exceeding 6% of Net Tangible Assets of the Company and
its Consolidated Subsidiaries.
(l) Neither the Company nor any of its ERISA Affiliates has been
notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is
in reorganization or has been terminated, within the meaning of Title IV of
ERISA. No such Multiemployer Plan is reasonably expected to be in reorganization
or to be terminated, within the meaning of Title IV of ERISA, in a
reorganization or termination which might reasonably be expected to result in a
liability of the Company in an amount in excess of $5,000,000.
(m) The Company is not, and immediately after the application by the
Company of the proceeds of each Loan will not be, (a) an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended, or (b) a "holding company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
(n) To the best of the Company's knowledge, the operations and
properties of the Company and its Subsidiaries taken as a whole comply in
all material respects with all Environmental Laws, all necessary
Environmental Permits have been applied for or have been obtained and are
in effect for the operations and properties of the Company and its
Subsidiaries and the Company and its Subsidiaries are in compliance in all
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material respects with all such Environmental Permits. To the best of the
Company's knowledge no circumstances exist that would be reasonably likely
to form the basis of an Environmental Action against the Company or any of
its Subsidiaries or any of their properties that could have a Material
Adverse Effect.
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01. Affirmative Covenants. So long as any Advance shall
remain unpaid or any Lender shall have any Commitment hereunder, the Company
will:
(a) Compliance with Laws, Etc. Comply, and cause each Designated
Subsidiary to comply with all applicable laws, rules, regulations and
orders, such compliance to include, without limitation, compliance with
ERISA and Environmental Laws as provided in Section 5.01(j), if failure to
comply with such requirements would have a Material Adverse Effect.
(b) Payment of Taxes, Etc. Pay and discharge, and cause each
Designated Subsidiary to pay and discharge, all taxes, assessments and
governmental charges or levies imposed upon it or on its income or profits
or upon any of its property; provided, however, that neither the Company
nor any of its Subsidiaries shall be required to pay or discharge any such
tax, assessment, charge or claim that is being contested in good faith and
by proper proceedings and as to which appropriate reserves are being
maintained.
(c) Maintenance of Insurance. Maintain, and cause each Designated
Subsidiary to maintain, insurance with responsible and reputable insurance
companies or associations in such amounts and covering such risks as is
usually carried by companies engaged in similar businesses and owning
similar properties in the same general areas in which the Company or such
Subsidiary operates.
(d) Preservation of Corporate Existence, Etc. Preserve and maintain,
and cause each Designated Subsidiary to preserve and maintain, its
corporate existence and all its material rights (charter and statutory)
privileges and franchises; provided, however, that the Company and each
Designated Subsidiary may consummate any merger, consolidation or sale of
assets permitted under Section 5.02(b).
(e) Visitation Rights. At any reasonable time and from time to time
upon reasonable notice but not more than once a year unless an Event of
Default has occurred and is continuing, permit the Agent or any of the
Lenders or any agents or representatives thereof, to examine and make
copies of and abstracts from the records and books of account of, and visit
the properties of, the Company and any Designated Subsidiary, and to
discuss the affairs, finances and accounts of the Company and any
Designated Subsidiary with any of their officers or directors and with
their independent certified public accountants.
(f) Keeping of Books. Keep, and cause each Designated Subsidiary to
keep, proper books of record and account, in which full and correct entries
shall be made of all
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financial transactions and the assets and business of the Company and each
Designated Subsidiary in accordance with generally accepted accounting
principles in effect from time to time.
(g) Maintenance of Properties, Etc. Maintain and preserve, and cause
each Designated Subsidiary to maintain and preserve, all of its properties
that are used or useful in the conduct of its business in good working
order and condition, ordinary wear and tear excepted; provided, however,
that neither the Company nor any of its Designated Subsidiaries shall be
required to maintain or preserve any property if the failure to maintain or
preserve such property shall not have a Material Adverse Effect.
(h) Reporting Requirements. Furnish to the Agent (with a copy for each
Lender) and the Agent shall promptly forward the same to the Lenders:
(i) as soon as available and in any event within 60 days after
the end of each of the first three quarters of each fiscal year of the
Company, a Consolidated balance sheet of the Company and its
Consolidated Subsidiaries as of the end of such quarter and a
Consolidated statement of income and cash flows of the Company and its
Consolidated Subsidiaries for the period commencing at the end of the
previous fiscal year and ending with the end of such quarter, setting
forth in each case in comparative form the corresponding figures as of
the corresponding date and for the corresponding period of the
preceding fiscal year, all in reasonable detail and certified by the
principal financial officer, principal accounting officer, the
Vice-President and Treasurer or an Assistant Treasurer of the Company,
subject, however, to year-end auditing adjustments, which certificate
shall include a statement that such officer has no knowledge, except
as specifically stated, of any condition, event or act which
constitutes a Default;
(ii) as soon as available and in any event within 120 days after
the end of each fiscal year of the Company, a Consolidated balance
sheet of the Company and its Consolidated Subsidiaries as of the end
of such fiscal year and the related Consolidated statements of income
and cash flows of the Company and its Consolidated Subsidiaries for
such fiscal year setting forth in each case in comparative form the
corresponding figures as of the close of and for the preceding fiscal
year, all in reasonable detail and accompanied by an opinion of
independent public accountants of nationally recognized standing, as
to said financial statements and a certificate of the principal
financial officer, principal accounting officer, the Vice-President
and Treasurer or an Assistant Treasurer of the Company stating that
such officer has no knowledge, except as specifically stated, of any
condition, event or act which constitutes a Default;
(iii) copies of the Forms 8-K and 10-K reports (or similar
reports) which the Company is required to file with the Securities and
Exchange Commission of the United States of America, promptly after
the filing thereof;
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(iv) copies of each annual report, quarterly report, special
report or proxy statement mailed to substantially all of the
stockholders of the Company, promptly after the mailing thereof to the
stockholders;
(v) immediate notice of the occurrence of any Default of which
the principal financial officer, principal accounting officer, the
Vice-President and Treasurer or an Assistant Treasurer of the Company
shall have knowledge;
(vi) as soon as available and in any event within 15 days after
the Company or any of its ERISA Affiliates knows or has reason to know
that any ERISA Event has occurred, a statement of a senior officer of
the Company with responsibility for compliance with the requirements
of ERISA describing such ERISA Event and the action, if any, which the
Company or such ERISA Affiliate proposes to take with respect thereto;
(vii) at the request of any Lender, promptly after the filing
thereof with the Internal Revenue Service, copies of Schedule B
(Actuarial Information) to each annual report (Form 5500 series) filed
by the Company or any of its ERISA Affiliates with respect to each
Plan;
(viii) promptly after receipt thereof by the Company or any of
its ERISA Affiliates, copies of each notice from the PBGC stating its
intention to terminate any Plan or to have a trustee appointed to
administer any Plan;
(ix) promptly after such request, such other documents and
information relating to any Plan as any Lender may reasonably request
from time to time;
(x) promptly and in any event within five Business Days after
receipt thereof by the Company or any of its ERISA Affiliates from the
sponsor of a Multiemployer Plan, copies of each notice concerning (A)
(x) the imposition of Withdrawal Liability in an amount in excess of
$5,000,000 with respect to any one Multiemployer Plan or in an
aggregate amount in excess of $25,000,000 with respect to all such
Multiemployer Plans within any one calendar year or (y) the
reorganization or termination, within the meaning of Title IV of
ERISA, of any Multiemployer Plan that has resulted or might reasonably
be expected to result in Withdrawal Liability in an amount in excess
of $5,000,000 or of all such Multiemployer Plans that has resulted or
might reasonably be expected to result in Withdrawal Liability in an
aggregate amount in excess of $25,000,000 within any one calendar year
and (B) the amount of liability incurred, or that may be incurred, by
the Company or any of its ERISA Affiliates in connection with any
event described in such subclause (x) or (y);
(xi) promptly after the commencement thereof, notice of all
actions and proceedings before any court, governmental agency or
arbitrator affecting the Borrower or any Designated Subsidiary of the
type described in Section 4.01(f); and
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(xii) from time to time such further information respecting the
financial condition and operations of the Company and its Subsidiaries
as any Lender may from time to time reasonably request.
(i) Authorizations. Obtain, and cause each Designated Subsidiary to
obtain, at any time and from time to time all authorizations, licenses,
consents or approvals (including exchange control approvals) as shall now
or hereafter be necessary or desirable under applicable law or regulations
in connection with its making and performance of this Agreement and, upon
the request of any Lender, promptly furnish to such Lender copies thereof.
(j) Compliance with Environmental Laws. Comply, and cause each of its
Subsidiaries and all lessees and other Persons operating or occupying its
properties to comply, in all material respects, with all applicable
Environmental Laws and Environmental Permits; obtain and renew and cause
each of its Subsidiaries to obtain and renew all Environmental Permits
necessary for its operations and properties; and conduct, and cause each of
its Subsidiaries to conduct, any investigation, study, sampling and
testing, and undertake any cleanup, removal, remedial or other action
necessary to remove and clean up all Hazardous Materials from any of its
properties, in accordance with the requirements of all Environmental Laws;
provided, however, that neither the Company nor any of its Subsidiaries
shall be required to undertake any such cleanup, removal, remedial or other
action to the extent that its obligation to do so is being contested in
good faith and by proper proceedings and appropriate reserves are being
maintained with respect to such circumstances.
(k) Change of Control. If a Change of Control shall occur, within ten
calendar days after the occurrence thereof, provide the Agent with notice
thereof, describing therein in reasonable detail the facts and
circumstances giving rise to such Change in Control.
SECTION 5.02. Negative Covenants. So long as any Advance shall remain
unpaid or any Lender shall have any Commitment hereunder, the Company will not:
(a) Liens, Etc. Issue, assume or guarantee, or permit any of its
Subsidiaries owning Restricted Property to issue, assume or guarantee, any
Debt secured by Liens on or with respect to any Restricted Property without
effectively providing that its obligations to the Lenders under this
Agreement and any of the Notes shall be secured equally and ratably with
such Debt so long as such Debt shall be so secured, except that the
foregoing shall not apply to:
(i) Liens affecting property of the Company or any of its
Subsidiaries existing on the Effective Date in effect as of the date
hereof or of any corporation existing at the time it becomes a
Subsidiary of the Company or at the time it is merged into or
consolidated with the Company or a Subsidiary of the Company;
(ii) Liens on property of the Company or its Subsidiaries
existing at the time of acquisition thereof or incurred to secure the
payment of all or part of
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the purchase price thereof or to secure Debt incurred prior to, at the
time of or within 24 months after acquisition thereof for the purpose
of financing all or part of the purchase price thereof;
(iii) Liens on property of the Company or its Subsidiaries (in
the case of property that is, in the opinion of the Board of Directors
of the Company, substantially unimproved for the use intended by the
Company) to secure all or part of the cost of improvement thereof, or
to secure Debt incurred to provide funds for any such purpose;
(iv) Liens which secure only Debt owing by a Subsidiary of the
Company to the Company or to another Subsidiary of the Company;
(v) Liens in favor of the United States of America, any State,
any foreign country, or any department, agency, instrumentality, or
political subdivisions of any such jurisdiction, to secure partial,
progress, advance or other payments pursuant to any contract or
statute or to secure any Debt incurred for the purpose of financing
all or any part of the purchase price or cost of constructing or
improving the property subject thereto, including, without limitation,
Liens to secure Debt of the pollution control or industrial revenue
bond type; or
(vi) any extension, renewal or replacement (or successive
extensions, renewals or replacements), in whole or in part, of any
Lien referred to in the foregoing clauses (i) to (v) inclusive of any
Debt secured thereby, provided that the principal amount of Debt
secured thereby shall not exceed the principal amount of Debt so
secured at the time of such extension, renewal or replacement, and
that such extension, renewal or replacement Lien shall be limited to
all or part of the property which secured the Lien extended, renewed
or replaced (plus improvements on such property);
provided, however, that, the Company and any one or more Subsidiaries
owning Restricted Property may issue, assume or guarantee Debt secured by
Liens which would otherwise be subject to the foregoing restrictions in an
aggregate principal amount which, together with the aggregate outstanding
principal amount of all other Debt of the Company and its Subsidiaries
owning Restricted Property that would otherwise be subject to the foregoing
restrictions (not including Debt permitted to be secured under clause (i)
through (vi) above) and the aggregate value of the Sale and Leaseback
Transactions in existence at such time, does not at any one time exceed 10%
of the Net Tangible Assets of the Company and its Consolidated
Subsidiaries; and provided further that the following type of transaction,
among others, shall not be deemed to create Debt secured by Liens: Liens
required by any contract or statute in order to permit the Company or any
of its Subsidiaries to perform any contract or subcontract made by it with
or at the request of the United States of America, any foreign country or
any department, agency or instrumentality of any of the foregoing
jurisdictions.
(b) Mergers, Etc. Merge or consolidate with or into, or convey,
transfer, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) all or
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substantially all of its assets (whether now owned or hereafter acquired)
to, any Person; provided, however, that the Company may merge or
consolidate with any other Person so long as the Company is the surviving
corporation and so long as no Default shall have occurred and be continuing
at the time of such proposed transaction or would result therefrom.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of the following events
("Events of Default") shall occur and be continuing:
(a) Any Borrower shall fail to pay: (i) any principal of any Advance
when the same becomes due and payable; (ii) any facility fees or any
interest on any Advance payable under this Agreement or any Note within
three Business Days after the same becomes due and payable; or (iii) any
other fees or other amounts payable under this Agreement or any Notes
within 30 days after the same becomes due and payable other than those fees
and amounts the liabilities for which are being contested in good faith by
such Borrower and which have been placed in Escrow by such Borrower; or
(b) Any representation or warranty made (or deemed made) by any
Borrower (or any of its officers) in connection with this Agreement or by
any Designated Subsidiary in the Designation Letter pursuant to which such
Designated Subsidiary became a Borrower hereunder shall prove to have been
incorrect in any material respect when made (or deemed made); or
(c) The Company shall repudiate its obligations under, or shall
default in the due performance or observance of, any term, covenant or
agreement contained in Article VII of this Agreement; or
(d) (i) The Company shall fail to perform or observe any other term,
covenant or agreement contained in Section 5.02(a) and such failure shall
remain unremedied for a period of 30 days after any Lender shall have given
notice thereof to the Company (through the Agent), or (ii) the Company or
any other Borrower shall fail to perform or to observe any other term,
covenant or agreement contained in this Agreement on its part to be
performed or observed and such failure shall remain unremedied for a period
of 30 days after any Lender shall have given notice thereof to the relevant
Borrower or, in the case of the Company, any of the principal financial
officer, the principal accounting officer, the Vice-President and Treasurer
or an Assistant Treasurer of the Company, and in the case of any other
Borrower, a responsible officer of such Borrower, first has knowledge of
such failure; or
(e) (i) The Company or any of its Consolidated or Designated
Subsidiaries shall fail to pay any principal of or premium or interest on
any Debt (other than Debt owed to the Company or its Subsidiaries or
Affiliates) that is outstanding in a principal amount of at least
$150,000,000 in the aggregate (but excluding Debt outstanding
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hereunder and Debt owed by such party to any bank, financial institution or
other institutional lender to the extent the Borrower or any Subsidiary has
deposits with such bank, financial institution or other institutional
lender sufficient to repay such Debt) of the Company or such Subsidiary (as
the case may be), when the same becomes due and payable (whether by
scheduled maturity, required prepayment, acceleration, demand or
otherwise), and such failure shall continue after the applicable grace
period, if any, specified in the agreement or instrument relating to such
Debt, or (ii) any other event shall occur or condition shall exist under
any agreement or instrument relating to any such Debt and shall continue
after the applicable grace period, if any, specified in such agreement or
instrument, if the effect of such event or condition is to accelerate, or
to permit the acceleration of, the maturity of such Debt, or (iii) any such
Debt shall be declared to be due and payable, or required to be prepaid or
redeemed (other than by a regularly scheduled required prepayment or
redemption), purchased or defeased, or an offer to prepay, redeem, purchase
or defease such Debt shall be required to be made, in each case prior to
the stated maturity thereof; provided, however, that, for purposes of this
Section 6.0l(e), in the case of (x) Debt of any Person (other than the
Company or one of its Consolidated Subsidiaries) which the Company has
guaranteed and (y) Debt of Persons (other than the Company or one of its
Consolidated Subsidiaries) the payment of which is secured by a Lien on
property of the Company or such Subsidiary, such Debt shall be deemed to
have not been paid when due or to have been declared to be due and payable
only when the Company or such Subsidiary, as the case may be, shall have
failed to pay when due any amount which it shall be obligated to pay with
respect to such Debt; provided further, however, that any event or
occurrence described in this subsection (e) shall not be an Event of
Default if (A) such event or occurrence relates to the Debt of any
Subsidiary of the Company located in China, India, the Commonwealth of
Independent States or Turkey (collectively, the "Exempt Countries"), (B)
such Debt is not guaranteed or supported in any legally enforceable manner
by any Borrower or by any Subsidiary or Affiliate of the Company located
outside the Exempt Countries, (C) such event or occurrence is due to the
direct or indirect action of any government entity or agency in any Exempt
Country and (D) as of the last day of the calendar quarter immediately
preceding such event or occurrence, the book value of the assets of such
Subsidiary does not exceed $150,000,000 and the aggregate book value of the
assets of all Subsidiaries of the Company located in Exempt Countries the
Debt of which would cause an Event of Default to occur but for the effect
of this proviso does not exceed $500,000,000; or
(f) The Company or any of its Designated or Consolidated Subsidiaries
shall generally not pay its debts as such debts become due, or shall admit
in writing its inability to pay its debts generally, or shall make a
general assignment for the benefit of creditors; or any proceeding shall be
instituted by or against the Company or any such Subsidiaries seeking to
adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition
of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee, custodian or other
similar official for it or for any substantial part of its property and, in
the case of any such proceeding instituted against it (but not instituted
by it), either such proceeding shall remain undismissed or unstayed for a
period of 30 days, or any of the actions sought in such proceeding
(including, without limitation, the entry of
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an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, it or for any substantial part of
its property) shall occur; or the Company or any such Subsidiaries shall
take any corporate action to authorize any of the actions set forth above
in this subsection (f); provided, however, that any event or occurrence
described in this subsection (f) shall not be an Event of Default if (A)
such event or occurrence relates to any Subsidiary of the Company located
in an Exempt Country, (B) the Debt of such Subsidiary is not guaranteed or
supported in any legally enforceable manner by any Borrower or by any
Subsidiary or Affiliate of the Company located outside the Exempt
Countries, (C) such event or occurrence is due to the direct or indirect
action of any government entity or agency in any Exempt Country and (D) as
of the last day of the calendar quarter immediately preceding such event or
occurrence, the book value of the assets of such Subsidiary does not exceed
$150,000,000 and the aggregate book value of the assets of all Subsidiaries
of the Company located in Exempt Countries with respect to which the
happening of the events or occurrences described in this subsection (f)
would cause an Event of Default to occur but for the effect of this proviso
does not exceed $500,000,000; or
(g) Any judgment or order for the payment of money in excess of
$150,000,000 shall be rendered against the Company or any of its
Subsidiaries and enforcement proceedings shall have been commenced by any
creditor upon such judgment or order and there shall be any period of 10
consecutive days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not be in effect;
provided, however, that any such judgment or order shall not be an Event of
Default under this Section 6.01(g) if (A) such judgment or order is
rendered against any Subsidiary of the Company located in an Exempt
Country, (B) the Debt of such Subsidiary is not guaranteed or supported in
any legally enforceable manner by any Borrower or by any Subsidiary or
Affiliate of the Company located outside the Exempt Countries, (C) such
judgment or order is due to the direct or indirect action of any government
entity or agency in any Exempt Country and (D) as of the last day of the
calendar quarter immediately preceding the tenth consecutive day of the
stay period referred to above, the book value of the assets of such
Subsidiary does not exceed $150,000,000 and the aggregate book value of the
assets of all Subsidiaries of the Company located in Exempt Countries the
judgments and orders against which would cause an Event of Default to occur
but for the effect of this proviso does not exceed $500,000,000; or
(h) Any non-monetary judgment or order shall be rendered against the
Company or any of its Subsidiaries that is reasonably likely to have a
Material Adverse Effect, and enforcement proceedings shall have been
commenced by any Person upon such judgment or order and there shall be any
period of 10 consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be
in effect; or
(i) Any license, consent, authorization or approval (including
exchange control approvals) now or hereafter necessary to enable the
Company or any Designated Subsidiary to comply with its obligations herein
or under any Notes of such Borrower shall be modified, revoked, withdrawn,
withheld or suspended; or
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(j) (i) Any ERISA Event shall have occurred with respect to a Plan of
any Borrower or any of its ERISA Affiliates and the sum (determined as of
the date of occurrence of such ERISA Event) of the Insufficiency of such
Plan and the Insufficiency of any and all other Plans of the Borrowers and
their ERISA Affiliates with respect to which an ERISA Event shall have
occurred and then exist (or the liability of the Borrowers and their ERISA
Affiliates related to such ERISA Event) exceeds $150,000,000; or (ii) any
Borrower or any of its ERISA Affiliates shall be in default, as defined in
Section 4219(c)(5) of ERISA, with respect to any payment of Withdrawal
Liability and the sum of the outstanding balance of such Withdrawal
Liability and the outstanding balance of any other Withdrawal Liability
that any Borrower or any of its ERISA Affiliates has incurred exceeds 6% of
Net Tangible Assets of the Company and its Consolidated Subsidiaries; or
(iii) any Borrower or any of its ERISA Affiliates shall have been notified
by the sponsor of a Multiemployer Plan of such Borrower or any of its ERISA
Affiliates that such Multiemployer Plan is in reorganization or is being
terminated, within the meaning of Title IV of ERISA, and as a result of
such reorganization or termination the aggregate annual contributions of
the Borrowers and their ERISA Affiliates to all Multiemployer Plans that
are then in reorganization or being terminated have been or will be
increased over the amounts contributed to such Multiemployer Plans for the
plan years of such Multiemployer Plans immediately preceding the plan year
in which such reorganization or termination occurs by an amount exceeding
$150,000,000; or
then, and (i) in any such event (except as provided in clause (ii) below), the
Agent (A) shall at the request, or may with the consent, of the Majority
Lenders, by notice to the Company, declare the obligation of each Lender to make
Advances to be terminated, whereupon the same shall forthwith terminate, and (B)
shall at the request, or may with the consent, of the Majority Lenders, by
notice to the Company, declare the Advances, all interest thereon and all other
amounts payable under this Agreement to be forthwith due and payable, whereupon
the Advances, all such interest and all such amounts shall become and be
forthwith due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Borrowers
and (ii) in the case of the occurrence of any Event of Default described in
clause (i) or (ii) of Section 6.01(a), the Agent shall, at the request, or may
with the consent, of the Lenders which have made or assumed under this Agreement
at least 66-2/3% of the aggregate principal amount (based in respect of
Competitive Bid Advances denominated in Foreign Currencies on the Equivalent in
Dollars on the date of such request) of Competitive Bid Advances then
outstanding and to whom such Advances are owed, by notice to the Company,
declare the full unpaid principal of and accrued interest on all Competitive Bid
Advances hereunder and all other obligations of the Borrowers hereunder to be
immediately due and payable, whereupon such Advances and such obligations shall
be immediately due and payable, without presentment, demand, protest or other
further notice of any kind, all of which are hereby expressly waived by the
Borrowers; provided, however, that in the event of an actual or deemed entry of
an order for relief with respect to any Borrower under the United States
Bankruptcy Code of 1978, as amended, (x) the obligation of each Lender to make
Advances shall automatically be terminated and (y) the Advances, all such
interest and all such amounts shall automatically become and be due and payable,
without presentment, demand, protest or any notice of any kind, all of which are
hereby expressly waived by the Borrowers.
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ARTICLE VII
GUARANTEE
SECTION 7.01. Unconditional Guarantee. For valuable consideration,
receipt whereof is hereby acknowledged, and to induce each Lender to make
Advances to the Designated Subsidiaries and to induce the Agent to act
hereunder, the Company hereby unconditionally and irrevocably guarantees to each
Lender and the Agent that:
(a) the principal of and interest on each Advance to each Designated
Subsidiary shall be promptly paid in full when due (whether at stated
maturity, by acceleration or otherwise) in accordance with the terms
hereof, and, in case of any extension of time of payment, in whole or in
part, of such Advance, that all such sums shall be promptly paid when due
(whether at stated maturity, by acceleration or otherwise) in accordance
with the terms of such extension; and
(b) all other amounts payable hereunder by any Designated Subsidiary
to any Lender or the Agent or the Sub-Agent, as the case may be, shall be
promptly paid in full when due in accordance with the terms hereof (the
obligations of the Designated Subsidiaries under these subsections (a) and
(b) of this Section 7.01 being the "Obligations").
In addition, the Company hereby unconditionally and irrevocably agrees that upon
default in the payment when due (whether at stated maturity, by acceleration or
otherwise) of any principal of, or interest on, any Advance to any Designated
Subsidiary or such other amounts payable by any Designated Subsidiary to any
Lender or the Agent, the Company will forthwith pay the same, without further
notice or demand.
SECTION 7.02. Guarantee Absolute. The Company guarantees that the
Obligations will be paid strictly in accordance with the terms of this
Agreement, regardless of any law, regulation or order now or hereafter in effect
in any jurisdiction affecting any of such terms or the rights of any Lender or
the Agent with respect thereto. The liability of the Company under this
guarantee shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of this Agreement or any
other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or
waiver of or any consent to departure from this Agreement (including,
without limitation, any extension of the Termination Date pursuant to
Section 2.16);
(c) any exchange, release or non-perfection of any collateral, or any
release or amendment or waiver of or consent to departure from any other
guaranty, for all or any of the Obligations; or
(d) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, the Company, any Borrower or a guarantor.
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This guarantee shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Obligations is rescinded or must
otherwise be returned by any of the Lenders or the Agent upon the insolvency,
bankruptcy or reorganization of the Company or any Borrower or otherwise, all as
though such payment had not been made.
SECTION 7.03. Waivers. The Company hereby expressly waives diligence,
presentment, demand for payment, protest, any requirement that any right or
power be exhausted or any action be taken against any Designated Subsidiary or
against any other guarantor of all or any portion of the Advances, and all other
notices and demands whatsoever.
SECTION 7.04. Remedies. Each of the Lenders and the Agent may pursue
its respective rights and remedies under this Article VII and shall be entitled
to payment hereunder notwithstanding any other guarantee of all or any part of
the Advances to the Designated Subsidiaries, and notwithstanding any action
taken by any such Lender or the Agent to enforce any of its rights or remedies
under such other guarantee, or any payment received thereunder. The Company
hereby irrevocably waives any claim or other right that it may now or hereafter
acquire against any Designated Subsidiary that arises from the existence,
payment, performance or enforcement of the Company's obligations under this
Article VII, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification and any right to
participate in any claim or remedy of the Agent or the Lenders against any
Designated Subsidiary, whether or not such claim, remedy or right arises in
equity or under contract, statute or common law, including, without limitation,
the right to take or receive from the Designated Subsidiary, directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security on account of such claim, remedy or right. If any amount
shall be paid to the Company in violation of the preceding sentence at any time
when all the Obligations shall not have been paid in full, such amount shall be
held in trust for the benefit of the Lenders and the Agent and shall forthwith
be paid to the Agent for its own account and the accounts of the respective
Lenders to be credited and applied to the Obligations, whether matured or
unmatured, in accordance with the terms of this Agreement, or to be held as
collateral for any Obligations or other amounts payable under this Agreement
thereafter arising. The Company acknowledges that it will receive direct and
indirect benefits from the financing arrangements contemplated by this Agreement
and that the waiver set forth in this section is knowingly made in contemplation
of such benefits.
SECTION 7.05. No Stay. The Company agrees that, as between (a) the
Company and (b) the Lenders and the Agent, the Obligations of any Designated
Subsidiary guaranteed by the Company hereunder may be declared to be forthwith
due and payable as provided in Article VI hereof for purposes of this Article
VII by declaration to the Company as guarantor notwithstanding any stay,
injunction or other prohibition preventing such declaration as against such
Designated Subsidiary and that, in the event of such declaration to the Company
as guarantor, such Obligations (whether or not due and payable by such
Designated Subsidiary), shall forthwith become due and payable by the Company
for purposes of this Article VII.
SECTION 7.06. Survival. This guarantee is a continuing guarantee and
shall (a) remain in full force and effect until payment in full (after the
Termination Date) of the Obligations and all other amounts payable under this
guaranty, (b) be binding upon the Company, its successors and assigns, (c) inure
to the benefit of and be enforceable by each
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Lender (including each Assuming Lender and each assignee Lender pursuant to
Section 9.06) and the Agent and their respective successors, transferees and
assigns and (d) shall be reinstated if at any time any payment to a Lender or
the Agent hereunder is required to be restored by such Lender or the Agent.
Without limiting the generality of the foregoing clause (c), each Lender may
assign or otherwise transfer its interest in any Advance to any other person or
entity, and such other person or entity shall thereupon become vested with all
the rights in respect thereof granted to such Lender herein or otherwise.
ARTICLE VIII
THE AGENT
SECTION 8.01. Authorization and Action. Each Lender hereby appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers and discretion under this Agreement as are delegated to the
Agent by the terms hereof, together with such powers and discretion as are
reasonably incidental thereto. As to any matters not expressly provided for by
this Agreement (including, without limitation, enforcement or collection of the
Notes), the Agent shall not be required to exercise any discretion or take any
action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Majority Lenders, and such instructions shall be binding upon all Lenders
and all holders of Notes; provided, however, that the Agent shall not be
required to take any action that exposes the Agent to personal liability or that
is contrary to this Agreement or applicable law. The Agent agrees to give to
each Lender prompt notice of each notice given to it by any Borrower pursuant to
the terms of this Agreement.
SECTION 8.02. Agent's Reliance, Etc. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them under or in connection with this Agreement,
except for its or their own gross negligence or willful misconduct. Without
limitation of the generality of the foregoing, the Agent: (a) may treat the
Lender that made any Advance as the holder of the Debt resulting therefrom until
the Agent receives and accepts an Assignment and Acceptance entered into by such
Lender, as assignor, and an Eligible Assignee, as assignee, as provided in
Section 9.06; (b) may consult with legal counsel (including counsel for the
Company), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice of such counsel, accountants or experts; (c)
makes no warranty or representation to any Lender and shall not be responsible
to any Lender for any statements, warranties or representations (whether written
or oral) made in or in connection with this Agreement; (d) shall not have any
duty to ascertain or to inquire as to the performance or observance of any of
the terms, covenants or conditions of this Agreement on the part of any Borrower
or to inspect the property (including the books and records) of any Borrower;
(e) shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
any other instrument or document furnished pursuant hereto; and (f) shall incur
no liability under or in respect of this Agreement by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telecopier,
telegram or telex) believed by it to be genuine and signed or sent by the proper
party or parties.
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SECTION 8.03. Citibank and Affiliates. With respect to its Commitment,
the Advances made by it and the Note issued to it, Citibank shall have the same
rights and powers under this Agreement as any other Lender and may exercise the
same as though it were not the Agent; and the term "Lender" or "Lenders" shall,
unless otherwise expressly indicated, include Citibank in its individual
capacity. Citibank and its Affiliates may accept deposits from, lend money to,
act as trustee under indentures of, accept investment banking engagements from
and generally engage in any kind of business with, the Company, any of its
Subsidiaries and any Person who may do business with or own securities of the
Company or any such Subsidiary, all as if Citibank were not the Agent and
without any duty to account therefor to the Lenders.
SECTION 8.04. Lender Credit Decision. Each Lender acknowledges that it
has, independently and without reliance upon the Agent or any other Lender and
based on the financial statements referred to in Section 4.01 and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the Agent or
any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.
SECTION 8.05. Indemnification. The Lenders agree to indemnify the
Agent (to the extent not reimbursed by a Borrower), ratably according to the
respective principal amounts of the Revolving Credit Advances then owed to each
of them (or if no Revolving Credit Advances are at the time outstanding, ratably
according to the respective amounts of their Commitments), from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever that may be imposed on, incurred by, or asserted against the Agent in
any way relating to or arising out of this Agreement or any action taken or
omitted by the Agent under this Agreement, provided that no Lender shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the Agent's gross negligence or willful misconduct. Without limitation of
the foregoing, each Lender agrees to reimburse the Agent promptly upon demand
for its ratable share of any out-of-pocket expenses (including counsel fees)
incurred by the Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, to the extent that the Agent
is not reimbursed for such expenses by a Borrower.
SECTION 8.06. Successor Agent. The Agent may resign at any time by
giving written notice thereof to the Lenders and the Company and may be removed
at any time with or without cause by the Majority Lenders. The Company may at
any time, by notice to the Agent, propose a successor Agent (which shall meet
the criteria described below) specified in such notice and request that the
Lenders be notified thereof by the Agent with a view to their removal of the
Agent and their appointment of such successor Agent; the Agent agrees to forward
any such notice to the Lenders promptly upon its receipt by the Agent. Upon any
such resignation or removal, the Majority Lenders shall have the right to
appoint a successor Agent. If no successor Agent shall have been so appointed by
the Majority Lenders, and shall have accepted such appointment, within 30 days
after the retiring Agent's giving of notice of resignation or the
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Majority Lenders' removal of the retiring Agent, then the retiring Agent may, on
behalf of the Lenders, appoint a successor Agent, which shall be a commercial
bank organized under the laws of the United States of America or of any State
thereof and having a combined capital and surplus of at least $500,000,000. Upon
the acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, discretion, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations under this
Agreement. After any retiring Agent's resignation or removal hereunder as Agent,
the provisions of this Article VIII shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement.
SECTION 8.07. Sub-Agent. The Sub-Agent has been designated under this
Agreement to carry out duties of the Agent. The Sub-Agent shall be subject to
each of the obligations in this Agreement to be performed by the Sub-Agent, and
each of the Borrowers and the Lenders agrees that the Sub-Agent shall be
entitled to exercise each of the rights and shall be entitled to each of the
benefits of the Agent under this Agreement as relate to the performance of its
obligations hereunder.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Amendments, Etc. No amendment or waiver of any provision
of this Agreement or the Revolving Credit Notes, nor consent to any departure by
any Borrower therefrom, shall in any event be effective unless the same shall be
in writing and signed by the Majority Lenders, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; provided, however, that no amendment, waiver or consent shall,
unless in writing and signed by all the Lenders, do any of the following: (a)
increase the Commitments of the Lenders or subject the Lenders to any additional
obligations, (b) reduce the principal of, or interest on, the Revolving Credit
Advances or any fees or other amounts payable hereunder, (c) postpone any date
fixed for any payment of principal of, or interest on, the Revolving Credit
Advances or any fees or other amounts payable hereunder (other than as permitted
by Section 2.16 to the extent any Lender consents thereunder), (d) release the
Company from any of its obligations under Article VII, (e) require the duration
of an Interest Period to be nine months if such period is not available to all
Lenders or (f) amend this Section 9.01; and provided further that no amendment,
waiver or consent shall, unless in writing and signed by the Agent in addition
to the Lenders required above to take such action, affect the rights or duties
of the Agent under this Agreement or any Note.
SECTION 9.02. Notices, Etc. (a) All notices and other communications
provided for hereunder shall be in writing (including telecopier, telegraphic or
telex communication) and mailed (return receipt requested), telecopied,
telegraphed, telexed or delivered, if to the Company or to any Designated
Subsidiary, at the Company's address at 101 Columbia Road, Morristown, New
Jersey 07962-1219, Attention: Assistant Treasurer; if to any Initial Lender, at
its Domestic Lending Office specified opposite its name on Schedule I hereto; if
to any other Lender, at its Domestic Lending Office specified in the Assignment
and Acceptance pursuant to which it became a Lender; and if to the Agent, at its
address at Two
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Penns Way, New Castle, Delaware 19720, Attention: Bank Loan Syndications
Department, with a copy to 388 Greenwich Street, New York, New York 10013,
Attention: Diane Pockaj; or, as to any Borrower or the Agent, at such other
address as shall be designated by such party in a written notice to the other
parties and, as to each other party, at such other address as shall be
designated by such party in a written notice to the Company and the Agent;
provided that materials as may be agreed between the Borrowers and the Agent may
be delivered to the Agent in accordance with clause (b) below. All such notices
and communications shall, when mailed, telecopied, telegraphed or telexed, be
effective when deposited in the mails, telecopied, delivered to the telegraph
company or confirmed by telex answerback, respectively, except that notices and
communications to the Agent pursuant to Article II, III or VIII shall not be
effective until received by the Agent. Delivery by telecopier of an executed
counterpart of any amendment or waiver of any provision of this Agreement or the
Notes or of any Exhibit hereto to be executed and delivered hereunder shall be
effective as delivery of a manually executed counterpart thereof.
(b) So long as Citibank or any of its Affiliates is the Agent, such
materials required to be delivered pursuant to Section 5.01(h)(i), (ii),
(iii) and (iv) as may be agreed between the Borrowers and the Agent may be
delivered to the Agent in an electronic medium in a format acceptable to
the Agent and the Lenders by e-mail at oploanswebadmin@citigroup.com. The
Borrowers agree that the Agent may make such materials (the
"Communications") available to the Lenders by posting such notices on
Intralinks or a substantially similar electronic system (the "Platform").
The Borrowers acknowledge that (i) the distribution of material through an
electronic medium is not necessarily secure and that there are
confidentiality and other risks associated with such distribution, (ii) the
Platform is provided "as is" and "as available" and (iii) neither the Agent
nor any of its Affiliates warrants the accuracy, adequacy or completeness
of the Communications or the Platform and each expressly disclaims
liability for errors or omissions in the Communications or the Platform. No
warranty of any kind, express, implied or statutory, including, without
limitation, any warranty of merchantability, fitness for a particular
purpose, non-infringement of third party rights or freedom from viruses or
other code defects, is made by the Agent or any of its Affiliates in
connection with the Platform.
(c) Each Lender agrees that notice to it (as provided in the next
sentence) (a "Notice") specifying that any Communications have been posted
to the Platform shall constitute effective delivery of such information,
documents or other materials to such Lender for purposes of this Agreement;
provided that if requested by any Lender the Agent shall deliver a copy of
the Communications to such Lender by email or telecopier. Each Lender
agrees (i) to notify the Agent in writing of such Lender's e-mail
address(es) to which a Notice may be sent by electronic transmission
(including by electronic communication) on or before the date such Lender
becomes a party to this Agreement (and from time to time thereafter to
ensure that the Agent has on record an effective e-mail address for such
Lender) and (ii) that any Notice may be sent to such e-mail address(es).
SECTION 9.03. No Waiver; Remedies. No failure on the part of any
Lender or the Agent to exercise, and no delay in exercising, any right hereunder
or under any Note shall
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operate as a waiver thereof; nor shall any single or partial exercise of any
such right preclude any other or further exercise thereof or the exercise of any
other right. The remedies herein provided are cumulative and not exclusive of
any remedies provided by law.
SECTION 9.04. Costs and Expenses. (a) The Company agrees to pay on
demand all reasonable costs and expenses of the Agent in connection with the
administration, modification and amendment of this Agreement, the Notes and the
other documents to be delivered hereunder, including, without limitation, (i)
all due diligence, syndication (including printing, distribution and bank
meetings), transportation, computer, duplication, appraisal, consultant, and
audit expenses and (ii) the reasonable fees and expenses of counsel for the
Agent with respect thereto. The Company further agrees to pay on demand all
costs and expenses of the Agent and the Lenders, if any (including, without
limitation, reasonable counsel fees and expenses), in connection with the
enforcement (whether through negotiations, legal proceedings or otherwise) of
this Agreement, the Notes and the other documents to be delivered hereunder,
including, without limitation, reasonable fees and expenses of counsel for the
Agent and each Lender in connection with the enforcement of rights under this
Section 9.04(a).
(b) Each Borrower agrees to indemnify and hold harmless the Agent and
each Lender and each of their Affiliates and their officers, directors,
employees, agents and advisors (each, an "Indemnified Party") from and against
any and all claims, damages, losses, liabilities and expenses (including,
without limitation, reasonable fees and expenses of counsel) that may be
incurred by or asserted or awarded against any Indemnified Party, in each case
arising out of or in connection with or by reason of, or in connection with the
preparation for a defense of, any investigation, litigation or proceeding
arising out of, related to or in connection with the Notes, this Agreement, any
of the transactions contemplated herein or the actual or proposed use of the
proceeds of the Advances whether or not such investigation, litigation or
proceeding is brought by the Company, its directors, shareholders or creditors
or an Indemnified Party or any other Person or any Indemnified Party is
otherwise a party thereto and whether or not the transactions contemplated
hereby are consummated, except to the extent any such claim, damage, loss,
liability or expense has resulted from such Indemnified Party's gross negligence
or willful misconduct.
The Company also agrees not to assert any claim against any Indemnified Party on
any theory of liability for special, indirect, consequential or punitive damages
arising out of or otherwise relating to the Notes, this Agreement, any of the
transactions contemplated herein or the actual or proposed use of the proceeds
of the Advances.
(c) If any payment of principal of, or Conversion of, any Eurocurrency
Rate Advance or LIBO Rate Advance is made by the Borrower to or for the account
of a Lender other than on the last day of the Interest Period for such Advance,
as a result of a payment or Conversion pursuant to Section 2.03(d), 2.05(b),
2.09(a) or (b), 2.11 or 2.16, acceleration of the maturity of the Notes pursuant
to Section 6.01 or for any other reason, the Borrower shall, upon demand by such
Lender (with a copy of such demand to the Agent), pay to the Agent for the
account of such Lender any amounts required to compensate such Lender for any
additional losses, costs or expenses that it may reasonably incur as a result of
such payment or Conversion, including, without limitation, any loss (including
loss of anticipated profits), cost or expense
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incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by any Lender to fund or maintain such Advance.
(d) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
Sections 2.10, 2.13 and 9.04 shall survive the payment in full of principal,
interest and all other amounts payable hereunder and under the Notes and the
termination in whole of any Commitment hereunder.
SECTION 9.05. Binding Effect. This Agreement shall become effective
(other than Sections 2.01 and 2.03, which shall only become effective upon
satisfaction of the conditions precedent set forth in Section 3.01) when it
shall have been executed by the Company and the Agent and when the Agent shall
have been notified by each Initial Lender that such Initial Lender has executed
it and thereafter shall be binding upon and inure to the benefit of each
Borrower, the Agent and each Lender and their respective successors and assigns,
except that no Borrower shall not have the right to assign its rights hereunder
or any interest herein without the prior written consent of the Lenders.
SECTION 9.06. Assignments and Participations. (a) Each Lender may at
any time, with notice to the Company prior to making any proposal to any
potential assignee and with the consent of the Company, which consent shall not
be unreasonably withheld (and shall at any time, if requested to do so by the
Company pursuant to Section 2.05(b), 2.10 or 2.13) assign to one or more Persons
all or a portion of its rights and obligations under this Agreement (including,
without limitation, all or a portion of its Commitment, the Revolving Credit
Advances owing to it and the Revolving Credit Note or Notes held by it);
provided, however, that (i) the Company's consent shall not be required (A) in
the case of an assignment to an Affiliate of such Lender, provided that notice
thereof shall have been given to the Company and the Agent or (B) in the case of
an assignment of the type described in subsection (g) below; (ii) each such
assignment shall be of a constant, and not a varying, percentage of all rights
and obligations under this Agreement (other than any right to make Competitive
Bid Advances, Competitive Bid Advances owing to it and Competitive Bid Notes);
(iii) except in the case of an assignment to a Person that, immediately prior to
such assignment, was a Lender or an assignment of all of a Lender's rights and
obligations under this Agreement, the amount of the Commitment of the assigning
Lender being assigned pursuant to each such assignment (determined as of the
date of the Assignment and Acceptance with respect to such assignment) shall in
no event be less than $10,000,000 or an integral multiple of $1,000,000 in
excess thereof; (iv) each such assignment shall be to an Eligible Assignee, (v)
each such assignment made as a result of a demand by the Company pursuant to
this Section 9.06(a) shall be arranged by the Company after consultation with,
and subject to the approval of, the Agent, and shall be either an assignment of
all of the rights and obligations of the assigning Lender under this Agreement
or an assignment of a portion of such rights and obligations made concurrently
with another such assignment or other such assignments that together cover all
of the rights and obligations of the assigning Lender under this Agreement, (vi)
no Lender shall be obligated to make any such assignment as a result of a demand
by the Borrower pursuant to this Section 9.06(a) unless and until such Lender
shall have received one or more payments from either the Borrower or one or more
Eligible Assignees in an aggregate amount at least equal to the aggregate
outstanding principal amount of the Advances owing to such Lender, together with
accrued interest thereon to the date of payment of such principal amount and all
other amounts payable to such Lender
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under this Agreement and all of the obligations of the Borrower to such Lender
shall have been satisfied; and (vii) the parties to each such assignment shall
execute and deliver to the Agent, for its acceptance and recording in the
Register, an Assignment and Acceptance, together with a processing and
recordation fee of $3,500 and, if the assigning Lender is not retaining a
Commitment hereunder, any Revolving Credit Note subject to such assignment. Upon
such execution, delivery, acceptance and recording, from and after the effective
date specified in each Assignment and Acceptance, (x) the assignee thereunder
shall be a party hereto and, to the extent that rights and obligations hereunder
have been assigned to it pursuant to such Assignment and Acceptance, have the
rights and obligations of a Lender hereunder and (y) the Lender assignor
thereunder shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its rights
and be released from its obligations under this Agreement (and, in the case of
an Assignment and Acceptance covering all or the remaining portion of an
assigning Lender's rights and obligations under this Agreement, such Lender
shall cease to be a party hereto, provided, however, that such assigning
Lender's rights under Sections 2.10, 2.13 and 9.04, and its obligations under
Section 8.05, shall survive such assignment as to matters occurring prior to the
effective date of such assignment).
(b) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as provided
in such Assignment and Acceptance, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
any other instrument or document furnished pursuant hereto or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement or any other instrument or document furnished pursuant hereto; (ii)
such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any Borrower or the
performance or observance by such Borrower of any of its obligations under this
Agreement or any other instrument or document furnished pursuant hereto; (iii)
such assignee confirms that it has received a copy of this Agreement, together
with copies of the financial statements referred to in Section 4.01 and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance; (iv)
such assignee will, independently and without reliance upon the Agent, such
assigning Lender or any other Lender and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement; (v) such assignee
confirms that it is an Eligible Assignee; (vi) such assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers and discretion under this Agreement as are delegated to the Agent by
the terms hereof, together with such powers and discretion as are reasonably
incidental thereto; and (vii) such assignee agrees that it will perform in
accordance with their terms all of the obligations that by the terms of this
Agreement are required to be performed by it as a Lender.
(c) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee representing that it is an Eligible Assignee,
together with any Revolving Credit Note or Notes subject to such assignment, the
Agent shall, if such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit C hereto,
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(i) accept such Assignment and Acceptance, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to the Company and
to each other Borrower.
(d) The Agent shall maintain at its address referred to in Section
9.02 a copy of each Assumption Agreement and each Assignment and Acceptance
delivered to and accepted by it and a register for the recordation of the names
and addresses of the Lenders and the Commitment of, and principal amount of the
Advances owing to, each Lender from time to time (the "Register"). The entries
in the Register shall be conclusive and binding for all purposes, absent
manifest error, and the Company, each other Borrower, the Agent and the Lenders
may treat each Person whose name is recorded in the Register as a Lender
hereunder for all purposes of this Agreement. The Register shall be available
for inspection by the Company, any other Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(e) Each Lender may sell participations to one or more banks or other
entities (other than the Company or any of its Affiliates) in or to all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment, the Advances owing to it and any
Note or Notes held by it); provided, however, that (i) such Lender's obligations
under this Agreement (including, without limitation, its Commitment to the
Company and the other Borrowers hereunder) shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) such Lender shall remain the holder of
any such Note for all purposes of this Agreement, (iv) the Company, any other
Borrower, the Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement, (v) no participant under any such
participation shall have any right to approve any amendment or waiver of any
provision of this Agreement or any Note, or any consent to any departure by any
Borrower therefrom, except to the extent that such amendment, waiver or consent
would reduce the principal of, or interest on, the Notes or any fees or other
amounts payable hereunder, in each case to the extent subject to such
participation, or postpone any date fixed for any payment of principal of, or
interest on, the Notes or any fees or other amounts payable hereunder, in each
case to the extent subject to such participation and (vi) within 30 days of the
effective date of such participation, such Lender shall provide notice of such
participation to the Company.
(f) Any Lender may, in connection with any assignment or participation
or proposed assignment or participation pursuant to this Section 9.06, disclose
to the assignee or participant or proposed assignee or participant, any
information relating to the Company or any Borrower furnished to such Lender by
or on behalf of such Borrower; provided that, prior to any such disclosure, the
assignee or participant or proposed assignee or participant shall agree to
preserve the confidentiality of any confidential information relating to such
Borrower received by it from such Lender.
(g) Notwithstanding any other provision set forth in this Agreement,
any Lender may at any time assign or create a security interest in all or any
portion of its rights under this Agreement (including, without limitation, the
Advances owing to it and any Note or Notes held by it) in favor of any Federal
Reserve Bank in accordance with Regulation A of the Board of Governors of the
Federal Reserve System.
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<Page>
SECTION 9.07. Designated Subsidiaries. (a) Designation. The Company
may at any time, and from time to time, by delivery to the Agent of a
Designation Letter duly executed by the Company and the respective Subsidiary
and substantially in the form of Exhibit E hereto, designate such Subsidiary as
a "Designated Subsidiary" for purposes of this Agreement and such Subsidiary
shall thereupon become a "Designated Subsidiary" for purposes of this Agreement
and, as such, shall have all of the rights and obligations of a Borrower
hereunder. The Agent shall promptly notify each Lender of each such designation
by the Company and the identity of the respective Subsidiary.
(b) Termination. Upon the payment and performance in full of all of
the indebtedness, liabilities and obligations under this Agreement and the Notes
of any Designated Subsidiary then, so long as at the time no Notice of Revolving
Credit Borrowing or Notice of Competitive Bid Borrowing in respect of such
Designated Subsidiary is outstanding, such Subsidiary's status as a "Designated
Subsidiary" shall terminate upon notice to such effect from the Agent to the
Lenders (which notice the Agent shall give promptly upon its receipt of a
request therefor from the Company). Thereafter, the Lenders shall be under no
further obligation to make any Advance hereunder to such Designated Subsidiary.
SECTION 9.08. Confidentiality. Each of the Lenders and the Agent
hereby agrees that it will use reasonable efforts (e.g., procedures
substantially comparable to those applied by such Lender or the Agent in respect
of non-public information as to the business of such Lender or the Agent) to
keep confidential any financial reports and other information from time to time
supplied to it by the Company hereunder to the extent that such information is
not and does not become publicly available and which the Company indicates at
the time is to be treated confidentially, provided, however, that nothing herein
shall affect the disclosure of any such information (i) by the Agent to any
Lender, (ii) to the extent required by law (including statute, rule, regulation
or judicial process), (iii) to counsel for any Lender or the Agent or to their
respective independent public accountants, (iv) to bank examiners and auditors
and appropriate government examining authorities, (v) to the Agent or any other
Lender, (vi) in connection with any litigation to which any Lender or the Agent
is a party, (vii) to actual or prospective assignees and participants as
contemplated by Section 9.06(f) or (viii) to any Affiliate of the Agent or any
Lender or to such Affiliate's officers, directors, employees, agents and
advisors, provided that, prior to any such disclosure, such Affiliate or such
Affiliate's officers, directors, employees, agents or advisors, as the case may
be, shall agree to preserve the confidentiality of any confidential information
relating to the Company received by it; a determination by a Lender or the Agent
as to the application of the circumstances described in the foregoing clauses
(i)-(viii) being conclusive if made in good faith; and each of the Lenders and
the Agent agrees that it will follow procedures which are intended to put any
transferee of such confidential information on notice that such information is
confidential. Notwithstanding anything herein to the contrary, each Borrower,
the Agent and each Lender (and each employee, representative or other agent of
each of the foregoing parties) may disclose to any and all Persons, without
limitation of any kind, the U.S. tax treatment and tax structure of the
transactions contemplated hereby and all materials of any kind (including
opinions or other tax analyses) that are provided to any of the foregoing
parties relating to such U.S. tax treatment and tax structure.
64
<Page>
SECTION 9.09. Mitigation of Yield Protection. Each Lender hereby
agrees that, commencing as promptly as practicable after it becomes aware of the
occurrence of any event giving rise to the operation of Section 2.10(a), 2.11 or
2.13 with respect to such Lender, such Lender will give notice thereof through
the Agent to the respective Borrower. A Borrower may at any time, by notice
through the Agent to any Lender, request that such Lender change its Applicable
Lending Office as to any Advance or Type of Advance or that it specify a new
Applicable Lending Office with respect to its Commitment and any Advance held by
it or that it rebook any such Advance with a view to avoiding or mitigating the
consequences of an occurrence such as described in the preceding sentence, and
such Lender will use reasonable efforts to comply with such request unless, in
the opinion of such Lender, such change or specification or rebooking is
inadvisable or might have an adverse effect, economic or otherwise, upon it,
including its reputation. In addition, each Lender agrees that, except for
changes or specifications or rebookings required by law or effected pursuant to
the preceding sentence, if the result of any change or change of specification
of Applicable Lending Office or rebooking would, but for this sentence, be to
impose additional costs or requirements upon the respective Borrower pursuant to
Section 2.10(a), Section 2.11 or Section 2.13 (which would not be imposed absent
such change or change of specification or rebooking) by reason of legal or
regulatory requirements in effect at the time thereof and of which such Lender
is aware at such time, then such costs or requirements shall not be imposed upon
such Borrower but shall be borne by such Lender. All expenses incurred by any
Bank in changing an Applicable Lending Office or specifying another Applicable
Lending Office of such Lender or rebooking any Advance in response to a request
from a Borrower shall be paid by such Borrower. Nothing in this Section 9.09
(including, without limitation, any failure by a Lender to give any notice
contemplated in the first sentence hereof) shall limit, reduce or postpone any
obligations of the respective Borrower under Section 2.10(a), Section 2.11 or
Section 2.13, including any obligations payable in respect of any period prior
to the date of any change or specification of a new Applicable Lending Office or
any rebooking of any Advance.
SECTION 9.10. Governing Law. This Agreement and the Notes shall be
governed by, and construed in accordance with, the laws of the State of New
York.
SECTION 9.11. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 9.12. Jurisdiction, Etc. (a) Each of the parties hereto hereby
irrevocably and unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of any New York State court or federal court of the
United States of America sitting in New York City, and any appellate court from
any thereof, in any action or proceeding arising out of or relating to this
Agreement or the Notes, or for recognition or enforcement of any judgment, and
each of the parties hereto hereby irrevocably and unconditionally agrees that
all claims in respect of any such action or proceeding may be heard and
determined in any such New York State court or, to the extent permitted by law,
in such federal court. Each Designated Subsidiary hereby agrees that service of
process in any such action or proceeding brought in the
65
<Page>
any such New York State court or in such federal court may be made upon CT
Corporation System at its offices at 1633 Broadway, New York, New York 10019
(the "Process Agent") and each Designated Subsidiary hereby irrevocably appoints
the Process Agent its authorized agent to accept such service of process, and
agrees that the failure of the Process Agent to give any notice of any such
service shall not impair or affect the validity of such service or of any
judgment rendered in any action or proceeding based thereon. Each Borrower
hereby further irrevocably consents to the service of process in any action or
proceeding in such courts by the mailing thereof by any parties hereto by
registered or certified mail, postage prepaid, to such Borrower at its address
specified pursuant to Section 9.02. Each of the parties hereto agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that any party
may otherwise have to serve legal process in any other manner permitted by law
or to bring any action or proceeding relating to this Agreement or the Notes in
the courts of any jurisdiction. To the extent that each Designated Subsidiary
has or hereafter may acquire any immunity from jurisdiction of any court or from
any legal process (whether through service or notice, attachment prior to
judgment, attachment in aid of execution, execution or otherwise) with respect
to itself or its property, each Designated Subsidiary hereby irrevocably waives
such immunity in respect of its obligations under this Agreement.
(b) Each of the parties hereto irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection that
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or the Notes in any New
York State or federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
SECTION 9.13. Substitution of Currency. If a change in any Foreign
Currency occurs pursuant to any applicable law, rule or regulation of any
governmental, monetary or multi-national authority, this Agreement (including,
without limitation, the definitions of Eurocurrency Rate and LIBO Rate) will be
amended to the extent determined by the Agent (acting reasonably and in
consultation with the Company) to be necessary to reflect the change in currency
and to put the Lenders and the Borrowers in the same position, so far as
possible, that they would have been in if no change in such Foreign Currency had
occurred.
SECTION 9.14. Final Agreement. This written agreement represents the
full and final agreement between the parties with respect to the matters
addressed herein and supercedes all prior communications, written or oral, with
respect thereto. There are no unwritten agreements between the parties.
SECTION 9.15. Judgment. (a) If for the purposes of obtaining judgment
in any court it is necessary to convert a sum due hereunder or under the Notes
in any currency (the "Original Currency") into another currency (the "Other
Currency"), the parties hereto agree, to the fullest extent that they may
effectively do so, that the rate of exchange used shall be that at which in
accordance with normal banking procedures the Agent could purchase the Original
Currency with the Other Currency at 9:00 A.M. (New York City time) on the first
Business Day preceding that on which final judgment is given.
66
<Page>
(b) The obligation of each Borrower in respect of any sum due in the
Original Currency from it to any Lender or the Agent hereunder or under the
Revolving Credit Note or Revolving Credit Notes held by such Lender shall,
notwithstanding any judgment in any Other Currency, be discharged only to the
extent that on the Business Day following receipt by such Lender or the Agent
(as the case may be) of any sum adjudged to be so due in such Other Currency,
such Lender or the Agent (as the case may be) may in accordance with normal
banking procedures purchase Dollars with such Other Currency; if the amount of
Dollars so purchased is less than the sum originally due to such Lender or the
Agent (as the case may be) in the Original Currency, such Borrower agrees, as a
separate obligation and notwithstanding any such judgment, to indemnify such
Lender or the Agent (as the case may be) against such loss, and if the amount of
Dollars so purchased exceeds the sum originally due to any Lender or the Agent
(as the case may be) in the Original Currency, such Lender or the Agent (as the
case may be) agrees to remit to such Borrower such excess.
67
<Page>
SECTION 9.16. Waiver of Jury Trial. Each Borrower, the Agent and each
Lender hereby irrevocably waive all right to trial by jury in any action,
proceeding or counterclaim (whether based on contract, tort or otherwise)
arising out of or relating to this Agreement or the Notes or the actions of the
Agent or any Lender in the negotiation, administration, performance or
enforcement thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
HONEYWELL INTERNATIONAL INC.
By: /s/
------------------------------------
Title: Vice President and Treasurer
CITIBANK, N.A., as Agent
By: /s/ Diane Pockaj
------------------------------------
Title: Vice President
REVOLVING CREDIT COMMITMENT ARRANGER AND ADMINISTRATIVE AGENT
$97,826,086.96 CITIBANK, N.A.
By: /s/ Diane Pockaj
------------------------------------
Title: Director
ARRANGER AND SYNDICATION AGENT
$97,826,086.96 JPMORGAN CHASE BANK
By: /s/
------------------------------------
Title: Vice President
DOCUMENTATION AGENTS
$82,608,695.65 BANK OF AMERICA, N.A.
By: /s/ John W. Pocalyko
------------------------------------
Title: Managing Director
$82,608,695.65 BARCLAYS BANK PLC
By: /s/ Douglas Berneggeh
------------------------------------
Title: Director
68
<Page>
$82,608,695.65 DEUTSCHE BANK AG NEW YORK BRANCH
By: /s/ Jean M. Hannigan
------------------------------------
Title: Director
By: /s/ Oliver Riedinger
------------------------------------
Title: Vice President
$82,608,695.65 UBS LOAN FINANCE LLC
By: /s/
------------------------------------
Title: Director
By: /s/
------------------------------------
Title: Associate Director
SENIOR MANAGING AGENTS
$56,521,739.13 ABN AMRO BANK N.V.
By: /s/ Alexander M. Blodi
------------------------------------
Title: Director
By: /s/ Eric Oppenheimer
------------------------------------
Title: Vice President
$56,521,739.13 BANK ONE, NA
By: /s/ James W. Petersen
------------------------------------
Title: Director
$56,521,739.13 BNP PARIBAS
By: /s/ Michel de Vibraye
------------------------------------
Title: Head of CFI North America
By: /s/ Richard Pace
------------------------------------
Title: Director
$56,521,739.13 BANK OF TOKYO-MITSUBISHI TRUST COMPANY
By: /s/
------------------------------------
Title: Vice President
69
<Page>
MANAGING AGENTS
$39,130,434.78 HSBC BANK USA
By: /s/ Johan Sorennson
------------------------------------
Title: First Vice President
$39,130,434.78 THE NORTHERN TRUST COMPANY
By: /s/ Ashish S. Bhagwat
------------------------------------
Title: Vice President
LENDERS
$21,739,130.43 ROYAL BANK OF CANADA
By: /s/ Dana Dratch
------------------------------------
Title: Authorized Signatory
$21,739,130.43 SUMITOMO MITSUI BANKING CORPORATION
By: /s/ Peter R. C. Knight
------------------------------------
Title: Joint General Manager
$21,739,130.43 UNICREDITO ITALIANO
By: /s/ Christopher J. Eldin
------------------------------------
Title: First Vice President &
Deputy Manager
$13,043,478.26 BANCO BILBAO VIZCAYA ARGENTARIA S.A.
By: /s/
------------------------------------
Title: Vice President
By: /s/
------------------------------------
Title: Vice President
$13,043,478.26 DANSKE BANK A/S, CAYMAN BRANCH
By: /s/ Angelo J. Balestrieri
------------------------------------
Title: Vice President
70
<Page>
$13,043,478.26 BANCA INTESA S.P.A.
By: /s/ Frank Maffei
------------------------------------
Title: Vice President
By: /s/ Anthony
------------------------------------
Title: First Vice President
$13,043,478.26 MIZUHO CORPORATE BANK, LTD.
By: /s/ Bertran
------------------------------------
Title: Vice President and Team Leader
$13,043,478.26 SOCIETE GENERALE
By: /s/ Ambrish D. Thanawala
------------------------------------
Title: Director
$13,043,478.26 WACHOVIA BANK, N.A.
By: /s/
------------------------------------
Title: Director
$13,043,478.26 WELLS FARGO BANK, NATIONAL ASSOCIATION
By: /s/ Peter Angelica
------------------------------------
Title: Vice President
$13,043,478.26 WESTPAC BANKING CORPORATION
By: /s/ Lisa Porter
------------------------------------
Title: Vice President
$1,000,000,000 TOTAL OF COMMITMENTS
71
<Page>
SCHEDULE I
APPLICABLE LENDING OFFICES
<TABLE>
<CAPTION>
NAME OF INITIAL LENDER DOMESTIC LENDING OFFICE EURODOLLAR LENDING OFFICE
- -------------------------------------- ----------------------------- -----------------------------
<S> <C> <C>
ABN AMRO Bank N.V. 208 South LaSalle Street 208 South LaSalle Street
Suite 1500 Suite 1500
Chicago, IL 60604 Chicago, IL 60604
Attn: Credit Administration Attn: Credit Administration
Phone: (312) 992-51521 Phone: (312) 992-51521
Fax: (312) 992-5157 Fax: (312) 992-5157
Banco Bilbao Vizcaya Argentarie S.A. 1345 Avenue of the Americas 1345 Avenue of the Americas
45th Floor 45th Floor
New York, NY 10105 New York, NY 10105
Attn: Miguel Lara Attn: Miguel Lara
Phone: (212) 728-1664 Phone: (212) 728-1664
Fax: (212) 333-2904 Fax: (212) 333-2904
Bank of America, N.A. 101 N. Tryon Street 101 N. Tryon Street
Charlotte, NC 28255 Charlotte, NC 28255
Attn: Carrie Cunder Attn: Carrie Cunder
Phone: (704) 386-8382 Phone: (704) 386-8382
Fax: (704) 409-0064 Fax: (704) 409-0064
The Bank of Tokyo-Mitsubishi 1251 Avenue of the Americas 1251 Avenue of the Americas
12th Floor 12th Floor
New York, NY 10020 New York, NY 10020
Attn: William Derasmo Attn: William Derasmo
Phone: (212) 782-4359 Phone: (212) 782-4359
Fax: (212) 782-6445 Fax: (212) 782-6445
Bank One, NA One Bank One Plaza One Bank One Plaza
Chicago, IL 60670 Chicago, IL 60670
Attn: Claudia Kech Attn: Claudia Kech
Phone: (312) 732-1031 Phone: (312) 732-1031
Fax: (312) 732-4840 Fax: (312) 732-4840
Barclays Bank PLC 200 Park Avenue 200 Park Avenue
New York, NY 10163 New York, NY 10163
Attn: Martin Duran Attn: Martin Duran
Phone: (212) 412 6831 Phone: (212) 412 6831
F: (212) 412 5306 F: (212) 412 5306
BNP Paribas 499 Park Avenue 499 Park Avenue
New York, NY 10022 New York, NY 10022
Attn: Andree Mitton/Robin Attn: Andree Mitton/Robin
Jackson-Bogner Jackson-Bogner
Phone: (212) 415-9617/9616 Phone: (212) 415-9617/9616
Fax: (212) 415-9606 Fax: (212) 415-9606
Citibank, N.A. 388 Greenwich Street 388 Greenwich Street
New York, NY 10013 New York, NY 10013
Attn: Carolyn Sheridan Attn: Carolyn Sheridan
Phone: (212) 559-3245 Phone: (212) 559-3245
Fax: (212) 826-2371 Fax: (212) 826-2371
</TABLE>
<Page>
<TABLE>
<S> <C> <C>
Danske Bank A/S, Cayman Branch 299 Park avenue, 14th Floor 299 Park avenue, 14th Floor
New York, NY 10171 New York, NY 10171
Attn: Loan Administration Attn: Loan Administration
Phone: (212) 984-8462 Phone: (212) 984-8462
Fax: (212) 984-9570 Fax: (212) 984-9570
Deutsche Bank AG New York Branch 60 Wall Street 60 Wall Street
New York, NY 10005 New York, NY 10005
Attn: Esther Ocampo Attn: Esther Ocampo
Phone: (213) 620-8241 Phone: (213) 620-8241
Fax: (213) 620-8293 Fax: (213) 620-8293
HSBC Bank USA One HSBC Center One HSBC Center
Buffalo, NY 14203 Buffalo, NY 14203
Attn: Donna Riley Attn: Donna Riley
Phone: (716) 841-4178 Phone: (716) 841-4178
Fax: (716) 841-0269 or 5683 Fax: (716) 841-0269 or 5683
Banca Intesa S.p.A. 1 S William Street 1 S William Street
New York, NY 10004 New York, NY 10004
Attn: Frank Maffei Attn: Frank Maffei
JPMorgan Chase Bank One Chase Manhattan Plaza One Chase Manhattan Plaza
New York, NY 10081 New York, NY 10081
Attn: Lenora Kiernan Attn: Lenora Kiernan
Phone: (212) 552-7309 Phone: (212) 552-7309
Fax: (212) 552-5650 Fax: (212) 552-5650
Mizuho Corporate Bank, Ltd. 1251 Avenue of the Americas 1251 Avenue of the Americas
New York, NY 10020 New York, NY 10020
Phone: (212) 282-3000 Phone: (212) 282-3000
Fax: (212) 282-4250 Fax: (212) 282-4250
The Northern Trust Company 50 S. LaSalle Street 50 S. LaSalle Street
Chicago, IL 60675 Chicago, IL 60675
Attn: Linda Honda Attn: Linda Honda
Phone: (312) 444-3532 Phone: (312) 444-3532
Fax: (312) 630-1566 Fax: (312) 630-1566
Royal Bank of Canada One Liberty Plaza, 3rd Floor One Liberty Plaza, 3rd Floor
New York, NY 10006 New York, NY 10006
Attn: Karim Amr Attn: Karim Amr
Phone: (212) 428-6369 Phone: (212) 428-6369
Fax: (212) 428-2372 Fax: (212) 428-2372
with a copy to: with a copy to:
Attn: N. Delph Attn: N. Delph
Phone: (212) 428-6249 Phone: (212) 428-6249
Fax: (212) 428-2319 Fax: (212) 428-2319
Societe Generale 1221 Avenue of the America 1221 Avenue of the America
New York, NY 10020 New York, NY 10020
Attn: Maria Manesis-Iarriccio Attn: Maria Manesis-Iarriccio
Phone: (212) 278-5396 Phone: (212) 278-5396
Fax: (212) 278-7862 Fax: (212) 278-7862
</TABLE>
2
<Page>
<TABLE>
<S> <C> <C>
Sumitomo Mitsui Banking Corporation 277 Park Avenue 277 Park Avenue
New York, NY 10172 New York, NY 10172
Attn: Edward McColly Attn: Edward McColly
Phone: (212) 224-4139 Phone: (212) 224-4139
Fax: (212) 224-4384 Fax: (212) 224-4384
UBS Loan Finance LLC 677 Washington Blvd. 677 Washington Blvd.
6th Floor South 6th Floor South
Stamford, CT 05901 Stamford, CT 05901
Attn: Christopher Aitkin Attn: Christopher Aitkin
Phone: (203) 719-3845 Phone: (203) 719-3845
Fax: (203) 719-3888 Fax: (203) 719-3888
Unicredito Italiano 375 Park Avenue 375 Park Avenue
New York, NY 10152 New York, NY 10152
Attn: Evangeline Blanco Attn: Evangeline Blanco
Phone: (212) 546-9615 Phone: (212) 546-9615
Fax: (212) 546-9675 Fax: (212) 546-9675
Wachovia Bank, N.A. 301 S. College Street 301 S. College Street
Charlotte, NC 28288 Charlotte, NC 28288
Attn: Romonia Lester Attn: Romonia Lester
Phone: (704) 383-5364 Phone: (704) 383-5364
Fax: (704) 715-0096 Fax: (704) 715-0096
Wells Fargo Bank, National Association 70 East 55th Street 70 East 55th Street
11th Floor 11th Floor
New York City, NY 10022-3222 New York City, NY 10022-3222
Attn: Peter M. Angelica\ Attn: Peter M. Angelica\
Phone: (212) 836-4141 Phone: (212) 836-4141
Fax: (212) 593-5241 Fax: (212) 593-5241
Westpac Banking Corporation GMO Nightshift Operations GMO Nightshift Operations
255 Elizabeth St. 3rd Floor 255 Elizabeth St. 3rd Floor
Sydney, NSW 2000 Sydney, NSW 2000
Australia Australia
Attn: Matt Healey Attn: Matt Healey
Phone: 011 612 9284-8241 Phone: 011 612 9284-8241
Fax: 011 44 207 621 7608 Fax: 011 44 207 621 7608
</TABLE>
3
<Page>
SCHEDULE 3.01(b)
DISCLOSED LITIGATION
While not giving an opinion as to whether any item is "reasonably
likely to have a Material Adverse Effect," we hereby disclose the litigation
matters as stated in our Form 10-Q for the quarter ended September 30, 2003,
under the heading "Legal Proceedings," as shown below. These matters are
modified and updated to the extent of the Form 8-K filed by Honeywell on
November 11, 2003, disclosing that the letter of intent regarding a transaction
in which Federal-Mogul Corp. would acquire Honeywell's automotive Bendix
friction materials business, and Honeywell would receive a permanent channeling
injunction shielding it from all current and future Bendix-related personal
injury asbestos liabilities, expired on November 15, 2003, but that the parties
remain engaged in active negotiations regarding a possible transaction.
SHAREOWNER LITIGATION - Honeywell and seven of its current and former
officers were named as defendants in several purported class action lawsuits
filed in the United States District Court for the District of New Jersey (the
"Securities Law Complaints"). The Securities Law Complaints principally allege
that the defendants violated federal securities laws by purportedly making false
and misleading statements and by failing to disclose material information
concerning Honeywell's financial performance, thereby allegedly causing the
value of Honeywell's stock to be artificially inflated. On January 15, 2002, the
District Court dismissed the consolidated complaint against four of Honeywell's
current and former officers. The Court has granted plaintiffs' motion for class
certification defining the class as all purchasers of Honeywell stock between
December 20, 1999 and June 19, 2000.
The parties participated in a two-day settlement mediation in April 2003 in
an attempt to resolve the cases without resort to a trial. The mediation proved
unsuccessful in resolving the cases. Discovery in the cases, which had been
stayed pending completion of the mediation, has resumed. A further mediation
session is planned for the fourth quarter of 2003.
We continue to believe that the allegations in the Securities Law
Complaints are without merit. Although it is not possible at this time to
predict the outcome of these cases, we expect to prevail. However, an adverse
outcome could be material to our consolidated financial position or results of
operations. As a result of the uncertainty regarding the outcome of this matter
no provision has been made in our financial statements with respect to this
contingent liability.
ERISA CLASS ACTION LAWSUIT - In April 2003, Honeywell and several of its
current and former officers were named as defendants in a purported class action
lawsuit filed in the United States District Court for the District of New
Jersey. The complaint principally alleges that the defendants breached their
fiduciary duties to participants in the Honeywell Savings and Ownership Plan
(the "Savings Plan") by purportedly making false and misleading statements,
failing to disclose material information concerning Honeywell's financial
performance, and failing to diversify the Savings Plan's assets and monitor the
prudence of Honeywell stock as a Savings Plan investment. In July 2003, an
amended complaint making similar allegations and naming several current and
former officers and directors as defendants was filed in the same district. In
September 2003, Honeywell filed a motion to dismiss the amended complaint.
<Page>
Although it is not possible at this time to predict the outcome of this
litigation, we believe that the allegations in these complaints are without
merit and we expect to prevail. An adverse litigation outcome could, however, be
material to our consolidated financial position or results of operations. As a
result of the uncertainty regarding the outcome of this matter no provision has
been made in our financial statements with respect to this contingent liability.
ENVIRONMENTAL MATTERS - We are subject to various federal, state and local
government requirements relating to the protection of employee health and safety
and the environment. We believe that, as a general matter, our policies,
practices and procedures are properly designed to prevent unreasonable risk of
environmental damage and personal injury to our employees and employees of our
customers and that our handling, manufacture, use and disposal of hazardous or
toxic substances are in accord with environmental laws and regulations. However,
mainly because of past operations and operations of predecessor companies, we,
like other companies engaged in similar businesses, have incurred remedial
response and voluntary cleanup costs for site contamination and are a party to
lawsuits and claims associated with environmental matters, including past
production of products containing toxic substances. Additional lawsuits, claims
and costs involving environmental matters are likely to continue to arise in the
future.
With respect to environmental matters involving site contamination, we
continually conduct studies, individually at our owned sites, and jointly as a
member of industry groups at non-owned sites, to determine the feasibility of
various remedial techniques to address environmental matters. It is our policy
to record appropriate liabilities for environmental matters when environmental
assessments are made or remedial efforts or damage claim payments are probable
and the costs can be reasonably estimated. With respect to site contamination,
the timing of these accruals is generally no later than the completion of
feasibility studies. We expect to fund expenditures for these matters from
operating cash flow. The timing of cash expenditures depends on a number of
factors, including the timing of litigation and settlements of personal injury
and property damage claims, regulatory approval of cleanup projects, remedial
techniques to be utilized and agreements with other parties.
Although we do not currently possess sufficient information to reasonably
estimate the amounts of liabilities to be recorded upon future completion of
studies, litigation or settlements, and neither the timing nor the amount of the
ultimate costs associated with environmental matters can be determined, they
could be material to our consolidated results of operations. However,
considering our past experience and existing reserves, we do not expect that
these matters will have a material adverse effect on our consolidated financial
position.
In the matter entitled Interfaith Community Organization, et al. v.
Honeywell International Inc., et al., the United States District Court for the
District of New Jersey held in May 2003 that a predecessor Honeywell site
located in Jersey City, New Jersey constituted an imminent and substantial
endangerment and ordered Honeywell to conduct the excavation and transport for
offsite disposal of approximately one million tons of chromium residue present
at the site. Honeywell strongly disagrees with the court's determinations and
has appealed the court's decision to the Third Circuit Court of Appeals. The
Third Circuit Court of Appeals has referred the case for mediation. In October
2003, the District Court denied Honeywell's motion
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for a stay of certain aspects of its May 2003 order, and we are considering
whether to appeal such ruling. The site at issue is one of twenty-one sites
located in Jersey City, New Jersey which are the subject of an Administrative
Consent Order (ACO) entered into with the New Jersey Department of Environmental
Protection (NJDEP) in 1993. Under the ACO, Honeywell agreed to study and
remediate these sites in accordance with NJDEP's directions, provided that the
total costs of such studies and remediation do not exceed $60 million. Honeywell
has cooperated with the NJDEP under the ACO and believes that decisions
regarding site cleanups should be made by NJDEP under the ACO. We are confident
that proceeding under the ACO will ensure a safe remediation and allow the
property to be placed back into productive use much faster and at a cost
significantly less than the remedies required by the court's order. We have not
completed development of a remedial action plan for the excavation and offsite
disposal directed under the court's order and therefore are unable to estimate
the cost of such actions. At trial, plaintiff's expert testified that the
excavation and offsite disposal cost might be $400 million. However, there are
significant variables in the implementation of the court's order and depending
on the method of implementation chosen, the estimate could increase or decrease.
Provisions have been previously made in our financial statements as to remedial
costs consistent with the ACO and during the three months ended June 30, 2003 we
provided for additional costs which are likely to be incurred during the
pendency of our appeal, which provisions do not assume excavation and offsite
removal of chromium from the site. There are alternative outcomes and remedies
beyond the scope of the ACO that could result from the remanding, reversal or
replacement of the Court's decision and order. At this time, we can neither
identify a probable alternative outcome nor reasonably estimate the cost of an
alternative remedy. Although we expect the court's decision and order to be
remanded, reversed or replaced, should the remedies prescribed in the court's
decision and order ultimately be upheld, such outcome could have a material
adverse impact on our consolidated results of operations or operating cash flows
in the periods recognized or paid.
ASBESTOS MATTERS - Like many other industrial companies, Honeywell is a
defendant in personal injury actions related to asbestos. We did not mine or
produce asbestos, nor did we make or sell insulation products or other
construction materials that have been identified as the primary cause of
asbestos related disease in the vast majority of claimants. Rather, we made
several products that contained small amounts of asbestos.
Honeywell's Bendix Friction Materials business manufactured automotive
brake pads that included asbestos in an encapsulated form. There is a group of
potential claimants consisting largely of professional brake mechanics. From
1981 through September 30, 2003, we have resolved about 62,500 Bendix claims at
an average indemnity cost per claim of approximately two thousand nine hundred
dollars. Through the second quarter of 2002, Honeywell had no out-of-pocket
costs for these cases since its insurance deductible was satisfied many years
ago. Beginning with claim payments made in the third quarter of 2002, Honeywell
began advancing indemnity and defense claim costs that amounted to approximately
$75 million in payments in the nine months ended September 30, 2003. A
substantial portion of this amount is expected to be reimbursed by insurance.
There are currently approximately 71,000 claims pending.
On January 30, 2003, Honeywell and Federal-Mogul Corp. (Federal-Mogul)
entered into a letter of intent (LOI) pursuant to which Federal-Mogul would
acquire Honeywell's automotive
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Bendix Friction Materials (Bendix) business, with the exception of certain U.S.
based assets. In exchange, Honeywell would receive a permanent channeling
injunction shielding it from all current and future personal injury asbestos
liabilities related to Honeywell's Bendix business.
Federal-Mogul, its U.S. subsidiaries and certain of its United Kingdom
subsidiaries voluntarily filed for financial restructuring under Chapter 11 of
the U.S. Bankruptcy Code in October 2001. Federal-Mogul will seek to establish
one or more trusts under Section 524(g) of the U.S. Bankruptcy Code as part of
its reorganization plan, including a trust for the benefit of Bendix asbestos
claimants. The reorganization plan to be submitted to the Bankruptcy Court for
approval will contemplate that the U.S. Bankruptcy Court in Delaware would issue
an injunction in favor of Honeywell that would channel to the Bendix 524(g)
trust all present and future asbestos claims relating to Honeywell's Bendix
business. The 524(g) trust created for the benefit of the Bendix claimants would
receive the rights to proceeds from Honeywell's Bendix related insurance
policies and would make these proceeds available to the Bendix claimants.
Honeywell would have no obligation to contribute any additional amounts toward
the settlement or resolution of Bendix related asbestos claims.
In the fourth quarter of 2002, we recorded a charge of $167 million
consisting of a $131 million reserve for the sale of Bendix to Federal-Mogul,
our estimate of asbestos related liability net of insurance recoveries and costs
to complete the anticipated transaction with Federal-Mogul. Completion of the
transaction contemplated by the LOI is subject to the negotiation of definitive
agreements, the confirmation of Federal-Mogul's plan of reorganization by the
Bankruptcy Court, the issuance of a final, non-appealable 524(g) channeling
injunction permanently enjoining any Bendix related asbestos claims against
Honeywell, and the receipt of all required governmental approvals. We do not
believe that completion of such transaction as contemplated under the LOI would
have a material adverse impact on our consolidated results of operations or
financial position.
During the third quarter of 2003, DaimlerChrysler AG, Ford Motor Co. and
General Motors Corp. filed a lawsuit in the U.S. Bankruptcy Court, against
Honeywell and Federal-Mogul seeking a declaration that Honeywell's Bendix unit
cannot be sold to Federal-Mogul and receive protection from asbestos claims
under Section 524(g) of the U.S. Bankruptcy Code. Honeywell believes the lawsuit
is without merit and intends to vigorously defend against the allegations in the
complaint.
There can be no assurance, however, that the transaction contemplated by
the LOI will be completed. Honeywell presently has approximately $1.9 billion of
insurance coverage remaining with respect to Bendix related asbestos claims.
Although it is impossible to predict the outcome of pending or future claims, in
light of our potential exposure, our prior experience in resolving these claims,
and our insurance coverage, we do not believe that the Bendix related asbestos
claims will have a material adverse effect on our consolidated financial
position.
Another source of claims is refractory products (high temperature bricks
and cement) sold largely to the steel industry in the East and Midwest by North
American Refractories Company (NARCO), a business we owned from 1979 to 1986.
Less than 2 percent of NARCO's products contained asbestos.
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When we sold the NARCO business in 1986, we agreed to indemnify NARCO with
respect to personal injury claims for products that had been discontinued prior
to the sale (as defined in the sale agreement). NARCO retained all liability for
all other claims. NARCO had resolved approximately 176,000 claims through
January 4, 2002, the date NARCO filed for reorganization under Chapter 11 of the
U.S. Bankruptcy Code, at an average cost per claim of two thousand two hundred
dollars. Of those claims, 43 percent were dismissed on the ground that there was
insufficient evidence that NARCO was responsible for the claimant's asbestos
exposure. As of the date of NARCO's bankruptcy filing, there were approximately
116,000 remaining claims pending against NARCO, including approximately 7
percent in which Honeywell was also named as a defendant. Since 1983, Honeywell
and our insurers have contributed to the defense and settlement costs associated
with NARCO claims. We have approximately $1.3 billion (excluding insurance
recoveries in October 2003 - see discussion below) of insurance remaining that
can be specifically allocated to NARCO related liability.
As a result of the NARCO bankruptcy filing, all of the claims pending
against NARCO are automatically stayed pending the reorganization of NARCO
except one claim which is not material as to which the stay was lifted in August
2003. Because the claims pending against Honeywell necessarily will impact the
liabilities of NARCO, because the insurance policies held by Honeywell are
essential to a successful NARCO reorganization, and because Honeywell has
offered to commit the value of those policies to the reorganization, the
bankruptcy court has temporarily enjoined any claims against Honeywell, current
or future, related to NARCO. Although the stay has been extended nineteen times
since January 4, 2002, there is no assurance that such stay will remain in
effect. In connection with NARCO's bankruptcy filing, we paid NARCO's parent
company $40 million and agreed to provide NARCO with up to $20 million in
financing. We also agreed to pay $20 million to NARCO's parent company upon the
filing of a plan of reorganization for NARCO acceptable to Honeywell, and to pay
NARCO's parent company $40 million, and to forgive any outstanding NARCO
indebtedness, upon the confirmation and consummation of such a plan.
As a result of ongoing negotiations with counsel representing NARCO related
asbestos claimants regarding settlement of all pending and potential NARCO
related asbestos claims against Honeywell, we have reached definitive agreements
or agreements in principle with approximately 256,000 claimants, which
represents in excess of 90 percent of the approximately 275,000 current
claimants who are now expected to file a claim as part of the NARCO
reorganization process. We are also in discussions with the NARCO Committee of
Asbestos Creditors on Trust Distribution Procedures for NARCO. We believe that,
as part of the NARCO plan of reorganization, a trust will be established
pursuant to these Trust Distribution Procedures for the benefit of all asbestos
claimants, current and future. If the trust is put in place and approved by the
court as fair and equitable, Honeywell as well as NARCO will be entitled to a
permanent channeling injunction barring all present and future individual
actions in state or federal courts and requiring all asbestos related claims
based on exposure to NARCO products to be made against the federally-supervised
trust. As part of its ongoing settlement negotiations, Honeywell has reached
agreement in principle with the representative for future NARCO claimants to cap
its annual contributions to the trust with respect to future claims at a level
that would not have a material impact on Honeywell's operating cash flows. Given
the substantial
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progress of negotiations between Honeywell and NARCO related asbestos claimants
and between Honeywell and the Committee of Asbestos Creditors during the fourth
quarter of 2002, Honeywell developed an estimated liability for settlement of
pending and future asbestos claims.
During the fourth quarter of 2002, Honeywell recorded a charge of $1.4
billion for NARCO related asbestos litigation charges, net of insurance
recoveries. This charge consists of the estimated liability to settle current
asbestos related claims, the estimated liability related to future asbestos
related claims through 2018 and obligations to NARCO's parent, net of insurance
recoveries of $1.8 billion.
The estimated liability for current claims is based on terms and
conditions, including evidentiary requirements, in definitive agreements or
agreements in principle with in excess of 90 percent of current claimants. Once
finalized, settlement payments with respect to current claims are expected to be
made over approximately a four-year period.
The liability for future claims estimates the probable value of future
asbestos related bodily injury claims asserted against NARCO over a 15 year
period and obligations to NARCO's parent as discussed above. In light of the
uncertainties inherent in making long-term projections we do not believe that we
have a reasonable basis for estimating asbestos claims beyond 2018 under
Statement of Financial Accounting Standard No. 5 "Accounting for Contingencies."
Honeywell retained the expert services of Hamilton, Rabinovitz and Alschuler,
Inc. (HR&A) to project the probable number and value, including trust claim
handling costs, of asbestos related future liabilities. The methodology used to
estimate the liability for future claims has been commonly accepted by numerous
courts and is the same methodology that is utilized by an expert who is
routinely retained by the asbestos claimants committee in asbestos related
bankruptcies. The valuation methodology includes an analysis of the population
likely to have been exposed to asbestos containing products, epidemiological
studies to estimate the number of people likely to develop asbestos related
diseases, NARCO claims filing history and the pending inventory of NARCO
asbestos related claims.
Honeywell has substantial insurance that reimburses it for portions of the
costs incurred to settle NARCO related claims and court judgments as well as
defense costs. This coverage is provided by a large number of insurance policies
written by dozens of insurance companies in both the domestic insurance market
and the London excess market. At September 30, 2003, a significant portion of
this coverage is with London-based insurance companies under a coverage-in-place
agreement. Coverage-in-place agreements are settlement agreements between
policyholders and the insurers specifying the terms and conditions under which
coverage will be applied as claims are presented for payment. These agreements
govern such things as what events will be deemed to trigger coverage, how
liability for a claim will be allocated among insurers and what procedures the
policyholder must follow in order to obligate the insurer to pay claims. We
conducted an analysis to determine the amount of insurance that we estimate is
probable that we will recover in relation to payment of current and projected
future claims. While the substantial majority of our insurance carriers are
solvent, some of our individual carriers are insolvent, which has been
considered in our analysis of probable recoveries. Some of our insurance
carriers have challenged our right to enter into settlement agreements resolving
all NARCO related asbestos claims against Honeywell. However, we believe there
is no factual or
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legal basis for such challenges and we believe that it is probable that we will
prevail in the resolution of, or in any litigation that is brought regarding
these disputes and, as of September 30, 2003, we have recognized approximately
$550 million in probable insurance recoveries from these carriers. We made
judgments concerning insurance coverage that we believe are reasonable and
consistent with our historical dealings with our insurers, our knowledge of any
pertinent solvency issues surrounding insurers and various judicial
determinations relevant to our insurance programs. Based on our analysis, we
recorded insurance recoveries that are deemed probable through 2018 of $1.8
billion. A portion of this insurance has been received, primarily from Equitas,
as discussed below.
During the nine months ended September 30, 2003, we made asbestos related
payments of $467 million, including legal fees. During the nine months ended
September 30, 2003, we received $477 million in insurance reimbursements
including $472 million in cash received from Equitas related to a comprehensive
policy buy-back settlement of all insurance claims by Honeywell against Equitas.
The settlement resolves all claims by Honeywell against Equitas arising from
asbestos claims related to NARCO and Bendix.
Projecting future events is subject to many uncertainties that could cause
the NARCO related asbestos liabilities to be higher or lower than those
projected and recorded. There is no assurance that ongoing settlement
negotiations will be successfully completed, that a plan of reorganization will
be proposed or confirmed, that insurance recoveries will be timely or whether
there will be any NARCO related asbestos claims beyond 2018. Given the inherent
uncertainty in predicting future events, we plan to review our estimates
periodically, and update them based on our experience and other relevant
factors. Similarly we will reevaluate our projections concerning our probable
insurance recoveries in light of any changes to the projected liability or other
developments that may impact insurance recoveries.
In October 2003, we received approximately $150 million in cash from
various insurance companies related to our NARCO asbestos claims.
We are monitoring proposals for federal asbestos legislation pending in the
United States Congress. Due to the uncertainty surrounding the proposed
legislation, it is not possible at this point in time to determine what impact
such legislation would have on the NARCO bankruptcy strategy, the proposed
transaction with Federal-Mogul, or our asbestos liabilities and related
insurance recoveries.
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EXHIBIT A-1 - FORM OF
REVOLVING CREDIT
PROMISSORY NOTE
Dated: _______________, 200_
FOR VALUE RECEIVED, the undersigned, [NAME OF BORROWER], a
_________________________ corporation (the "Borrower"), HEREBY PROMISES TO PAY
to the order of _________________________ (the "Lender") for the account of its
Applicable Lending Office on the Termination Date (each as defined in the Credit
Agreement referred to below) the aggregate principal amount of the Revolving
Credit Advances made by the Lender to the Borrower pursuant to the 364-Day
Credit Agreement dated as of November 26, 2003 among Honeywell International
Inc., the Lender and certain other lenders parties thereto, and Citibank, N.A.,
as Agent for the Lender and such other lenders (as amended or modified from time
to time, the "Credit Agreement"; the terms defined therein being used herein as
therein defined) outstanding on such date.
The Borrower promises to pay interest on the unpaid principal amount
of each Revolving Credit Advance from the date of such Revolving Credit Advance
until such principal amount is paid in full, at such interest rates, and payable
at such times, as are specified in the Credit Agreement.
Both principal and interest in respect of each Revolving Credit
Advance (i) in Dollars are payable in lawful money of the United States of
America to Citibank, N.A., as Agent, at 388 Greenwich Street, New York, New
York, 10013, in same day funds and (ii) in any Major Currency are payable in
such currency at the applicable Payment Office in same day funds. Each Revolving
Credit Advance owing to the Lender by the Borrower pursuant to the Credit
Agreement, and all payments made on account of principal thereof, shall be
recorded by the Lender and, prior to any transfer hereof, endorsed on the grid
attached hereto which is part of this Promissory Note.
This Promissory Note is one of the Revolving Credit Notes referred to
in, and is entitled to the benefits of, the Credit Agreement. The Credit
Agreement, among other things, (i) provides for the making of Revolving Credit
Advances by the Lender to the Borrower from time to time in an aggregate amount
not to exceed at any time outstanding the Dollar amount first above mentioned or
the Equivalent thereof in one or more Major Currencies, the indebtedness of the
Borrower resulting from each such Revolving Credit Advance being evidenced by
this Promissory Note, (ii) contains provisions for determining the Dollar
Equivalent of Revolving Credit Advances denominated in Major Currencies and
(iii) contains provisions for acceleration of the maturity hereof upon the
happening of certain stated events and also for prepayments on account of
principal hereof prior to the maturity hereof upon the terms and conditions
therein specified.
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The Borrower hereby waives presentment, demand, protest and notice of
any kind. No failure to exercise, and no delay in exercising, any rights
hereunder on the part of the holder hereof shall operate as a waiver of such
rights.
This promissory note shall be governed by, and construed in accordance
with the laws of the State of New York.
[NAME OF BORROWER]
By
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Name:
Title:
2
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ADVANCES AND PAYMENTS OF PRINCIPAL
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Amount of Amount of Unpaid
Type of Advance in Principal Paid Principal Notation
Date Advance Relevant Currency Interest Rate or Prepaid Balance Made By
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EXHIBIT A-2 - FORM OF
COMPETITIVE BID
PROMISSORY NOTE
Dated: _______________, 200_
FOR VALUE RECEIVED, the undersigned, [NAME OF BORROWER], a
_________________________ corporation (the "Borrower"), HEREBY PROMISES TO PAY
to the order of _________________________ (the "Lender") for the account of its
Applicable Lending Office (as defined in the 364-Day Credit Agreement dated as
of November 26, 2003 among Honeywell International Inc., the Lender and certain
other lenders parties thereto, and Citibank, N.A., as Agent for the Lender and
such other lenders (as amended or modified from time to time, the "Credit
Agreement"; the terms defined therein being used herein as therein defined)), on
_______________, the principal amount of [U.S.$_______________] [for a
Competitive Bid Advance in a Foreign Currency, list currency and amount of such
Advance].
The Borrower promises to pay interest on the unpaid principal amount
hereof from the date hereof until such principal amount is paid in full, at the
interest rate and payable on the interest payment date or dates provided below:
Interest Rate: [____% per annum (calculated on the basis of a year of
_____ days for the actual number of days elapsed)].
Interest Payment Date or Dates: ______________
Both principal and interest are payable in lawful money of
___________________ to Citibank, N.A., as Agent, for the account of the Lender
at the office of _________________________, at _________________________ in same
day funds.
This Promissory Note is one of the Competitive Bid Notes referred to
in, and is entitled to the benefits of, the Credit Agreement. The Credit
Agreement, among other things, contains provisions for acceleration of the
maturity hereof upon the happening of certain stated events.
The Borrower hereby waives presentment, demand, protest and notice of
any kind. No failure to exercise, and no delay in exercising, any rights
hereunder on the part of the holder hereof shall operate as a waiver of such
rights.
This Promissory Note shall be governed by, and construed in accordance
with, the laws of the State of New York.
[NAME OF BORROWER]
By
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Name:
Title:
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EXHIBIT B-1 - FORM OF NOTICE OF
REVOLVING CREDIT BORROWING
Citibank, N.A., as Agent
for the Lenders parties
to the Credit Agreement
referred to below
Two Penns Way
New Castle, Delaware 19720 [Date]
Attention: Bank Loan Syndication
Ladies and Gentlemen:
The undersigned, [Name of Borrower], refers to the 364-Day Credit
Agreement, dated as of November 26, 2003 (as amended or modified from time to
time, the "Credit Agreement", the terms defined therein being used herein as
therein defined), among the undersigned, certain Lenders parties thereto, and
Citibank, N.A., as Agent for said Lenders, and hereby gives you notice,
irrevocably, pursuant to Section 2.02 of the Credit Agreement that the
undersigned hereby requests a Revolving Credit Borrowing under the Credit
Agreement, and in that connection sets forth below the information relating to
such Revolving Credit Borrowing (the "Proposed Revolving Credit Borrowing") as
required by Section 2.02(a) of the Credit Agreement:
(i) The Business Day of the Proposed Revolving Credit Borrowing is
_______________.
(ii) The Type of Advances comprising the Proposed Revolving Credit
Borrowing is [Base Rate Advances] [Eurocurrency Rate Advances].
(iii) The aggregate amount of the Proposed Revolving Credit Borrowing
is [$_______________] [for a Revolving Credit Borrowing in a Major
Currency, list currency and amount of Revolving Credit Borrowing].
[(iv) The initial Interest Period for each Eurocurrency Rate Advance
made as part of the Proposed Revolving Credit Borrowing is _____ month[s].]
<Page>
The undersigned hereby certifies that the conditions precedent to this
Revolving Credit Borrowing set forth in Section 3.04 of the Credit Agreement
have been satisfied and the applicable statements contained therein are true on
the date hereof, and will be true on the date of the Proposed Revolving Credit
Borrowing.
Very truly yours,
[NAME OF BORROWER]
By
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Name:
Title:
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EXHIBIT B-2 - FORM OF NOTICE OF
COMPETITIVE BID BORROWING
Citibank, N.A., as Agent
for the Lenders parties
to the Credit Agreement
referred to below
Two Penns Way
New Castle, Delaware 19720