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Exhibit 10
FIRST AMENDMENT
TO AMENDED AND RESTATED MULTICURRENCY REVOLVING CREDIT AGREEMENT
First Amendment dated as of October 31, 1997 to Amended and Restated
Multicurrency Revolving Credit Agreement (the "First Amendment"), by and among
SENSORMATIC ELECTRONICS CORPORATION, a Delaware corporation (the "Parent"),
BANKBOSTON, N.A. (formerly known as The First National Bank of Boston) and the
other lending institutions listed on Schedule 1 to the Credit Agreement (as
hereinafter defined) (collectively, the "Banks"), amending certain provisions of
the Amended and Restated Multicurrency Revolving Credit Agreement dated as of
March 18, 1997 (as amended and in effect from time to time, the "Credit
Agreement") by and among the Parent, the other Borrowing Subsidiaries (as such
term is defined in the Credit Agreement) which may from time to time become
parties thereto in accordance with the terms thereof (collectively with the
Parent, the "Borrowers"), the Banks and BANKBOSTON, N.A. as agent for the Banks
(in such capacity, the "Agent"), with NATIONSBANK, N.A. as syndication agent
thereunder. Terms not otherwise defined herein which are defined in the Credit
Agreement shall have the same respective meanings herein as therein.
WHEREAS, the Borrowers and the Majority Banks have agreed to modify
certain terms and conditions of the Credit Agreement as specifically set forth
in this First Amendment;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
ss.1. Amendment to ss.1 of the Credit Agreement. Section 1 of the
Credit Agreement is hereby amended as follows:
(a) the definition of "Consolidated Net Worth" is hereby amended by
deleting such definition in its entirety and restating it as follows:
Consolidated Net Worth. The consolidated stockholders equity
of the Parent and its Subsidiaries determined in accordance with
generally accepted accounting principles, provided, however, solely for
purposes of calculating compliance with the financial covenants set
forth in ss.ss.10.1, 11.2 and 11.3 hereof, the Shareholder Litigation
Charge, to the extent deducted as a charge in arriving at Consolidated
Net Worth, shall be added back to Consolidated Net Worth.
(b) Section 1 of the Credit Agreement is further amended by inserting
the following definitions in the appropriate alphabetical order:
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Class Action Settlement. The settlement or any proposed
settlement of the shareholders' class actions filed in 1995 and
consolidated before the Xxx. Xxxxxxx Xxxxx, United States District
Judge for the United States District Court for the Southern District of
Florida.
CTA. Each currency translation adjustment that results in a
change (whether positive or negative) in the foreign currency
adjustment account balance which the Parent records as an equity
account on its balance sheet pursuant to generally accepted accounting
principles.
EBIT. With respect to any fiscal period, an amount equal to
Consolidated Net Income for such fiscal period after eliminating
therefrom, without duplication, all non-cash extraordinary nonrecurring
items of gains or losses for such period and after eliminating
therefrom the Parent's September 30, 1997 restructuring charge and the
Shareholder Litigation Charge for such period in which such charges
relate, plus, to the extent otherwise deducted in arriving at
Consolidated Net Income and without duplication, (a) tax expense for
such period, plus (b) Net Interest Expense for such period, all as
determined in accordance with generally accepted accounting principles.
Interest Coverage Ratio. As at any date of determination, the
ratio of (a) EBIT of the Parent and its Subsidiaries for the Reference
Period ending on such date to (b) Net Interest Expense of the Parent
and its Subsidiaries for such Reference Period.
Net Interest Expense. As at any date of determination, (a)
Consolidated Total Interest Expense of the Parent and its Subsidiaries
for the relevant period, less (b) interest income of the Parent and its
Subsidiaries for such period as determined in accordance with generally
accepted accounting principles.
Reference Period. Each period of four consecutive complete
fiscal quarters (or such shorter period of three consecutive fiscal
quarters as has elapsed since June 30, 1997).
Shareholder Litigation Charge. The after tax charge taken by
the Parent on or before December 31, 1997, associated with the Class
Action Settlement and in accordance with generally accepted accounting
principles, less any subsequent insurance recoveries (such recoveries
to be net of taxes and expenses incurred in connection with such
recoveries) received by the Parent (whether by assignment or otherwise)
in connection therewith; provided, however, for purposes of calculating
compliance with the financial covenants set forth in ss.11 hereof, such
charge shall not exceed, in the aggregate, $40,000,000.
ss.2. Amendment to ss.8 of the Credit Agreement. Section 8 of the
Credit Agreement is hereby amended as follows:
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(a) Section 8.4(b) of the Credit Agreement is hereby amended by
deleting ss.8.4(b) in its entirety and restating it as follows:
(b) Except for (x) matters disclosed in the Parent's (i) Forms
10-K for the fiscal years ended, respectively, June 30, 1996 and June
30, 0000 (xxx "Xxxxx 00-X"), (xx) Forms 10-Q for the quarterly periods
ended, respectively, September 30, 1996, December 31, 1996 and March
31, 1997 (the "Forms 10-Q") and (iii) Form 8-K filed on November 21,
1996 (the "Form 8-K") (other than the actions, suits and proceedings
that are subject to the Class Action Settlement), as to which the
ultimate outcome, and whether or not such matters could reasonably be
expected to have a Material Adverse Effect, are not known at this time
(or, if the outcome is known, such outcome could not reasonably be
expected to have a Material Adverse Effect), (y) the actions, suits and
proceedings that are subject to the Class Action Settlement, the
outcome of which the Parent believes will not have a Material Adverse
Effect, and (z) any other actions, suits or proceedings based primarily
on allegations similar to those contained in the actions, suits or
proceedings that are the subject of clauses (x) and (y) above, since
June 30, 1997, there has been no event, act, condition or occurrence
having a Material Adverse Effect; provided, that, during the term of
this Credit Agreement and after the Closing Date, future
representations as to the matters set forth in this ss.8.4 shall be
deemed to refer to the most recent financial statements delivered
pursuant to ss.9.4(a) or (b), respectively, including notes thereto and
any statement of the Parent or auditors accompanying such financial
statements
(b) Section 8.5 of the Credit Agreement is hereby amended by deleting
ss.8.5 in its entirety and restating it as follows:
8.5. No Litigation. Except for (x) the proceedings described
in the Forms 10-K, the Forms 10-Q and Form 8-K referred to above (other
than those that are subject to the Class Action Settlement), as to
which the ultimate outcome, and whether or not such matters could
reasonably be expected to have a Material Adverse Effect, are not known
at this time (or, if the outcome is known, such outcome could not
reasonably be expected to have a Material Adverse Effect), and any
other actions, suits or proceedings based primarily on allegations
similar to those contained in such proceedings disclosed in such Forms
10-K, Forms 10-Q and Form 8-K, and (y) the proceedings that are subject
to the Class Action Settlement, the outcome of which the Parent
believes will not have a Material Adverse Effect, there is no action,
suit or proceeding pending, or to the knowledge of each Borrower,
threatened, against or affecting such Borrower or any of the
Subsidiaries of such Borrower before any court or arbitrator or any
governmental body, agency or official which could reasonably be
expected to have a Material Adverse Effect or which could impair in any
material respect the ability of the Borrowers taken as a whole or, on
the occasion of each borrowing, of the Borrower making such borrowing,
to perform its obligations under, this Credit Agreement, the Notes or
any of the other Loan Documents executed by
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such Borrower. In addition, there is no action, suit or proceeding
pending, or to the knowledge of each Borrower threatened, against or
affecting such Borrower or any of the Subsidiaries of such Borrower
before any court or arbitrator or any governmental body, agency or
official which in any manner draws into question the validity of this
Credit Agreement, the Notes or any of the other Loan Documents executed
by such Borrower.
ss.3. Amendment to ss.10 of the Credit Agreement. Section 10.9 of the
Credit Agreement is hereby amended by deleting all the text which immediately
follows the words "provided, however," and inserting in place thereof the
following:
"so long as no Default or Event of Default has occurred and is
continuing or would exist as a result of such a transaction, the Parent
and its Subsidiaries shall be permitted to (a) enter into a sale and
leaseback transaction pertaining to the Parent's "Corporate Office
Building" located at 000 Xxxxxx Xxxx, Xxxx Xxxxx, Xxxxxxx 00000 and the
Parent's "Boca Operations Center" located at 0000 Xxxxxxxx Xxxxxx, Xxxx
Xxxxx Xxxxxxx 00000 so long as the purchase price for each such sale
and leaseback is no less than the fair market value of the applicable
asset at the time of the sale and (b) other sale and leaseback
transactions so long as (i) the aggregate net cash proceeds received
for all such sales or dispositions does not exceed $5,000,000 during
the term of this Credit Agreement and (ii) the purchase price for each
such sale and leaseback is no less than the fair market value of the
applicable asset at the time of the sale."
ss.4. Amendment to ss.11 of the Credit Agreement. Section 11 of the
Credit Agreement is hereby amended as follows:
(a) Section 11.1 of the Credit Agreement is hereby amended by deleting
ss.11.1 in its entirety and restating it as follows:
11.1. Net Worth. The Parent will not permit at any time its
Consolidated Net Worth to be less than (a) $730,000,000 less the
Shareholder Litigation Charge, plus (i) if the date of determination is
any day during the period from and including January 1, 1997 through
June 30, 1998 ("Period 1"), 100% of the aggregate net CTA from the
first day of Period 1 to through the date of determination; (ii) if the
date of determination is any day during the period from and including
July 1, 1998 through June 30, 1999 ("Period 2"), the sum of the 100% of
the aggregate net CTA for Period 1, plus seventy five percent (75%) of
the aggregate net CTA from the first day of Period 2 through such date
of determination; and (iii) if the date of determination is any day
during the period commencing on or after July 1, 1999 ("Period 3"), the
sum of 100% of the aggregate net CTA for Period 1 plus seventy five
percent (75%) of the aggregate net CTA for Period 2 plus fifty percent
(50%) of the aggregate net CTA during the period from and including the
first day of Period 3 through the date of determination; plus (b) the
cumulative sum of fifty percent (50%) of Consolidated Net Income
(without reduction for any net losses) for each
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completed fiscal year ending after June 30, 1997 and on or before the
date 120 days prior to the date of determination, plus (c) for the then
current fiscal year, the cumulative sum of fifty percent (50%) of
Consolidated Net Income (without reduction for any net losses) from the
beginning of such year to the last day of the Fiscal Quarter of the
Parent most recently ended as of the date sixty (60) days prior to the
date of determination. For purposes of calculating compliance with this
ss.11.1, the Parent will include as a debit (without duplication of any
amounts which already may be reflected in the financial statements of
the Parent or its Subsidiaries with respect to such amounts) the net
after tax charge of any judgment or settlement in respect of any
litigation described in Forms 10-K, Forms 10-Q or Form 8-K (as defined
in ss.8.4(b) hereof) or any other actions, suits or proceedings based
primarily on allegations similar to those contained in such
proceedings, in the case of a judgment, upon the entry of such judgment
by the court (unless such judgment is being appealed and execution of
such judgment is stayed) and, in the case of a settlement, upon the
approval of such settlement by the court (or, if such settlement is not
to be approved by the court, upon payment of such settlement).
(b) Section 11 of the Credit Agreement is further amended by inserting
the following immediately after the end of ss.11.3:
11.4. EBIT to Interest. The Parent will not, as of the end of
any Reference Period ending on any date described in the table set
forth below, permit the Interest Coverage Ratio for such Reference
Period to be less than the ratio set forth opposite such period in such
table:
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Reference Period Ending Ratio
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03/31/98 1.05:1.00
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06/30/98 , 09/30/98 and 12/31/98 1.70:1.00
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03/31/99 - 06/30/99 1.90:1.00
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the last day of each fiscal quarter
ending thereafter 2.00:1.00
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ss.5. Amendment to Exhibit I. The Compliance Certificate Worksheet
attached to Exhibit I to the Credit Agreement is hereby amended by making all
modifications to the financial covenants and definitions used therein
(including, without limitation, adding the Interest Coverage Ratio set forth in
ss.11.4 to the Credit Agreement) to conform such definitions and covenants to
the definitions and covenants to the Credit Agreement as modified by this First
Amendment.
ss.6. Consent to Amendment to Senior Notes. Upon the effectiveness of
this First Amendment as set forth in ss.7 below, the Majority Banks hereby
consent to the amendment of the Note Agreement (1996) provided such amendment is
substantially in the form and substance as the amendment attached hereto as
Exhibit A.
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ss.7. Conditions to Effectiveness. This First Amendment shall not
become effective until the Agent receives the following:
(a) a counterpart of this First Amendment executed by the Borrowers and
the Majority Banks;
(b) evidence satisfactory to the Agent that the Parent has obtained an
amendment to the covenants contained in the Note Agreement (1996), which
amendment shall be in form and substance satisfactory to the Agent;
(c) receipt by the Agent for the respective pro rata accounts of each
Bank consenting to this First Amendment of an amendment fee, in cash, in amount
equal to five basis points on the aggregate Commitments of all the Banks
consenting to this First Amendment.
ss.8. Representations and Warranties. Each of the Borrowers hereby
repeats, on and as of the date hereof, each of the representations and
warranties made by it in ss.8 of the Credit Agreement (except to the extent that
such representations and warranties relate expressly to an earlier date),
provided, that all references therein to the Credit Agreement shall refer to
such Credit Agreement as amended hereby. In addition, each of the Borrowers
hereby represents and warrants that the execution and delivery by such Borrower
of this First Amendment and the performance by such Borrower of all of its
agreements and obligations under the Credit Agreement as amended hereby are
within the corporate authority of such Borrower and have been duly authorized by
all necessary corporate action on the part of such Borrower, and further
represents and warrants that the execution and deliver by such Borrower of this
First Amendment and the performance by such Borrower of the transactions
contemplated hereby will not contravene, or constitute a default under, any
material provision of applicable law or regulation or, to the best of the
Borrower's knowledge, of any material agreement relating to Debt, or other
material instrument relating to Debt, judgment, injunction, order or decree
binding upon the Borrower.
ss.9. Ratification, Etc. Except as expressly amended hereby, the Credit
Agreement and all documents, instruments and agreements related thereto are
hereby ratified and confirmed in all respects and shall continue in full force
and effect. The Credit Agreement and this First Amendment shall be read and
construed as a single agreement. All references in the Credit Agreement, the
Loan Documents or any related agreement or instrument to the Credit Agreement
shall hereafter refer to the Credit Agreement as amended hereby.
ss.10. No Waiver. Nothing contained herein shall constitute a waiver
of, impair or otherwise affect any Obligations, any other obligation of the
Borrowers or any rights of the Agent or the Banks consequent thereon.
ss.11. Counterparts. This First Amendment may be executed in one or
more counterparts, each of which shall be deemed an original but which together
shall constitute one and the same instrument.
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ss.12. Governing Law. THIS FIRST AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT
REFERENCE TO CONFLICT OF LAWS).
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties hereto have executed this First
Amendment as a document under seal as of the date first above written.
SENSORMATIC ELECTRONICS
CORPORATION
By:
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Name:
Title:
BANKBOSTON, N.A.
By:
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Name:
Title:
SUN TRUST BANK, SOUTH FLORIDA, N.A.
By:
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Name:
Title:
CITIBANK, N.A.
By:
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Name:
Title:
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THE FUJI BANK LIMITED,
NEW YORK BRANCH
By:
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Name:
Title:
CIBC, INC.
By:
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Name:
Title:
NATIONSBANK, N.A.
By:
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Name:
Title:
UNION BANK OF SWITZERLAND,
NEW YORK BRANCH
By:
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Name:
Title:
By:
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Name:
Title:
LTCB TRUST COMPANY
By:
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Name:
Title:
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MITSUBISHI TRUST & BANKING
CORPORATION (U.S.A.)
By:
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Name:
Title:
THE SUMITOMO BANK, LIMITED
By:
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Name:
Title:
THE YASUDA TRUST AND BANKING
COMPANY LIMITED, NEW YORK BRANCH
By:
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Name:
Title:
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, ATLANTA AGENCY
By:
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Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO
By:
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Name:
Title:
INSTITUTO BANCARIO SAN PAOLO di
TORINO SPA
By:
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Name:
Title:
By:
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Name:
Title:
