Exhibit 4.1
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ACTERNA CORPORATION
ACTERNA LLC
INVESTMENT AGREEMENT
$75,000,000 Principal Amount of 12%
Senior Secured Convertible Notes Due 2007
of Acterna LLC
Dated as of December 27, 2001
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TABLE OF CONTENTS
Page
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Article I
Authorization, Issuance, Purchase and Sale of Notes and Warrants
1.1 Authorization of the Notes............................................ 1
1.2 Authorization of Warrants............................................. 1
1.3 Sale and Purchase of Notes............................................ 2
Article II
The Closing
2.1 Date, Time and Location of Closing.................................... 2
2.2 Delivery of Initial Notes and Purchase Price.......................... 2
Article III
Representations and Warranties of the Parent and the Company
3.1 Corporate Existence; Compliance with Law.............................. 2
3.2 Corporate Power; Authorization; Enforceable Obligations............... 3
3.3 Capitalization........................................................ 4
3.4 Financial Condition................................................... 4
3.5 Absence of Changes.................................................... 5
3.6 No Legal Bar.......................................................... 5
3.7 No Material Litigation................................................ 5
3.8 No Default............................................................ 5
3.9 Ownership of Property; Liens.......................................... 5
3.10 Intellectual Property................................................. 5
3.11 No Burdensome Restrictions............................................ 6
3.12 Taxes................................................................. 6
3.13 Federal Reserve Regulations........................................... 6
3.14 ERISA................................................................. 7
3.15 Investment Company Act; Other Regulations............................. 7
3.16 Subsidiaries.......................................................... 7
3.17 Environmental Matters................................................. 7
3.18 Note Security Documents; Second Lien.................................. 9
3.19 Disclosure............................................................ 9
3.20 Solvency.............................................................. 9
3.21 Senior Indebtedness................................................... 10
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Article IV
Representations and Warranties of the Investor
4.1 Experience............................................................ 10
4.2 Investment Intent..................................................... 10
4.3 Notes, Warrants and Common Stock Not Registered....................... 10
Article V
Conditions to Closing
5.1 Conditions to Obligations of Each Party............................... 11
5.2 Conditions to Obligations of the Investor............................. 12
Article VI
The Convertible Notes; General Terms
6.1 Interest Accrual...................................................... 14
6.2 Payments.............................................................. 14
6.3 Conversion............................................................ 15
6.4 Optional Redemption................................................... 24
6.5 Mandatory Offer to Repurchase Upon Change of Control.................. 25
6.6 Mandatory Offer to Repurchase CD&R Notes Upon Disposition of Assets... 27
6.7 Issuance of Warrants Upon Early Redemption or Repurchase.............. 32
6.8 Register of Holders................................................... 32
6.9 Exchange of Notes Upon Transfer....................................... 33
6.10 Mutilated, Destroyed, Lost and Stolen Notes........................... 33
Article VII
Affirmative Covenants of the Company
7.1 Financial Statements.................................................. 34
7.2 Certificates; Other Information....................................... 35
7.3 Payment of Obligations................................................ 36
7.4 Conduct of Business and Maintenance of Existence...................... 36
7.5 Maintenance of Property; Insurance.................................... 36
7.6 Inspection of Property; Books and Records; Discussions................ 37
7.7 Notices............................................................... 37
7.8 Environmental Laws.................................................... 39
7.9 Additional Collateral................................................. 39
7.10 Liens................................................................. 42
7.11 Note Guarantors....................................................... 43
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Article VIII
Negative Covenants of the Company
8.1 Limitation on Indebtedness..................................................... 44
8.2 Limitation on Restricted Payments.............................................. 48
8.3 Limitation on Restrictions on Distributions from Restricted Subsidiaries....... 52
8.4 Limitation on Sales of Assets and Subsidiary Stock............................. 54
8.5 Limitation on Transactions with Affiliates..................................... 57
8.6 Limitation on Liens............................................................ 58
8.7 Limitation on Optional Payments and Modifications of Debt Instruments and
other Material Agreements...................................................... 59
8.8 Limitation on Negative Pledge Clauses.......................................... 60
Article IX
Successor Company
9.1 When the Company May Merge, etc................................................ 61
9.2 Successor Company Substituted.................................................. 62
Article X
Events of Default
10.1 Events of Default.............................................................. 62
10.2 Acceleration of Maturity; Rescission and Annulment............................. 65
10.3 Unconditional Right of Holders to Receive Principal, Premium and Interest...... 66
10.4 Restoration of Rights and Remedies............................................. 66
10.5 Rights and Remedies Cumulative................................................. 66
10.6 Delay or Omission Not Waiver................................................... 66
10.7 Waiver of Past Defaults........................................................ 67
10.8 Waiver of Stay, Extension or Usury Laws........................................ 67
Article XI
Termination
11.1 Termination.................................................................... 67
11.2 Effect of Termination.......................................................... 67
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Article XII
Definitions
Article XIII
Miscellaneous
13.1 Notices............................................................... 101
13.2 Governing Law, etc.................................................... 102
13.3 Jurisdiction; Waiver of Jury Trial; Waiver of Punitive Damages........ 102
13.4 Binding Effect........................................................ 103
13.5 Assignment............................................................ 103
13.6 No Third-Party Beneficiaries.......................................... 103
13.7 Amendment; Waivers, etc............................................... 103
13.8 Survival of Representations and Warranties............................ 105
13.9 Payment of Expenses and Taxes......................................... 105
13.10 Judgment Currency..................................................... 107
13.11 Entire Agreement...................................................... 107
13.12 Severability.......................................................... 107
13.13 Headings.............................................................. 108
13.14 Rules of Construction................................................. 108
13.15 Schedules............................................................. 108
13.16 Counterparts.......................................................... 109
Schedule 3.2(a): Consents, Authorizations, Notices and Filings
Schedule 3.3: Capitalization
Schedule 3.16: Subsidiaries
Annex A: Terms of Note Guarantees of Transferred Notes
Exhibit A: Form of Note
Exhibit B: Form of Warrant
Exhibit C: Form of Second Credit Agreement Amendment
Exhibit D: Form of Amendment No. 2 to the Registration Rights Agreement
Exhibit E: Form of Guarantee and Collateral Agreement
Exhibit F: Form of Intercreditor Agreement
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INVESTMENT AGREEMENT
INVESTMENT AGREEMENT, dated as of December 27, 2001, among Acterna
Corporation, a Delaware corporation (together with its successors and assigns,
the "Parent"), Acterna LLC, a Delaware limited liability company wholly owned
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and controlled by the Parent (together with its successors and assigns, the
"Company"), and Clayton, Dubilier & Rice Fund VI Limited Partnership, a Cayman
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Islands exempted limited partnership (together with its successors and assigns,
the "Investor"). Capitalized terms used in this Agreement and not otherwise
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defined are defined in Article XII.
Recitals
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WHEREAS, the Company desires to issue and sell to the Investor, and the
Investor desires to purchase from the Company, $75,000,000 in aggregate
principal amount of 12% Senior Secured Convertible Notes due December 31, 2007
of the Company (the "Initial Notes");
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WHEREAS, the Parent, the Company and the Investor have agreed that the
Notes will be secured, on and subject to the terms of (a) a Guarantee and
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Collateral Agreement, dated as of December 27, 2001 (the "Guarantee and
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Collateral Agreement"), by the Parent, the Company and certain Subsidiaries of
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the Company for the benefit of the Investor, and (b) an Intercreditor Agreement,
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dated as of December 27, 2001 (the "Intercreditor Agreement"), between the Bank
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Agent and the Investor, and consented to by the Parent, the Company and certain
Subsidiaries of the Company;
WHEREAS, the Parent, the Company and the Investor desire to enter into this
Agreement to govern the terms of the CD&R Investment;
NOW, THEREFORE, in consideration of the mutual premises, covenants,
representations and warranties made in this Agreement and of the mutual benefits
to be derived from this Agreement, the parties hereto agree as follows:
Article I
Authorization, Issuance, Purchase and Sale of Notes and Warrants
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1.1 Authorization of the Notes. The Company has authorized the issuance
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and sale of the Notes on the terms set forth in this Agreement, to be in the
form of Exhibit A hereto, with such changes therefrom, if any, as may be
approved by the Company and the Investor.
1.2 Authorization of Warrants. The Parent has authorized the issuance,
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upon the redemption or repurchase of the Notes prior to the Maturity Date, of
warrants (each, a "Warrant") to purchase a number of newly-issued shares of
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Common Stock equal to the number of shares of Common Stock into which the Notes
were convertible immediately
prior to such redemption or repurchase, at the exercise price per share equal to
the Conversion Price, to be in the form of Exhibit B hereto, with such changes
therefrom, if any, as may be approved by the Parent and the Holder of the Notes
so redeemed or repurchased.
1.3 Sale and Purchase of Notes. Subject to the terms and conditions of
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this Agreement, at the Closing the Company will issue and sell to the Investor,
and the Investor will purchase from the Company, the Initial Notes for a
purchase price equal to one-hundred percent (100%) of the aggregate Principal
Amount of the Initial Notes (the "Purchase Price").
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Article II
The Closing
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2.1 Date, Time and Location of Closing. The purchase and sale of the
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Initial Notes shall take place at the offices of Debevoise & Plimpton, 919 Third
Avenue, New York, New York 10022, at 10:00 a.m., New York City time, at a
closing (the "Closing") on January 15, 2002, or on such other Business Day
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thereafter as may be agreed upon by the Parent, the Company and the Investor
(the "Closing Date").
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2.2 Delivery of Initial Notes and Purchase Price. At the Closing, (a) the
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Company will deliver the Initial Notes to the Investor in the form of a single
promissory note (or such greater number of promissory notes in denominations of
at least $500,000 and integral multiples thereof as the Investor may request),
in the form of Exhibit A hereto, with such changes therefrom, if any, as may be
approved by the Company and the Investor, dated the Closing Date and registered
in the name of the Investor (or its nominee), and (b) the Investor shall deliver
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the Purchase Price to the Company by wire transfer of immediately available
funds to an account previously designated in writing by the Company.
Article III
Representations and Warranties of the Parent and the Company
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The Parent and the Company hereby represent and warrant as follows:
3.1 Corporate Existence; Compliance with Law. Each of the Parent, the
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Company and the Subsidiaries of the Company (a) is duly organized, validly
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existing and in good standing under the laws of the jurisdiction of its
organization, (b) has the corporate or other organizational power and authority,
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and the legal right, to own and operate its property, to lease the property it
operates as lessee and to conduct the business in which it is currently engaged,
except to the extent that the failure to have such legal right would not be
reasonably expected to have a Material Adverse Effect, (c) is duly qualified as
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a foreign entity and in good standing under the laws of each jurisdiction
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where its ownership, lease or operation of property or the conduct of its
business requires such qualification, other than in such jurisdictions where the
failure to be so qualified and in good standing would not be reasonably expected
to have a Material Adverse Effect and (d) is in compliance with all Requirements
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of Law except to the extent that the failure to comply therewith would not, in
the aggregate, reasonably be expected to have a Material Adverse Effect.
3.2 Corporate Power; Authorization; Enforceable Obligations.
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(a) Each of the Parent, the Company and the Subsidiaries of the
Company (i) has the corporate or other organizational power and authority, and
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the legal right, to make, deliver and perform under this Agreement and the other
Transaction Agreements to which it is a party and (ii) has taken all necessary
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corporate or other organizational action to authorize the execution, delivery
and performance of this Agreement and the other Transaction Agreements to which
it is a party. No consent or authorization of, filing with, notice to or other
similar act by or in respect of, any Governmental Authority or any other Person
is required to be obtained or made by or on behalf of the Parent, the Company or
any Subsidiary in connection with the borrowings hereunder or with the
execution, delivery, performance, validity or enforceability of this Agreement
or the other Transaction Agreements, except for (w) consents, authorizations,
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notices and filings described in Schedule 3.2(a), all of which have been
obtained or made, (x) filings to perfect the Liens created by the Note Security
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Documents, (y) filings pursuant to the Assignment of Claims Act of 1940, as
amended (31 U.S.C. (S). 3737 et seq.), in respect of accounts of the Parent, the
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Company or any Subsidiary of the Company, the obligor in respect of which is the
United States of America or any department, agency or instrumentality thereof,
and (z) consents, authorizations, notices and filings which the failure to
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obtain or make would not reasonably be expected to have a Material Adverse
Effect.
(b) This Agreement has been, and each of the other Transaction
Agreements and any other agreement to be entered into pursuant hereto will be,
duly executed and delivered on behalf of the Parent, the Company or any
Subsidiary of the Company, as appropriate. This Agreement constitutes, and each
of the other Transaction Agreements and any other agreement to be entered into
pursuant to this Agreement will, upon their execution and delivery, constitute,
a legal, valid and binding obligation of the Parent, the Company or any
Subsidiary of the Company, as appropriate, enforceable in accordance with its
terms, except as may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium, or similar laws relating to or affecting
creditors' rights generally and by general equitable principles (regardless of
whether enforcement is sought in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
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3.3 Capitalization. Schedule 3.3 sets forth a complete and correct
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description of the shares of capital stock of, or other securities or
instruments convertible into or exchangeable for any capital stock of or other
equity interest in, the Parent and the Company that are authorized, or issued
and outstanding as of the date set forth in such Schedule. Except as set forth
in Schedule 3.3, (a) there are no preemptive or similar rights on the part of
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any holders of any class of securities of the Parent or the Company, (b) no
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subscriptions, options, warrants, conversion or other rights, agreements,
commitments, arrangements or understandings of any kind obligating any Person,
contingently or otherwise, to issue or sell, or cause to be issued or sold, any
shares of capital stock of any class of the Parent or the Company, or any
securities or other instruments convertible into or exchangeable for any such
shares, are outstanding and (c) no authorization for any of the foregoing has
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been given. There are no outstanding contractual or other rights or obligations
to or of any Person to repurchase, redeem or otherwise acquire any outstanding
shares or other equity interests in the Parent or the Company.
3.4 Financial Condition. The audited consolidated balance sheets of the
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Parent and its Subsidiaries as at March 31, 2001 and March 31, 2000, and the
related consolidated statements of income and of cash flows for the fiscal years
ended on such dates, as filed by the Parent with the United States Securities
and Exchange Commission (and reported on by and accompanied by an unqualified
report from PricewaterhouseCoopers), present fairly, in all material respects,
the consolidated financial condition of the Parent and its Subsidiaries as at
such respective dates, and the consolidated results of its operations and its
consolidated cash flows for the respective fiscal years then ended. The
unaudited consolidated balance sheet of the Parent and its Subsidiaries as at
September 30, 2001, and the related unaudited consolidated statements of income
and cash flows for the six-month period ended on such date, as filed by the
Parent with the United States Securities and Exchange Commission, on the basis
disclosed in the footnotes to such financial statements, present fairly, in all
material respects, the consolidated financial condition of the Parent and its
Subsidiaries as at such date, and the consolidated results of its operations and
its consolidated cash flows for the nine-month period then ended (subject to the
omission of certain footnotes and normal year-end audit and other adjustments).
All such financial statements, including the related schedules and notes
thereto, have been prepared in accordance with GAAP applied consistently
throughout the periods involved (except as approved by the Chief Financial
Officer of the Parent, and disclosed in any such schedules and notes, and except
that such unaudited financial statements do not contain certain footnotes). All
material Guarantee Obligations, material contingent liabilities and liabilities
for taxes, or all material long-term leases or unusual forward or long-term
commitments, including, without limitation, any interest rate or foreign
currency swap or exchange transaction or other obligation in respect of
derivatives, which according to GAAP must be reflected in such financial
statements or the notes thereto, are so reflected.
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3.5 Absence of Changes. Since September 30, 2001, there has been no
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development or event relating to or affecting the Parent, the Company or any
Subsidiary of the Company which has had or would reasonably be expected to have
a Material Adverse Effect (after giving effect to the Transactions).
3.6 No Legal Bar. The execution, delivery and performance of this
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Agreement and the other Transaction Agreements by the Parent, the Company and
the Subsidiaries of the Company, as appropriate, and the use of the proceeds of
the CD&R Investment by the Company, (a) will not violate any Requirement of Law
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or any Contractual Obligation applicable to or binding upon the Parent, the
Company and any Subsidiary of the Company or any of their respective properties
or assets in any respect that would reasonably be expected to have a Material
Adverse Effect and (b) will not result in the creation or imposition of any Lien
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on any of the properties or assets of the Parent, the Company or the
Subsidiaries of the Company pursuant to any Requirement of Law or Contractual
Obligation, except for the Liens (i) arising under the Security Documents (as
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defined in the Credit Agreement) or the Note Security Documents or (ii) that are
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Permitted Liens and are permitted under the Credit Agreement (after giving
effect to the Second Credit Agreement Amendment).
3.7 No Material Litigation. No litigation by, investigation by, or
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proceeding of or before any arbitrator or any Governmental Authority is pending
or, to the knowledge of the Parent, the Company or any Subsidiary of the
Company, threatened by or against the Parent, the Company or any Subsidiary of
the Company (or any of their respective properties or revenues, after giving
effect to the CD&R Investment) which would reasonably be expected to have a
Material Adverse Effect.
3.8 No Default. Neither the Parent, the Company nor any Subsidiary of the
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Company is in default under or with respect to any Contractual Obligation which
would reasonably be expected to have a Material Adverse Effect. No Bank Default
Event or Senior Subordinated Default Event has occurred and is continuing.
3.9 Ownership of Property; Liens. Each of the Parent, the Company and the
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Subsidiaries of the Company has good record and marketable title in fee simple
to, or a valid leasehold interest in, all of its material real property, and
good title to, or a valid leasehold interest in, all of its other material
property, and none of such property is subject to any Lien, except for Liens (a)
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arising under the Security Documents (as defined in the Credit Agreement) or the
Note Security Documents or (b) that are Permitted Liens and are permitted under
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the Credit Agreement (after giving effect to the Second Credit Agreement
Amendment).
3.10 Intellectual Property. Each of the Parent, the Company and the
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Subsidiaries of the Company owns, or is licensed (or otherwise has the legal
right) to use, all United States trademarks, tradenames, copyrights, technology,
know-how and
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processes necessary for the conduct of its business substantially as currently
conducted, except for those United States trademarks, tradenames, copyrights,
technology, know-how and processes, the failure to own or license (or otherwise
have the legal right to use) which would not reasonably be expected to have a
Material Adverse Effect (the "Intellectual Property"). No claim has been
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asserted and is pending by any Person challenging or questioning the use of any
Intellectual Property or the validity or effectiveness of any Intellectual
Property, nor does the Parent, the Company or any Subsidiary of the Company know
of any valid basis for any such claim and to the knowledge of each of the
Parent, the Company and the Subsidiaries of the Company, the use of the
Intellectual Property by the Parent, the Company and the Subsidiaries of the
Company does not infringe on the rights of any Person, except for such claims
and infringements that, in the aggregate, would not reasonably be expected to
have a Material Adverse Effect.
3.11 No Burdensome Restrictions. No Requirement of Law applicable to or
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Contractual Obligation of any of the Parent, the Company and the Subsidiaries of
the Company would reasonably be expected to have a Material Adverse Effect.
3.12 Taxes. Each of the Parent, the Company and its Subsidiaries has filed
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or caused to be filed all United States federal income tax returns and all other
material tax returns which, to the knowledge of the Company, are required to be
filed and has paid all taxes shown to be due and payable on said returns or on
any assessments made against it or any of its property and all other taxes, fees
or other charges imposed on it or any of its property by any Governmental
Authority (other than any (i) taxes, fees or other charges with respect to which
the failure to pay, in the aggregate, would not have a Material Adverse Effect
or (ii) taxes, fees or other charges the amount or validity of which are
currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided on the
books of the Parent, the Company or its Subsidiaries, as the case may be); no
tax Lien has been filed, and, to the knowledge of the Company, no claim is being
asserted, with respect to any such tax, fee or other charge.
3.13 Federal Reserve Regulations. Neither the Parent, the Company nor any
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Subsidiary of the Company will, directly or indirectly, use any of the proceeds
of the CD&R Investment for the purpose, whether immediate, incidental or
ultimate, of buying "margin stock" or of maintaining, reducing or retiring any
indebtedness originally incurred to purchase a stock that is currently "margin
stock", or otherwise take or permit to be taken any action which would involve a
violation of any regulation of the Board of Governors of the Federal Reserve
System. No indebtedness being reduced or retired out of the proceeds of the CD&R
Investment was incurred for the purpose of purchasing or carrying any "margin
stock" and neither the Parent, the Company nor any Subsidiary owns or has any
intention of acquiring any "margin stock".
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3.14 ERISA. During the respective five year periods prior to each of the
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date hereof and the Closing Date, with respect to any Plan (or, with respect to
(e) or (h) below, as of the date such representation is made or deemed made),
none of the following events or conditions, either individually or in the
aggregate, has resulted or is reasonably likely to result in a liability to the
Parent, the Company or any Subsidiary of the Company which would be reasonably
expected to have a Material Adverse Effect: (a) a Reportable Event; (b) an
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"accumulated funding deficiency" (within the meaning of Section 412 of the Code
or Section 302 of ERISA); (c) any material noncompliance with the applicable
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provisions of ERISA or the Code; (d) a termination of a Single Employer Plan
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(other than a standard termination pursuant to Section 4041(b) of ERISA); (e) a
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Lien in favor of the PBGC or a Plan; (f) under-funding with respect to any
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Single Employer Plan; (g) a complete or partial withdrawal from any
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Multiemployer Plan by the Parent, the Company, any Subsidiary of the Company or
any Commonly Controlled Entity; (h) any liability of the Parent, the Company,
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any Subsidiary of the Company or any Commonly Controlled Entity under ERISA if
the Parent, the Company, any Subsidiary of the Company or any Commonly
Controlled Entity were to withdraw completely from all Multiemployer Plans as of
the annual valuation date most closely preceding the date on which this
representation is made or deemed made; (i) the Reorganization or Insolvency of
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any Multiemployer Plan; and (j) an event or condition with respect to which the
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Parent, the Company, any Subsidiary of the Company or any Commonly Controlled
Entity has incurred or could incur any liability in respect of a Former Plan.
3.15 Investment Company Act; Other Regulations. Neither the Parent, the
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Company nor any Subsidiary of the Company is an "investment company", or a
company "controlled" by an "investment company" required to register as such
under the Investment Company Act of 1940, as amended, within the meaning of such
act. Neither the Parent, the Company nor any Subsidiary is subject to regulation
under any Federal or State statute or regulation (other than Regulation X of the
Board of Governors of the Federal Reserve System) which limits its ability to
incur Indebtedness.
3.16 Subsidiaries. On the Closing Date, the Subsidiaries of the Company
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and their jurisdiction of organization shall be as set forth in Schedule 3.16.
3.17 Environmental Matters. Other than exceptions to any of the following
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that would not, individually or in the aggregate, reasonably be expected to
result in the payment of a Material Environmental Amount:
(a) the facilities and properties owned, leased or operated by each
of the Parent, the Company and the Subsidiaries of the Company (the
"Properties") do not contain any Materials of Environmental Concern in amounts
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or concentrations which (i) constitute a violation of, or (ii) would reasonably
be expected to give rise to liability on the part of any of the Parent, the
Company and the Subsidiaries of the Company under, any applicable Environmental
Law.
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(b) the Properties and all operations at the Properties are in
compliance, and have in the last five years been in compliance, in all material
respects, with all applicable Environmental Laws, and there is no contamination
at, under or about the Properties or violation of any applicable Environmental
Law with respect to the Properties or the business operated by the Parent, the
Company and the Subsidiaries of the Company (the "Business") which would
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materially interfere with the continued operation of the Properties.
(c) neither the Parent, the Company nor any of the Subsidiaries of
the Company has received any written notice of violation, alleged violation,
non-compliance, liability or potential liability regarding environmental matters
or compliance with applicable Environmental Laws with regard to any of the
Properties or the Business, nor does any of the Parent, the Company or the
Subsidiaries of the Company have knowledge or reason to believe that any such
notice will be received or is being threatened.
(d) Materials of Environmental Concern have not been transported or
disposed of from the Properties, in violation of, or in a manner or to a
location which would reasonably be expected to give rise to liability on the
part of any of the Parent, the Company and the Subsidiaries of the Company
under, any applicable Environmental Law, nor have any Materials of Environmental
Concern been generated, treated, stored or disposed of at, on or under any of
the Properties, in violation of, or in a manner that would reasonably be
expected to give rise to liability on the part of the Parent, the Company and
the Subsidiaries of the Company under, any applicable Environmental Law.
(e) no judicial proceeding or governmental or administrative action
is pending or, to the knowledge of any of the Parent, the Company and the
Subsidiaries of the Company, threatened, under any applicable Environmental Law
to which any of the Parent, the Company and the Subsidiaries of the Company is
or will be named as a party with respect to the Properties or the Business, nor
are there any consent decrees or other decrees, consent orders, administrative
orders or other orders, or other administrative or judicial requirements
outstanding under any applicable Environmental Law with respect to the
Properties or the Business.
(f) there has been no release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related to
the operations of any of the Parent, the Company and the Subsidiaries of the
Company in connection with the Properties or otherwise in connection with the
Business, in violation of or in amounts or in a manner that would reasonably be
expected to give rise to liability on the part of any of the Parent, the Company
and the Subsidiaries of the Company under applicable Environmental Laws.
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(g) none of the Parent, the Company and the Subsidiaries of the
Company has assumed or retained, by contract or, to its knowledge, operation of
law, any known or suspected liabilities of any kind, fixed or contingent, as a
result of any violation or breach of applicable Environmental Law or with
respect to any contamination by any Materials of Environmental Concern.
3.18 Note Security Documents; Second Lien. Upon execution and delivery
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thereof by the parties thereto, the Note Security Documents will be effective to
create (to the extent described therein) in favor of and for the benefit of the
Secured Parties, a legal, valid and enforceable security interest in the
Collateral described therein, (a) except as may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing and (b) subject to the
terms of the Intercreditor Agreement. When the actions specified in Schedule 7
to the Guarantee and Collateral Agreement have been duly taken, the security
interests granted pursuant thereto shall constitute (to the extent described
therein) a perfected second priority lien on, and security interest in, all
right, title and interest of each pledgor party thereto in the Collateral
described therein with respect to such pledgor. Neither the Bank Agent nor the
Lenders (as defined in the Credit Agreement) have any security interests in or
Liens on any assets of the Note Financing Parties securing Bank Indebtedness
other than the security interests and Liens created pursuant to the Credit
Documents (as defined in the Credit Agreement as in effect on the date hereof),
and no Bank Indebtedness benefits from any Guarantee of any Subsidiary of the
Company that has not provided a Guarantee under the Guarantee and Collateral
Agreement (except with respect to the Subsidiaries named in and subject to the
provisions of Section 7.9(f)).
3.19 Disclosure. The factual statements contained in the financial
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statements referred to in Section 3.4, the Note Financing Documents (including
the schedules thereto, but excluding any statements by the Investor) and any
other certificates or documents furnished by or on behalf of the Company or any
of its Subsidiaries to the Investor in connection with this Agreement, taken as
a whole, do not, and will not as of the Closing Date, to the best knowledge of
the Company, contain any material misstatement of fact or omit to state a
material fact necessary in order to make the statements contained therein, in
light of the circumstances in which the same were made, not materially
misleading in their presentation of the Transactions or the other transactions
contemplated hereby or by the other Transaction Agreements or of the Company and
its Subsidiaries taken as a whole; all except as otherwise qualified herein or
therein, and such knowledge qualification being given only with respect to
factual statements made by Persons other than the Company or any of its
Subsidiaries.
3.20 Solvency. As of the Closing Date, immediately prior to and after
--------
giving effect to the CD&R Investment, the other Transactions and the incurrence
of all
9
Indebtedness and obligations being incurred in connection herewith and
therewith, and after giving effect to the Guarantee Obligations being made
pursuant to the Guarantee and Collateral Agreement, each of the Parent, the
Company and the Subsidiaries of the Company will be Solvent.
3.21 Senior Indebtedness. The monetary obligations of the Company under
-------------------
this Agreement and the Notes constitute "Senior Indebtedness" under and as
defined in the Senior Subordinated Note Indenture. The Guarantee Obligation
being made by the Parent pursuant to the Guarantee and Collateral Agreement
constitutes "Parent Senior Indebtedness" under and as defined in the Senior
Subordinated Note Indenture.
Article IV
Representations and Warranties of the Investor
----------------------------------------------
The Investor hereby represents and warrants as follows:
4.1 Experience. The Investor (a) acknowledges that the CD&R Investment is
---------- -
by its nature one of high risk, (b) has such knowledge and experience in
-
financial and business matters as to be capable of evaluating the merits and
risks of the CD&R Investment, (c) has been furnished with and has had access to
-
such information as the Investor considers necessary to make a determination as
to the advisability of the CD&R Investment, together with such additional
information as is necessary to verify the accuracy of the information supplied
and (d) financially can afford to bear the economic risk of holding the Notes
-
and, if issued, the Warrants, for an indefinite period and can afford to suffer
the complete loss of the Purchase Price.
4.2 Investment Intent. The Investor is acquiring the Notes and, if issued,
-----------------
the Warrants, as well as the Common Stock issuable upon conversion of the Notes
and the exercise of the Warrants, for investment, for its own account, and not
with a view to, or for resale in connection with, any distribution or public
offering thereof within the meaning of the Securities Act.
4.3 Notes, Warrants and Common Stock Not Registered.
-----------------------------------------------
(a) The Investor acknowledges and understands that the offering of the
Notes and the Warrants issuable upon the early redemption or repurchase of the
Notes pursuant to this Agreement and the Transaction Agreements has not been
registered under the Securities Act or qualified under any state securities
laws.
(b) The Investor acknowledges and understands that (i) the Notes must
be held until the earlier of their maturity, conversion, redemption or
repurchase, unless, prior to any such maturity, conversion, redemption or
repurchase, the Notes are registered under the Securities Act and qualified
under any applicable state securities laws or an exemption from such
registration and such qualification is available, (ii) the Warrants, if
10
issued, must be held until the earlier of their exercise or expiration, unless
such Warrants are, prior to such exercise or expiration, registered under the
Securities Act and qualified under any applicable state securities laws or an
exemption from such registration and such qualification is available and (iii)
the shares of Common Stock issuable upon the conversion or exercise, as
appropriate, of the Notes and Warrants must be held indefinitely unless such
shares of Common Stock are registered under the Securities Act and qualified
under any applicable state securities laws or an exemption from such
registration and such qualification is available.
(c) The Investor has been advised or is aware of the provisions of Rule
144 promulgated under the Securities Act, which permits limited resale of
securities purchased in a private placement subject to the satisfaction of
certain conditions and that such Rule may not become available for resale of the
Notes and Warrants.
Article V
Conditions to Closing
---------------------
5.1 Conditions to Obligations of Each Party. The obligations of the Parent,
---------------------------------------
the Company and the Investor to consummate the transactions contemplated by this
Agreement and the other Transaction Agreements at the Closing shall be subject
to the satisfaction, or waiver by each such party, on or prior to the Closing
Date of the following conditions:
(a) No Injunction etc. Consummation of the transactions contemplated by
-----------------
this Agreement and the other Transaction Agreements shall not have been
restrained, enjoined or otherwise prohibited or made illegal by any Requirement
of Law, and no such Requirement of Law that would have such an effect shall have
been promulgated, entered, issued or determined by any court or other
Governmental Authority to be applicable to this Agreement or the other
Transaction Agreements. No action or proceeding shall be pending on the Closing
Date before any court or other Governmental Authority to restrain, enjoin or
otherwise prevent the consummation of the transactions contemplated by this
Agreement or the Transaction Agreements, or to recover any material damages or
obtain other material relief as a result of such transactions, or that otherwise
relates to the application of any such Requirement of Law.
(b) Government Approvals and Consents. All Governmental Approvals and
---------------------------------
other Consents required to be made or obtained by any of the Parent, the
Company, the Investor and their respective Affiliates, including all Consents to
be obtained by the Company pursuant to the Credit Agreement, in connection with
the execution and delivery of this Agreement and the Transaction Agreements or
the consummation of the transactions contemplated hereby or thereby, shall have
been made or obtained.
11
5.2 Conditions to Obligations of the Investor. The obligations of the
-----------------------------------------
Investor to consummate the transactions contemplated by this Agreement and the
other Transaction Agreements at the Closing shall be subject to the
satisfaction, or waiver by the Investor, on or prior to the Closing Date of the
following conditions:
(a) Representations and Warranties. The representations and warranties
------------------------------
of each Note Financing Party contained in Article III or any other provision of
this Agreement, or in any other Transaction Agreement, (i) shall be true and
correct in all material respects at and as of the date hereof (in the case of
this Agreement and the Guarantee and Collateral Agreement, giving effect to the
delivery of disclosure schedules in accordance with Sections 5.2(l) and 13.15)
as if such schedules, had formed a part of each such respective Transaction
Agreement on the date hereof) and (ii) shall be repeated and true and correct in
all material respects at and as of the Closing as though made at and as of such
date (except to the extent such representations and warranties expressly relate
to an earlier date, in which case such representations and warranties shall be
true and correct in all material respects, on and as of such earlier date).
(b) Performance of Agreements. Each Note Financing Party shall have in
-------------------------
all material respects duly performed and complied with all agreements, covenants
and conditions required by this Agreement or any other Transaction Agreement to
be performed or complied with by it prior to or on the Closing Date.
(c) Second Credit Agreement Amendment. The requisite Lenders (as such
---------------------------------
term is defined in the Credit Agreement), the Company and Acterna International
GmbH shall have entered into, and certain Subsidiaries of the Company shall have
acknowledged and consented to, the Second Credit Agreement Amendment, which
amendment shall be in the form of Exhibit C hereto, with such changes therefrom,
if any, as are satisfactory to the Investor; the Investor shall have received an
executed copy (certified by an officer of the Company) of the Second Credit
Agreement Amendment; and the Second Credit Agreement Amendment and the Credit
Agreement as amended thereby shall be effective and in full force and effect
both before and after giving effect to the purchase and sale of the Initial
Notes on the Closing Date and the other transactions contemplated hereby to
occur on the Closing Date.
(d) Amendment No. 2 to Registration Rights Agreement. The Parent and
------------------------------------------------
the Investor shall have entered into Amendment No. 2 to the Registration Rights
Agreement, which amendment shall be in the form of Exhibit D hereto, with such
changes therefrom, if any, as are satisfactory to the Investor.
(e) Guarantee and Collateral Agreement. Each Note Financing Party and
----------------------------------
the Investor shall have entered into the Guarantee and Collateral Agreement,
which agreement shall be in the form of Exhibit E hereto, with such changes
therefrom, if any, as are satisfactory to the Investor.
12
(f) Intercreditor Agreement. The Bank Agent and the Investor shall have
-----------------------
entered into, and the Parent, the Company and certain Subsidiaries of the
Company shall have acknowledged and consented to, the Intercreditor Agreement,
which agreement shall be in the form of Exhibit F hereto, with such changes
therefrom, if any, as are satisfactory to the Investor.
(g) Fee Letter. The Company and CD&R shall have entered into an
----------
agreement for the payment of a fee to CD&R, at the Closing, for the financial
and management advisory services rendered by CD&R to the Company in connection
with the negotiation and consummation of the CD&R Investment and Second Credit
Agreement Amendment, in form and substance satisfactory to the Investor.
(h) Actions to Perfect Liens. The Investor shall have received evidence
------------------------
in form and substance reasonably satisfactory to it that all filings,
recordings, registrations and other actions, including, without limitation, the
filing of duly executed financing statements on Form UCC-1, necessary or, in the
reasonable opinion of the Investor, reasonably desirable to perfect the Liens
created by the Note Security Documents shall have been completed.
(i) Lien Searches. The Investor shall have received the results of a
-------------
recent search by a Person satisfactory to the Investor, of the Uniform
Commercial Code, judgment and tax lien filings which may have been filed with
respect to personal property of the Parent, the Company and any Domestic
Subsidiary (including any Foreign Subsidiary Holdco) that is a Credit Party, and
the results of such search shall be reasonably satisfactory to the Investor.
(j) No Default. No Bank Default Event, no Senior Subordinated Default
----------
Event and no Default or Event of Default hereunder shall have occurred and be
continuing as of the Closing Date.
(k) Officer's Certificate. Each of the Parent and the Company shall
---------------------
have delivered to the Investor a certificate, dated the Closing Date and signed
by an officer of the Parent or the Company, as appropriate, in form and
substance reasonably satisfactory to the Investor, to the effect set forth above
in Sections 5.2(a), 5.2(b), and 5.2(j).
(l) Disclosure Schedules. The Parent and the Company shall have
--------------------
delivered to the Investor each of the Schedules to this Agreement and the
Guarantee and Collateral Agreement as required hereby and thereby, in form and
substance reasonably satisfactory to the Investor.
(m) Corporate and Other Proceedings. All corporate and other
-------------------------------
proceedings of the Parent, the Company and the Subsidiaries of the Company in
13
connection with the transactions contemplated by this Agreement and the other
Transaction Agreements, and all documents and instruments incident thereto,
shall be satisfactory in form and substance to the Investor and its counsel, and
the Investor and its counsel shall have received all such documents and
instruments, or copies thereof, certified if requested, as may be reasonably
requested.
Article VI
The Convertible Notes; General Terms
------------------------------------
6.1 Interest Accrual. Interest on each Note shall be computed on the basis
----------------
of a three hundred sixty (360) day year of twelve (12) thirty (30) day months,
and shall accrue on the unpaid principal amount of such Note from time to time
outstanding from and including the date thereof at the rate (the "Interest
Rate") of twelve percent (12%) per annum, in arrears, semi-annually on each
March 31st and September 30th (each, an "Interest Payment Date") of each year
(commencing on the later of March 31, 2002 and the Interest Payment Date next
succeeding the date of issuance of such Note) until the Principal Amount of such
Note shall have become due and payable. Any overdue installment of interest or
payment of any Principal Amount (the due date of such installment or payment to
be determined without giving effect to any grace period) shall be payable upon
demand and shall bear interest at a rate per annum equal to the lesser of (a)
the highest rate allowed by applicable law and (b) the Interest Rate plus two
percent (2%).
6.2 Payments.
--------
(a) Interest Payments. The Company shall pay the accrued and unpaid
-----------------
interest on the Notes on each Interest Payment Date, without any presentment of
the Notes by the Holders thereof and without any notation of such payment being
made thereon. With respect to each Note, payments of accrued and unpaid interest
(each, an "Interest Payment") shall be made by the Company to the Holder of such
----------------
Note either (i) in cash or (ii), at the option of the Company, by the issuance
- --
of an additional Note (A) in the form Exhibit A hereto, with such changes
-
therefrom, if any, as may be approved by the Company and the Holder, (B)
-
registered in the name of such Holder, (C) bearing interest at the Interest Rate
-
and (D) having a face value equal to the amount of the Interest Payment
-
applicable to such Note. In the event that an Interest Payment is made by the
Company through the issuance of an additional Note as provided in the previous
sentence, such Interest Payment shall be deemed paid in full and shall not
constitute an overdue installment of interest.
(b) Payment of Principal Upon Maturity. With respect to each Note, on
----------------------------------
the Maturity Date, the Principal Amount of such Note shall become due and
payable and shall be paid by the Company, together with any accrued and unpaid
interest on such Note, to the Holder thereof in cash.
14
(c) Mechanism for Payments in Cash. Any cash payment required to be
------------------------------
made by the Company under this Article VI shall be made by wire transfer of
immediately available funds to an account designated in writing by the Holder to
whom such payment is due.
(d) Payment on Business Day Only. If any payment due on, or with
----------------------------
respect to, any Note shall fall due on a day other than a Business Day, then
such payment shall be made on the next succeeding Business Day following the day
on which such payment shall have so fallen due, without including the additional
days elapsed in the computation of the interest payable on such succeeding
Business Day.
6.3 Conversion.
----------
(a) Subject to and upon compliance with the provisions of this Section
6.3, at the option of the Holder thereof, any Note may be converted into fully
paid and nonassessable shares (calculated as to each conversion to the nearest
1/100th of a share) of Common Stock at the Conversion Rate, determined as
hereinafter provided, in effect at the time of conversion. Such conversion right
shall commence on the initial issuance date of each Note and expire at the close
of business on the Maturity Date. In case a Note or portion thereof is called
for redemption at the election of the Company or the Holder thereof exercises
his right to require the Company to repurchase the Note following a Change of
Control, such conversion right in respect of the Note, or portion thereof so
called, shall expire at the close of business on the Business Day prior to the
Redemption Date or the Change of Control Payment Date, as the case may be,
unless the Company defaults in making the payment due upon redemption or
repurchase, as the case may be. The rate at which shares of Common Stock shall
be delivered upon conversion (the "Conversion Rate") shall be initially three
---------------
hundred thirty three and one-third (333.33) shares of Common Stock for each
$1,000 Principal Amount of Notes. The Conversion Rate shall be adjusted in
certain instances as provided in this Section 6.3. (For the purposes of this
Agreement, an "increase" or "decrease" in the Conversion Rate means that the
number of shares of Common stock issuable upon conversion of each $1,000 of
Principal Amount of the Notes shall be increased or decreased, as appropriate.)
(b) Mechanics of Conversion.
-----------------------
(i) No fractional shares of Common Stock shall be issued upon
conversion of any Note. In lieu of any fractional shares of Common Stock
(or other property) to which a Holder would otherwise be entitled upon
conversion of any Note (or specified portion thereof), the Company shall
pay such Holder cash equal to such fraction multiplied by the Current
Market Price per share of Common Stock on the day of conversion.
15
(ii) Before any Holder of a Note shall be entitled to convert such
Note into Common Stock, such Holder shall surrender such Note, duly
endorsed in blank, to the Company at the principal executive office of the
Company (or any transfer agent designated by the Company), accompanied by
written notice to the Company (a copy of which shall also be delivered to
the Parent) stating therein (A) that such Holder elects to convert all or a
-
specified percentage (based on the Principal Amount and any accrued but
unpaid interest thereon) of such Note into shares of Common Stock in
accordance with this Agreement and (B) the name or names of the Person or
-
Persons which such Holder wishes the certificate or certificates evidencing
the Common Stock to be issued. The Company's or Parent's delivery to the
Holder (or its designee in the notice of conversion) of the number of
shares of Common Stock (and cash in lieu of fractions thereof) into which a
Note is convertible will be deemed to satisfy the Company's obligation to
pay the Principal Amount of (and accrued but unpaid interest on) the Note.
The Parent and the Company shall, as soon as practicable thereafter, (x)
-
issue and deliver to such Holder (or to his nominee or nominees) a
certificate or certificates representing the number of shares of Common
Stock to which such Holder shall be entitled as aforesaid, (y) deliver to
-
such Holder (or to his nominee or nominees) cash in lieu of any fractional
share and (z), if less than the full Principal Amount (and accrued but
-
unpaid interest) evidenced by such surrendered Note is being converted, a
new Note, duly executed and delivered by the Company, with a Principal
Amount equal to the Principal Amount of the Note surrendered for
conversion, plus any accrued but unpaid interest thereon, minus the portion
of such Principal Amount (and accrued but unpaid interest) converted to
shares Common Stock. A Note may be converted in part, but only if the
principal amount of such Note to be converted is any integral multiple of
$1,000 and the principal amount of such Note to remain outstanding after
such conversion is equal to $1,000 or any integral multiple of $1,000 in
excess thereof.
(iii) Any conversion made under this Agreement shall be deemed to have
been made immediately prior to the close of business on the date of
surrender of the Note to be converted, and at such time the rights of the
Holders of such Notes shall cease, and the Person or Persons entitled to
receive the Common Stock issuable upon such conversion shall be treated for
all purposes by the Parent as the record holder or holders of such Common
Stock as of such date.
(c) Anti-Dilution Adjustments. The Conversion Rate shall be subject
-------------------------
to adjustments from time to time as follows:
(i) In case the Parent shall pay or make a dividend or other
distribution on shares of any class of capital stock payable in shares of
Common Stock, the Conversion Rate in effect at the opening of business on
the day following the date fixed for the determination of shareholders
entitled to receive
16
such dividend or other distribution shall be increased by dividing such
Conversion Rate by a fraction of which (x) the numerator shall be the
-
number of shares of Common Stock outstanding at the close of business on
the date fixed for such determination and (y) the denominator shall be the
-
sum of such number of shares and the total number of shares constituting
such dividend or other distribution, such increase to become effective
immediately after the opening of business on the day following the date
fixed for such determination. If, after any such date fixed for
determination, any dividend or distribution is not in fact paid, the
Conversion Rate shall be immediately readjusted, effective as of the date
the Board of Directors determines not to pay such dividend or distribution,
to the Conversion Rate that would have been in effect if such determination
date had not been fixed. For the purposes of this Section 6.3(c)(i), the
number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Parent but shall include shares issuable
in respect of scrip certificates issued in lieu of fractions of shares of
Common Stock.
(ii) In case the Parent shall issue rights, options or warrants to all
or substantially all holders of its Common Stock or to any other Person
(whether or not other holders of its Common Stock receive any such rights,
options or warrants) entitling them to subscribe for or purchase shares of
Common Stock, or securities convertible into shares of Common Stock, at a
price per share (such price per share, the "New Price Per Share") less than
either (A) the Current Market Price per share of the Common Stock or (B)
- -
the Conversion Price in effect, on the date fixed for the determination of
stockholders entitled to receive such rights, options or warrants or, in
the case of any other issuance (an "Issuance"), on the date of such
--------
Issuance (other than any rights, options or warrants that by their terms
will also be issued to any Holder upon conversion of a Note into shares of
Common Stock without any action required by the Parent or any other
Person), the Conversion Rate in effect at the opening of business on the
day following the date fixed for such determination or the date of such
Issuance, as the case may be, shall be increased by dividing such
Conversion Rate by a fraction of which (x) the numerator shall be the
-
number of shares of Common Stock outstanding at the close of business on
the date fixed for such determination or immediately prior to such
Issuance, as the case may be, plus the number of shares of Common Stock
which the aggregate of the offering price of the total number of shares of
Common Stock so offered for subscription or purchase would purchase at (1)
-
if the New Price Per Share is less than both such Current Market Price and
such Conversion Price, the higher of such prices or (2) if the New Price
-
Per Share is less than either such Current Market Price or such Conversion
Price but not both, such price that the New Price Per Share is less than,
(y) the denominator shall be the number of shares of Common Stock
-
outstanding at the close of business on the date fixed for such
determination or immediately prior to such Issuance, as the case may be,
plus the number of shares of Common Stock so
17
offered for subscription or purchase, such increase to become effective
immediately after the opening of business on the day following the date
fixed for such determination or of such Issuance, as the case may be.
If, after any such date fixed for determination or any Issuance, any
such rights, options or warrants are not in fact issued, or are not
exercised, prior to the expiration thereof, the Conversion Rate shall
be immediately readjusted, effective as of the date such rights,
options or warrants expire, or the date the Board of Directors of the
Parent determines not to issue such rights, options or warrants, to the
Conversion Rate that would have been in effect if the unexercised
rights, options or warrants had never been granted or such
determination date had not been fixed, as the case may be. For the
purposes of this Section 6.3(c)(ii), the number of shares of Common
Stock at any time outstanding shall not include shares held in the
treasury of the Company but shall include shares issuable in respect of
scrip certificates issued in lieu of fractions of shares of Common
Stock.
(iii) In case outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the
Conversion Rate in effect at the opening of business on the day
following the day upon which such subdivision becomes effective shall
be proportionately increased, and, conversely, in case outstanding
shares of Common Stock shall be combined into a smaller number of
shares of Common Stock, the Conversion Rate in effect at the opening of
business on the day following the day upon which such subdivision or
combination becomes effective shall be proportionately reduced, such
increase or reduction, as the case may be, to become effective
immediately after the opening of business on the day following the day
upon which such subdivision or combination becomes effective.
(iv) In case the Parent shall, by dividend or otherwise,
distribute to all or substantially all holders of its Common Stock
evidences of its indebtedness, shares of any class of capital stock or
other property (including cash or assets or securities, but excluding
(A) any rights, options or warrants referred to in Section 6.3(c)(ii)
-
and any other rights, options or warrants that by their terms will also
be issued to any Holder upon conversion of a Note into shares of Common
Stock without any action required by the Parent or any other Person,
(B) any dividend or distribution referred to in Section 6.3(c)(i) and
-
(C) mergers or consolidations to which Section 6.3(i) applies), the
-
Conversion Rate shall be adjusted so that the same shall equal the rate
determined by dividing the Conversion Rate in effect immediately prior
to the close of business on the date fixed for the determination of
stockholders entitled to receive such distribution by a fraction of
which (x) the numerator shall be the Current Market Price per share of
the Common Stock on the date fixed for such determination less the then
fair market value (as determined by the Board of Directors of the
Parent) of the portion of the assets, shares or evidences of
indebtedness so distributed applicable
18
to one share of Common Stock and (y) the denominator shall be such
-
Current Market Price per share of the Common Stock, such adjustment to
become effective immediately prior to the opening of business on the
day following the date fixed for the determination of stockholders
entitled to receive such distribution. If after any such date fixed for
determination, any such distribution is not in fact made, the
Conversion Rate shall be immediately readjusted, effective as of the
date the Board of Directors of the Parent determines not to make such
distribution, to the Conversion Rate that would have been in effect if
such determination date had not been fixed.
(v) The reclassification of Common Stock into securities other
than Common Stock (other than any reclassification upon a consolidation
or merger to which Section 6.3(i) applies) shall be deemed to involve
(A) a distribution of such securities other than Common Stock to all
-
holders of Common Stock (and the effective date of such
reclassification shall be deemed to be "the date fixed for the
determination of stockholders entitled to receive such distribution"
and "the date fixed for such determination" within the meaning of
Section 6.3(c)(iv)), and (B) a subdivision or combination, as the case
-
may be, of the number of shares of Common Stock outstanding immediately
prior to such reclassification into the number of shares of Common
Stock outstanding immediately thereafter (and the effective date of
such reclassification shall be deemed to be "the day upon which such
subdivision becomes effective" or "the day upon which such combination
becomes effective," as the case may be, and "the day upon which such
subdivision or combination becomes effective" within the meaning of
Section 6.3(c)(iii).
(vi) In the case the Parent shall issue or sell any shares of New
Common Stock for consideration per share (such price per share, the
"New Issue Price") less than either (A) the Current Market Price per
--------------- -
share of Common Stock or (B) the Conversion Price in effect on the date
-
of and immediately prior to such issuance, then and in such event, the
Conversion Rate shall be increased by dividing such Conversion Rate by
a fraction of which (x) the numerator shall be the number of shares of
-
Common Stock outstanding immediately prior to such issuance or sale
plus the number of shares of Common Stock which the aggregate of the
purchase price of the total number of shares of Common Stock so issued
or sold would purchase at (1) if the New Issue Price is less than both
-
such Current Market Price and such Conversion Price, the higher of such
prices or (2) if the New Issue Price is less than either such Current
-
Market Price or such Conversion Price but not both, such price that the
New Issue Price is less than and (y) the denominator shall be the
-
number of shares of Common Stock outstanding immediately prior to such
issuance or sale plus the number of shares of Common Stock so issued or
sold, such increase to become effective immediately after the
consummation of such issuance or sale.
19
(vii) For purposes of this Agreement, the term "`ex' date," when
used with respect to any issuance or distribution, means the first date
on which the Common Stock trades the regular way in the applicable
securities market or on the applicable securities exchange without the
right to receive such issuance or distribution.
(viii) The Parent may make such increases in the Conversion Rate,
for the remaining term of the Notes or any shorter term, in addition to
those required by paragraphs (i), (ii), (iii), (iv), (v), and (vi) of
this Section 6.3(c), as it considers to be advisable in order to avoid
or diminish any income tax to any holders of shares of Common Stock
resulting from any dividend or distribution of stock or issuance of
rights or warrants to purchase or subscribe for stock or from any event
treated as such for income tax purposes. The Parent shall have the
power to resolve any ambiguity or correct any error in this paragraph
(viii) and its actions in so doing shall, absent manifest error, be
final and conclusive.
(ix) Notwithstanding the provisions of Section 6.3(c)(iv), in
the event that the then fair market value (as so determined) of the
portion of the shares of capital stock, evidences of indebtedness, cash
or other assets, including securities so distributed applicable to one
share of Common Stock is equal to or greater than the Current Market
Price per share of the Common Stock, then, in lieu of the adjustments
provided for by Section 6.3(c)(iv), as the case may be, adequate
provision shall be made so that each Holder shall have the right to
receive upon conversion of a Note (or any portion thereof) the amount
of shares of capital stock, evidences of indebtedness, cash or other
assets, including securities, such Holder would have received had such
Holder converted such Note (or portion thereof) immediately prior to
the date fixed for such determination.
(d) Notice of Adjustments of Conversion Rate. Whenever the
----------------------------------------
Conversion Rate is adjusted as herein provided the Parent shall compute the
adjusted Conversion Rate in accordance with Section 6.3(c) and shall prepare a
certificate signed by a Responsible Officer setting forth the adjusted
Conversion Rate and showing in reasonable detail the facts upon which such
adjustment is based, and such certificate shall promptly be provided to the
Holder.
(e) Notice of Certain Corporate Action. In case:
----------------------------------
(i) the Parent shall declare a dividend (or any other
distribution) on its Common Stock; or
(ii) the Parent shall authorize the granting to all or
substantially all of the holders of its Common Stock of, or otherwise
authorize the issuance to any
20
other Person, rights, options or warrants to subscribe for or purchase
any shares of capital stock of any class or of any other rights; or
(iii) the Parent shall subdivide the outstanding shares of Common
Stock into a greater number of shares; or
(iv) the Parent shall distribute, by dividend or otherwise, to
all or substantially all of the holders of Common Stock evidences of
its indebtedness, shares of any class of capital stock or other
property (including, without limitation, cash, assets or securities),
subject to the exceptions set forth on Section 6.3(c)(iv); or
(v) of any reclassification of the Common Stock, or of any
consolidation, merger or share exchange to which the Parent is a party
and for which approval of any stockholders of the Parent is required,
or of the conveyance, sale, transfer or lease of all or substantially
all of the assets of the Parent; or
(vi) of the voluntary or involuntary dissolution, liquidation or
winding up of the Parent;
then the Parent shall provide to all Holders, at least twenty (20) days (or ten
(10) days in any case specified in clause (i) or (ii) above) prior to the
applicable record or effective date hereinafter specified, a notice stating (x)
the date on which a record is to be taken for the purpose of such dividend,
distribution, rights, options or warrants, or, if a record is not to be taken,
the date as of which the holders of Common Stock of record to be entitled to
such dividend, distribution, rights, options or warrants are to be determined or
(y) the date on which such reclassification, consolidation, merger, conveyance,
transfer, sale, lease, dissolution, liquidation or winding up is expected to
become effective, and the date as of which it is expected that holders of Common
Stock of record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, conveyance, transfer, sale, lease, dissolution,
liquidation or winding up. Neither the failure to give such notice or the notice
referred to in the next sentence nor any defect therein shall affect the
legality or validity of the proceedings described in clauses (i) through (vi) of
this Section 6.3(e). The Parent shall provide to all Holders notice of any
tender offer by the Company or any of its Subsidiaries for all or any portion of
the Common Stock at or about the time that such notice of tender offer is
provided to the public generally.
(f) Company to Reserve Common Stock. The Parent shall at all
-------------------------------
times reserve and keep available, free from preemptive rights, out of its
authorized but unissued Common Stock (including treasury stock), for the purpose
of effecting the conversion of
21
Notes, the full number of shares of Common Stock then issuable upon the
conversion of all then outstanding Notes.
(g) Taxes on Conversions. Except as provided in the next
--------------------
sentence, the Parent will pay any and all taxes and duties that may be payable
in respect of the issue or delivery of shares of Common Stock on conversion of
Notes pursuant hereto. The Parent shall not, however, be required to pay any tax
or duty which may be payable in respect of any transfer involved in the issue
and delivery of shares of Common Stock in a name other than that of the Holder
of the Note or Notes to be converted, and no such issue or delivery shall be
made unless and until the Person requesting such issue has paid to the Parent
the amount of any such tax or duty, or has established to the satisfaction of
the Parent that such tax or duty has been paid.
(h) Covenants as to Common Stock and Distribution in Respect
--------------------------------------------------------
Thereof.
- -------
(i) The Parent agrees that all shares of Common Stock that may
be delivered upon conversion of Notes, upon such delivery, will have been
duly authorized and validly issued and will be fully paid and nonassessable
and, except as provided in Section 6.3(g), the Parent will pay all taxes,
liens and charges with respect to the issue thereof.
(ii) The Parent will not pay any dividend or make any
distribution on shares of Common Stock held in the treasury of the Parent.
(iii) The Parent will not issue any rights, options or warrants
in respect of shares of Common Stock held in the treasury of the Parent.
(i) Provision in Case of Consolidation, Merger or Sale of
-----------------------------------------------------
Assets. In case of any consolidation or merger of the Parent with or into any
- ------
other Person or any merger of another Person with or into the Parent (in either
case, other than a merger which does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of Common Stock of
the Parent) or any conveyance, sale, transfer or lease of all or substantially
all of the assets of the Parent, the Person formed by such consolidation or
resulting from such merger or which acquires such assets, as the case may be,
shall execute and deliver to each Holder an agreement providing that the Holder
of each Note then outstanding shall have the right thereafter, during the period
such Note shall be convertible as specified in this Section 6.3, to convert such
Note only into the kind and amount of securities, cash and other property
receivable upon such consolidation, merger, conveyance, sale, transfer or lease
by a holder of the number of shares of Common Stock of the Parent into which
such Note might have been converted immediately prior to such consolidation,
merger, conveyance, sale, transfer or lease, assuming such holder of Common
Stock (x) is not (A) a Person with which the Parent
- -
22
consolidated or merged with or into or which merged into or with the Parent or
to which such conveyance, sale, transfer or lease was made, as the case may be
(a "Constituent Person"), or (B) an Affiliate of a Constituent Person and (y)
------------------ - -
failed to exercise his or her rights of election, if any, as to the kind or
amount of securities, cash and other property receivable upon such
consolidation, merger, conveyance, sale, transfer or lease (provided that if the
kind or amount of securities, cash and other property receivable upon such
consolidation, merger, conveyance, sale, transfer, or lease is not the same for
each share of Common Stock held immediately prior to such consolidation, merger,
conveyance, sale, transfer or lease by others than a Constituent Person or an
Affiliate thereof and in respect of which such rights of election shall not have
been exercised ("Non-electing Share"), then for the purpose of this Section
------------------
6.3(i) the kind and amount of securities, cash and other property receivable
upon such consolidation, merger, conveyance, sale, transfer or lease by the
holders of each Non-electing Share shall be deemed to be the kind and amount so
receivable per share by a plurality of the Non-electing Shares). Such agreement
shall provide for adjustments which, for events subsequent to the effective date
of such agreement, shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 6.3. The above provisions of this
Section 6.3(i) shall similarly apply to successive consolidations, mergers,
conveyances, sales, transfers or leases.
(j) Rights Issued in Respect of Common Stock. Rights, options
----------------------------------------
or warrants distributed by the Parent to all holders of Common Stock entitling
the holders thereof to subscribe for or purchase shares of the Parent's capital
stock (either initially or under certain circumstances), which rights or
warrants, until the occurrence of a specified event or events (each, a "Trigger
-------
Event"):
- -----
(i) are deemed to be transferred with such shares of Common
Stock,
(ii) are not exercisable, and
(iii) are also issued in respect of future issuances of Common
Stock
shall not be deemed distributed for purposes of this Section 6.3 until the
occurrence of the earliest Trigger Event. In addition, in the event of any
distribution of rights or warrants, or any Trigger Event with respect thereto,
that shall have resulted in an adjustment to the Conversion Rate under this
Section 6.3, (A) in the case of any such rights or warrants which shall all have
-
been redeemed or repurchased without exercise by any holders thereof, the
Conversion Rate shall be readjusted upon such final redemption or repurchase to
give effect to such distribution or Trigger Event, as the case may be, as though
it were a cash distribution, equal to the per share redemption or repurchase
price received by a holder of Common Stock with respect to such rights or
warrants (assuming such holder had retained such rights or warrants), made to
all holders of Common Stock as of the date of such redemption or repurchase, and
(B) in the case of any such rights or
-
23
warrants all of which shall have expired without exercise by any holder thereof,
the Conversion Rate shall be readjusted as if such issuance had not occurred.
(k) Conversion Rights Subject to Stockholder Vote. If, pursuant
to any Requirement of Law or rule or regulation of any securities exchange or
national securities quotation service, the stockholders of the Parent are
required to approve the issuance of shares of Common Stock issuable upon
conversion of the Notes under this Agreement, no Note may be converted until
such issuance upon conversion has been so approved at the next annual meeting of
the Parent's stockholders following the Closing Date or otherwise. At any time
prior to such approval, upon the written request of Holders of Notes holding, at
any time, eighty percent (80%) of the aggregate Principal Amount of the Notes
outstanding at such time, the Parent, at its own expense and as soon as
practicable following such request, shall obtain the written consent of its
stockholders to such issuance upon conversion of the Notes, prepare and file
with the SEC an information statement relating to such stockholder approval and
take all other actions as are necessary or advisable under any Requirement of
Law or otherwise in respect of the issuance of Common Stock upon conversion of
the Notes.
6.4 Optional Redemption.
-------------------
(a) The Company may, at its option, redeem (each, an "Optional
--------
Redemption") the Notes at any time, in whole or in part, without penalty or
- ----------
premium, in a minimum aggregate Principal Amount of $1,000,000 (or, if the
aggregate outstanding principal amount of the Notes is less than $1,000,000 at
such time, then such Principal Amount) and in integral multiples of $1,000,000,
in each case for a redemption price equal to the aggregate Principal Amount of
the Notes so redeemed, together with accrued but unpaid interest on such
Principal Amount to the date of redemption (the "Redemption Date"), without
---------------
penalty or premium.
(b) If the Company undertakes an Optional Redemption in
accordance with this Section 6.4, notice (a "Redemption Notice") shall be given
-----------------
by the Company, at its own expense, to each Holder of Notes to be redeemed. The
Redemption Notice shall be sent by first class mail, postage prepaid, to such
Holder's address appearing in the Note Register, by the Company not less than
thirty (30) nor more than sixty (60) days prior to the expected Redemption Date.
The Redemption Notice shall state:
(i) the expected Redemption Date;
(ii) that such redemption is an Optional Redemption made
pursuant to this Section 6.4;
(iii) the Principal Amount of each Note to be redeemed plus the
amount of the interest to be paid on each such Note, accrued to the
Redemption Date (the
24
Principal Amount plus accrued but unpaid interest thereon, the "Redemption
----------
Price");
-----
(iv) the place where or manner in which the Notes to be redeemed are
to be surrendered to the Company for payment; and
(c) In the case of any partial Optional Redemption, selection of the
Notes for redemption will be made not more than sixty (60) days prior to the
Redemption Date by the Company on a pro rata basis, by lot or by such other
--- ----
method as the Company in its sole discretion shall deem to be fair and
appropriate, although no Note of $1,000 in Principal Amount or less will be
redeemed in part.
(d) If a Redemption Notice has been given in accordance with this
Section 6.4, such Notes (or the portions thereof to be redeemed) shall, on the
Redemption Date, become due and payable at the Redemption Price and from and
after such date (unless the Company defaults in the payment of the Redemption
Price) such Notes (or the portions thereof to be redeemed) shall cease to bear
interest. Upon surrender of such Notes for redemption in accordance with such
Redemption Notice, such Notes (or the portions thereof to be redeemed) shall be
paid by the Company at the Redemption Price. If any Note (or portion thereof)
called for redemption shall not be so paid upon surrender thereof for
redemption, such Note shall, until paid, bear interest from the Redemption Date
at the Interest Rate.
(e) If any Note is duly surrendered by its Holder for redemption only
in part, following the consummation of such redemption, the Company shall
execute and deliver to such Holder, without service charge, a new Note or Notes,
of any authorized denomination as requested by such Holder, in aggregate
principal amount equal to and in exchange for the unredeemed portion of the
Principal Amount of the Note so surrendered.
6.5 Mandatory Offer to Repurchase Upon Change of Control.
----------------------------------------------------
(a) In the event of the obtaining of actual knowledge of a Change of
Control Notice Event, the Company will, within three (3) Business Days after the
occurrence of such event, give notice of such Change of Control Notice Event to
each Holder of Notes. Each such notice shall (i) be dated the date of the
-
sending of such notice; (ii) refer to this Section 6.5; and (iii) specify, in
-- ---
reasonable detail, the nature and date of the Change of Control Notice Event.
(b) In the event of a Change of Control, the Company will, within
three (3) Business Days after the occurrence of such event (or, in the case of
any Change of Control the consummation or finalization of which would involve
any action of the Company, at least thirty (30) days prior to such Change of
Control), give notice of such Change of Control to each Holder of Notes. Such
notice shall contain an irrevocable
25
separate offer by the Company to each Holder of Notes to repurchase all, but not
less than all, of the Notes held by such Holder, in each case for a purchase
price equal to the aggregate Principal Amount of Notes so repurchased, together
with accrued but unpaid interest on such Principal Amount to the date of
repurchase, without penalty or premium. Such payment shall occur on a date (the
"Change of Control Payment Date") specified in such notice that is not less than
------------------------------
thirty (30) days and not more than forty-five (45) days after the date of such
notice. Each such notice shall:
(i) be dated the date of the sending of such notice;
(ii) specify, in reasonable detail, the nature and date of the Change
of Control;
(iii) specify the Change of Control Payment Date;
(iv) specify the Principal Amount of each Note outstanding;
(v) specify the interest that will be due on each Note offered to be
repurchased, accrued to the Change of Control Payment Date;
(vi) certify that the conditions of this Section 6.5 have been
fulfilled; and
(vii) state that a failure to respond to the notice shall be deemed to
be an acceptance of such offer.
If the Company shall not have received a written response to such notice from
any Holder of Notes within ten (10) days after the date of posting of such
notice to such Holder of Notes, then the Company shall immediately send a second
notice to each such Holder of Notes.
(c) In the event that the Company makes a repurchase offer to the
Holders of the Notes in accordance with subsection (b) of this Section 6.5, but
at the time such offer is made the terms of any Bank Indebtedness restrict or
prohibit such repurchase of Notes, then prior to the mailing of a notice to
Holders in accordance with subsection (b) of this Section 6.5, but in any event
not later than thirty (30) days following the date of any Change of Control
(unless the Company has exercised its right to redeem all the Notes under
Section 6.4 or has repurchased all the Notes under Section 6.6), the Company
shall (i) repay in full all such Bank Indebtedness (if otherwise permitted
-
hereby) or (ii) if no other action is required by the terms of such Bank
--
Indebtedness, offer to repay in full all such Bank Indebtedness and repay the
Bank Indebtedness of each holder thereof who has accepted such offer or (ii)
--
obtain the requisite consent under the agreements governing such Bank
Indebtedness to permit the repurchase of Notes as provided for in this Section
6.5.
26
(d) To accept such repurchase offer, a Holder of Notes shall either
(i) cause a notice of such acceptance to be delivered to the Company not later
than thirty (30) days after the date of receipt by such Holder of the written
offer of such repurchase or (ii) unless such Holder subsequently delivers a
--
written notice of rejection to the Company, fail to respond to such written
offer of repurchase within such period of thirty (30) days. To reject such offer
such Holder of Notes shall deliver a written notice of rejection of such offer.
If accepted, such offered repurchase shall be due and payable on the Change of
Control Payment Date.
(e) The obligation of the Company to purchase Notes pursuant to the
offers required by Section 6.5(b) and accepted in accordance with Section 6.5(d)
is subject to the occurrence of the Change of Control in respect of which such
offers and acceptances shall have been made. In the event that such Change of
Control does not occur prior to the Change of Control Payment Date in respect
thereof, such purchase shall be deferred until and shall be made on the date on
which such Change of Control occurs or, if the Company determines that efforts
to effect such Change of Control have ceased or have been abandoned, then such
offer, acceptances and obligation to purchase shall be deemed to have been
rescinded. The Company shall keep each Holder of Notes reasonably and timely
informed of (i) any such deferral of the date of purchase; (ii) the date on
- --
which such Change of Control and the purchase are expected to occur; and (iii)
---
any determination by the Company that efforts to effect such Change of Control
have ceased or been abandoned.
(f) The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to this
Section 6.5. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 6.5, the Company will
comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations under this Section 6.5 by virtue
thereof.
6.6 Mandatory Offer to Repurchase CD&R Notes Upon Disposition of Assets.
-------------------------------------------------------------------
(a) For purposes of this Section 6.6(a), the term "Mandatory 6.6(a)
Repurchase Event" shall mean:
(i) any sale, transfer or other disposition by the Company or any of
its Subsidiaries of any real or personal, tangible or intangible, property
of the Company or such Subsidiary (including, without limitation, any
Capital Stock of a Subsidiary of the Company) to any Person (other than to
the Company or any of its Restricted Subsidiaries) that is either (x) not
-
permitted under the Credit Agreement as in effect on the Closing Date
(giving effect to the Second Credit Agreement Amendment) but has been
consented to by the requisite lenders under
27
the Credit Agreement, or (y) is permitted under, but is subject to any
-
mandatory prepayment requirement of, the Credit Agreement, or
(ii) the recovery by the Company or any of its Subsidiaries of amounts
owing to it under property insurance policies if the Company and its
Subsidiaries have not commenced replacement of the property on account of
which such amounts were paid within one year of the later of the date of
the casualty to, or condemnation of, such property or the receipt of such
Net Proceeds.
If, on any date during the Adjustment Period, the Company or any of its
Subsidiaries shall receive Net Proceeds from any Mandatory 6.6(a) Repurchase
Event, the Company shall give notice thereof to the Investor and any other
member of the CD&R Group that is a Holder. Such notice shall contain an
irrevocable separate offer by the Company to repurchase each such Holder's CD&R
Notes on the applicable Mandatory Repurchase Date (subject to prorating as
described in Section 6.6(d)), for a purchase price equal to the Principal Amount
of Notes so repurchased (plus accrued and unpaid interest on the Principal
Amount thereof so repurchased to the date of repurchase). The aggregate purchase
price to be so applied to repurchase CD&R Notes (excluding accrued and unpaid
interest) shall be equal to (x) the aggregate amount of such Net Proceeds not
-
previously applied to permanently prepay Bank Indebtedness under the Credit
Agreement minus (y) the Reinvested Amount related thereto; provided, however,
-
that in no event shall the aggregate amount of all Reinvested Amounts subtracted
from such Net Proceeds received in connection with asset dispositions described
in clause (i) of the definition of "Mandatory 6.6(a) Repurchase Event" exceed
$10,000,000 in any fiscal year of the Company.
(b) For purposes of this Section 6.6(b), the term "Mandatory 6.6(b)
Repurchase Event" shall mean:
(i) the sale, transfer or other disposition by the Company or any of
its Subsidiaries of any real or personal, tangible or intangible, property
of the Company or such Subsidiary (including, without limitation, any
Capital Stock of a Subsidiary of the Company) to any Person (other than to
the Company or any of its Restricted Subsidiaries) that is either (x) not
-
permitted under the Credit Agreement as in effect on the date hereof
(without giving effect to the Second Credit Agreement Amendment) but has
been consented to by the requisite lenders under the Credit Agreement, or
(y) is permitted under, but is subject to any mandatory prepayment
-
requirement of, the Credit Agreement, or
(ii) the recovery by the Company or any of its Subsidiaries of amounts
owing to it under property insurance policies if the Company and its
Subsidiaries have not commenced replacement of the property on account of
which such
28
amounts were paid within one year of the later of the date of the casualty
to, or condemnation of, such property or the receipt of such Net Proceeds.
If, on any date other than during the Adjustment Period, the Company or any of
its Subsidiaries shall receive Net Proceeds from any Mandatory 6.6(b) Repurchase
Event, the Company shall give notice thereof to the Investor and any other
member of the CD&R Group that is a Holder. Such notice shall contain an
irrevocable separate offer by the Company to repurchase each such Holder's CD&R
Notes on the applicable Mandatory Repurchase Date (subject to prorating as
described in Section 6.6(d)), for a purchase price equal to the Principal Amount
of Notes so repurchased (plus accrued and unpaid interest on the Principal
Amount thereof so repurchased to the date of repurchase). The aggregate purchase
price to be so applied to repurchase CD&R Notes (excluding accrued and unpaid
interest) shall be equal to (x) the aggregate amount of such Net Proceeds not
-
previously applied to permanently prepay Bank Indebtedness under the Credit
Agreement minus (y) the Reinvested Amount related thereto; provided that,
-
notwithstanding the foregoing, any such repurchase of CD&R Notes shall only be
required upon any such sale, transfer, other disposition or recovery (A)
described in subsections 14.5(h), (j) or (k) of the Credit Agreement as in
effect on the date hereof (without giving effect to the Second Credit Agreement
Amendment), to the extent the Net Proceeds received therefrom, when aggregated
with the Net Proceeds received from all such sales, transfers, other
dispositions or recoveries in the immediately preceding twelve-month period and
minus all applicable Reinvested Amounts relating to all such Net Proceeds,
exceed $5,000,000 or (B) described in subsection 14.5(f) of the Credit Agreement
as in effect on the date hereof (without giving effect to the Second Credit
Agreement Amendment), to the extent the Net Proceeds received from any one such
sale and minus the applicable Reinvested Amounts relating to such Net Proceeds
exceeds $5,000,000 or to the extent that Net Proceeds received therefrom, when
aggregated with the Net Proceeds received from all such sales and minus all
applicable Reinvested Amounts relating to all such Net Proceeds, exceed
$10,000,000.
(c) Any notice of the Company's offer to repurchase CD&R Notes given
pursuant to this Section 6.6 shall be given as promptly as practicable (and in
any event, within three (3) Business Days) following the date of receipt of any
such Net Proceeds (except that if any such Net Proceeds are eligible to be
reinvested in accordance with the definition of "Reinvested Amount" in Section
6.6(e) and the Company has not elected to reinvest such proceeds, such notice
shall be given on the earlier of (i) the date on which the certificate of a
-
Responsible Officer of the Company to such effect is delivered to the Investor
in accordance with such definition and (ii) the last day of the period within
--
which a certificate setting forth such election is required to be delivered in
accordance with such definition). If the Company shall not have received a
written response to such notice from any Holder of CD&R Notes within ten (10)
days after the date of posting of such notice to such Holder, then the Company
shall immediately send a second notice to such Holder.
29
(d) To accept a repurchase offer under this Section 6.6, a Holder of
CD&R Notes shall cause a notice of such acceptance to be delivered to the
Company not later than thirty (30) days after the date of receipt by such Holder
of the written offer of such repurchase. If accepted, such offered repurchase
shall be due and payable on the applicable Mandatory Repurchase Date or, if
later, five (5) Business Days after the date of delivery of such notice of
acceptance to the Company. If, upon the expiration of the period for which a
repurchase offer under this Section 6.6 remains open, the aggregate Principal
Amount of the CD&R Notes surrendered by Holders exceeds the amount of Net
Proceeds available for payment, the Company will select the CD&R Notes to be
purchased on a pro rata basis.
(e) As used in this Section 6.6, the following terms shall have the
following meanings:
"Adjustment Period" means the period from the date of this Agreement to the
-----------------
first date on or after June 30, 2003 on which no Bank Default Event has occurred
and is continuing.
"Mandatory Repurchase Date" means a date specified in a notice given
-------------------------
pursuant to this Section 6.6 of an offer to repurchase CD&R Notes that is not
later than ten (10) Business Days after the date of such notice (or if no date
is so specified, the date that is ten (10) Business Days after the date such
notice is issued).
"Net Proceeds" means, with respect to any of the events referred to in this
------------
Section 6.6 and the defined terms used therein, (a) the gross cash
-
consideration, and all cash proceeds (as and when received) of non-cash
consideration (including, without limitation, any such cash proceeds in the
nature of principal and interest payments on account of promissory notes or
similar obligations), received by the Company and its Subsidiaries in connection
with such event, minus (b) the sum, without duplication, of (i) any taxes
- -
reasonably estimated to be payable to any federal, state, local or foreign
taxing authority by the Parent and its Subsidiaries as a result thereof, (ii)
--
the amount of fees and commissions (including reasonable investment banking
fees, legal, accounting, consulting, survey, title and recording tax expenses
and other costs and expenses) actually incurred in connection with such event
which are paid or payable by the Company and its Subsidiaries, (iii) the amount
---
of such net cash proceeds which are attributable to (and payable to) minority
interests, (iv) the amount of any reserve reasonably maintained by the Company
--
and its Subsidiaries with respect to indemnification obligations owing pursuant
to the definitive documentation pursuant to which such event is consummated
(with any unused portion of such reserve to constitute Net Proceeds on the date
upon which the indemnification obligations terminate or such reserve is reduced
other than in connection with a payment), (v) the amount of Indebtedness (other
-
than intercompany Indebtedness) of any Person, or secured by a Lien permitted
hereunder on or that otherwise relates to any asset, that is the subject of such
30
event, if any, which is required to be repaid at the time or as a result of such
event out of the proceeds thereof and (vi) with respect to the determination of
--
Net Proceeds from a sale or other disposition of property or assets referred to
in this Section 6.6, appropriate amounts to be provided by the Company or any of
its Subsidiaries to be applied to satisfy any reasonable expenses and
liabilities associated with any such property or assets and retained by the
Company or any such Subsidiary after such sale or other disposition and other
appropriate amounts which shall be used by the Company or any of its
Subsidiaries to discharge or pay on a current basis any other reasonable
expenses and liabilities associated with such property or assets.
"Reinvested Amount" means, with respect to any sale, transfer or other
-----------------
disposition of property or assets of the Company or any of its Subsidiaries or
any recovery of amounts under any property insurance policies, that portion of
the Net Proceeds thereof as shall, according to a certificate of a Responsible
Officer of the Company delivered to the Investor within thirty (30) days of such
sale or other disposition, be reinvested in the business of the Company and its
Subsidiaries in a manner consistent with the terms of this Agreement within
three hundred sixty (360) days of the receipt of such Net Proceeds or, if such
reinvestment is in a project authorized by the board of directors or comparable
body of the Company that will take longer than such three hundred sixty (360)
days to complete, the period of time necessary to complete such project (so long
as the Company or the relevant Subsidiary has committed to expend such portion
of the Net Proceeds within, and is diligently pursuing such project during, the
period of three hundred sixty (360) days from the receipt of such Net Proceeds);
provided that if any such certificate of a Responsible Officer is not delivered
to the Investor on the date of such sale or other disposition, any Net Proceeds
of such sale or other disposition shall be promptly (x) deposited in a cash
-
collateral account established in accordance with the terms of the Credit
Agreement, to the extent then required thereby (it being understood in such case
that the Administrative Agent is acting as bailee for the Secured Parties
pursuant to the terms of the Intercreditor Agreement), or applied to prepay
revolving credit borrowings under the Credit Agreement pending delivery of such
certificate, or (y) deposited in a cash collateral account established at the
-
Collateral Account Bank (as defined in the Guaranty and Collateral Agreement) to
be held as collateral in favor of the Secured Parties on terms reasonably
satisfactory to the Secured Parties and shall remain on deposit in such cash
collateral account until such certificate of a Responsible Officer is (or is
required to be) delivered to the Investor or such Net Proceeds are required to
be applied in accordance with this Section 6.6.
(f) The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to this
Section 6.6. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 6.6, the Company will
comply with the applicable securities laws and
31
regulations and will not be deemed to have breached its obligations under this
Section 6.6 by virtue thereof.
(g) The provisions of this Section 6.6 are in addition to and not in
limitation of the provisions of Section 8.4.
6.7 Issuance of Warrants Upon Early Redemption or Repurchase.
--------------------------------------------------------
(a) Upon the consummation of any redemption or repurchase of Notes
prior to the Maturity Date (whether pursuant to any provision of this Article
VI, Section 8.4 or otherwise), the Parent shall, at its own expense, execute,
issue and deliver Warrants to the Holders of the Notes so redeemed or
repurchased as provided by this Section 6.7. With respect to each Holder
receiving Warrants under this Section 6.7, the Warrants shall (a) be
-
substantially in the form of Exhibit B hereto, with such changes as may be
reasonably requested by such Holder and approved by the Parent, (b) expire on
-
the Maturity Date, (c) have an initial exercise price, subject to adjustment in
-
accordance with the terms of the warrant, equal to the Conversion Price in
effect immediately prior to such repurchase or redemption, and (d) entitle its
-
Holder to purchase a number of shares of Common Stock (or other property) equal
to the number of shares of Common Stock (or other property) into which such
Holder's Notes were convertible immediately prior to their redemption or
repurchase. Each Holder entitled to receive Warrants under this Section 6.7
shall receive them in the form of a single warrant certificate (or such greater
number of warrant certificates in denominations of at least 500,000 shares as
such Holder may request), delivered by the Parent to the registered address of
such Holder in the Register of Holders maintained by the Company in accordance
with Section 6.8.
(b) If, pursuant to any Requirement of Law or rule or regulation of
any securities exchange or national securities quotation service, the
stockholders of the Parent are required to approve the issuance of shares of
Common Stock issuable upon exercise of the Warrants, no Warrant may be exercised
until such issuance upon exercise has been so approved in connection with the
stockholder approval of the issuance of Common Stock upon conversion of the
Notes as contemplated by Section 6.3(k). At any time prior to such approval,
upon the written request of holders of the Warrants, the Parent, at its own
expense and as soon as practicable following such request, shall obtain the
written consent of its stockholders to such issuance upon exercise of the
Warrants, prepare and file with the SEC an information statement relating to
such stockholder approval and take all other actions as are necessary or
advisable under any Requirement of Law or otherwise in respect of the issuance
of Common Stock upon exercise of the Warrants.
6.8 Register of Holders. The Company shall keep, or shall cause to be
-------------------
kept, by a Transfer Agent for the Notes or otherwise, a register (the "Register
--------
of Holders") for the registration and transfer of Notes, in which register the
- ----------
Company shall record (a) the name, address and facsimile number of each Holder
-
(subject to change by such Holder in
32
accordance with Section 13.1) and (b) the details of each transfer of one or
-
more Notes made in accordance with Section 6.9, including the name and address
of each transferee of one or more Notes. The Person in whose name any Note shall
be properly registered shall be deemed and treated as the owner and holder
thereof for all purposes hereof, and the Company shall not be affected by any
notice or knowledge to the contrary, other than in accordance with Section 6.9.
6.9 Exchange of Notes Upon Transfer. Upon surrender of any Note to the
-------------------------------
Company (or the Transfer Agent for the Notes, if any), duly endorsed or
accompanied by a written instrument of transfer duly executed by the Holder or
such Holder's attorney duly authorized in writing, the Company shall execute and
deliver a new Note or Notes in exchange therefor, in an aggregate principal
amount equal to the unpaid Principal Amount of the surrendered Note. Each new
Note shall (i) be registered in the name of such Person as the Holder may
-
request, (ii) be (A) dated and bear interest from the date to which interest had
-- -
been paid on the surrendered Note or (B) dated the date of the surrendered Note
-
if no interest shall have been paid thereon and (iii) carry the same rights to
---
unpaid interest and interest to accrue that were carried by the surrendered
Note. Notes shall not be transferred in denominations of less than $1,000,000,
provided that a Holder may transfer its entire holding of Notes regardless of
- --------
the principal amount of such Notes. Each Holder may transfer any Note (or any
portion thereof) to any Person without the Company's consent, provided that any
--------
such transfer of Notes by the Investor or any Holder that is a member of the
CD&R Group to any Person not a member of the CD&R Group shall cause the Liens
and Guarantees established with respect to such Transferred Notes in accordance
with the Guarantee and Collateral Agreement or any other Note Security Documents
to be released, discharged and of no further force or effect with respect to
such Transferred Notes. The Company shall pay the cost of executing, issuing and
delivering the new Note or Notes to the home, office or custodian bank of (or
other location designated by) the Holder thereof, insured to the reasonable
satisfaction of such Holder. The Company may require payment of a sum sufficient
to cover any stamp tax or governmental charge imposed in respect of any transfer
of Notes.
6.10 Mutilated, Destroyed, Lost and Stolen Notes.
-------------------------------------------
(a) If (i) any mutilated Note is surrendered to the Company, or the
-
Company receives evidence reasonably satisfactory to it of the destruction, loss
or theft of any Note and (ii), in the case of any destroyed, lost or stolen
--
Note, there is delivered to the Company such security or indemnity as may be
required to hold the Company harmless, then, in the absence of notice to the
Company that such Note has been acquired by a bona fide purchaser, the Company
shall execute and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Note, a new Note of like tenor and principal amount,
bearing a number not contemporaneously outstanding. The Company may require
payment of a sum sufficient to cover its reasonable expenses and any stamp tax
or governmental charge imposed in respect of such issuance of a new Note.
33
(b) Every new Note issued pursuant to this Section 6.10 in lieu of any
mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Company, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Agreement and, as appropriate, the
other Transaction Agreements equally and ratably with any and all other duly
issued Notes.
(c) The provisions of this Section 6.10 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Notes.
Article VII
Affirmative Covenants of the Company
------------------------------------
The Company hereby agrees that, from and after the date hereof and until
the payment in full of the Principal Amount of the Notes, as well as any other
amount then due and owing under or with respect to the Notes, the Company shall
and (except in the case of delivery of financial information, reports and
notices) shall cause each of its Subsidiaries to:
7.1 Financial Statements. Furnish the following financial statements of
--------------------
the Parent to each Holder, it being understood all such financial statements
shall be complete and correct in all material respects and shall be prepared in
reasonable detail and in accordance with GAAP applied consistently throughout
the periods reflected therein and with prior periods (except as approved by a
Responsible Officer of the Parent and disclosed therein, and except, in the case
of financial statements delivered pursuant to subsections (b) and (c), for the
absence of certain notes):
(a) as soon as available, but in any event within ninety (90) days
after the end of each fiscal year of the Parent, a copy of the consolidated
balance sheet of the Parent and its consolidated Subsidiaries as at the end of
such year and the related consolidated statements of income, stockholders equity
and cash flows for such year, setting forth in each case in comparative form the
figures for the previous year, reported on without a "going concern" or like
qualification or exception, or qualification arising out of the scope of the
audit, by PricewaterhouseCoopers or other independent certified public
accountants of nationally recognized standing;
(b) as soon as available, but in any event not later than forty-five
(45) days after the end of each of the first three quarterly periods of each
fiscal year of the Parent, the unaudited consolidated balance sheet of the
Parent and its consolidated Subsidiaries as at the end of such quarter and the
related unaudited consolidated statements of income, stockholders equity and
cash flows of the Parent and its consolidated Subsidiaries for such quarter and
the portion of the fiscal year through the
34
end of such quarter, setting forth in each case in comparative form the figures
for the previous year, certified by a Responsible Officer of the Parent as being
fairly stated in all material respects (subject to normal year-end audit and
other adjustments); and
(c) as soon as available, but in any event not later than forty-five
(45) days after the end of each calendar month, commencing with the month of
December 2001, financial data for such month summarizing the results of
operations of the Parent and its consolidated Subsidiaries as at the end of such
month, certified by a Responsible Officer as being fairly stated in all material
respects.
7.2 Certificates; Other Information. Furnish to each Holder:
-------------------------------
(a) concurrently with the delivery of the financial statements
referred to in subsection (a) of Section 7.1, a certificate of the independent
certified public accountants reporting on such financial statements stating
that, in making the audit necessary therefor, no knowledge was obtained of any
Default or Event of Default, insofar as the same relates to any financial
accounting matters covered by their audit, except as specified in such
certificate;
(b) concurrently with the delivery of the financial statements
referred to in subsections (a) and (b) of Section 7.1, a certificate of a
Responsible Officer stating that, to the best of such Responsible Officer's
knowledge, during such period (i) no Subsidiary has been formed or acquired (or,
-
if any such Subsidiary has been formed or acquired, the Company has complied
with the requirements of subsection 7.9 with respect thereto), (ii) neither the
--
Company nor any other Note Financing Party has changed its name, its principal
place of business, its chief executive office or the location of any material
item of tangible Collateral without complying with the requirements of this
Agreement and the Note Security Documents with respect thereto and (iii) to the
---
best of such Responsible Officer's knowledge, each of the Company and the other
Note Financing Parties has observed or performed all of its covenants and other
agreements, and satisfied every condition, contained in this Agreement and the
other Note Financing Documents to be observed, performed or satisfied by it, and
that such Responsible Officer has obtained no knowledge of any Default or Event
of Default except, in each case as specified in such certificate;
(c) not later than sixty (60) days after the beginning of each fiscal
year of the Company, a copy of the projections by the Company of the operating
budget and cash flow budget of the Company and its Subsidiaries for such fiscal
year, such projections to be accompanied by a certificate of a Responsible
Officer to the effect that such Responsible Officer believes such projections
have been prepared on the basis of reasonable assumptions;
35
(d) within five (5) Business Days after the same are sent, copies of
all financial statements and reports which the Parent sends to its public
stockholders, and within five (5) Business Days after the same are filed, copies
of all financial statements and reports which the Parent or the Company may make
to, or file with, the SEC or any successor or analogous Governmental Authority;
(e) promptly, such additional financial and other information as any
Holder may from time to time reasonably request; and
(f) promptly, (x) any certificate of a Responsible Officer required
-
pursuant to the definition of "Consolidated Net Income" and (y) any additional
-
financial and other information provided to the Administrative Agent or any
lender or other party under the Credit Agreement, whether pursuant to the terms
of the Credit Agreement or upon the reasonable request of such party thereto.
7.3 Payment of Obligations. Pay, discharge or otherwise satisfy at or
----------------------
before maturity or before they become delinquent, as the case may be, all its
material obligations of whatever nature, except where the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
and reserves in conformity with GAAP with respect thereto have been provided on
the consolidated books of the Parent.
7.4 Conduct of Business and Maintenance of Existence. Continue to engage
------------------------------------------------
in business of the same general type as the Company and its Subsidiaries now
conduct and preserve, renew and keep in full force and effect the corporate
existence of the Company and its Subsidiaries and take all reasonable action to
maintain all rights, privileges and franchises necessary or desirable in the
normal conduct of the business of the Company and its Subsidiaries taken as a
whole except as otherwise permitted pursuant to Article IX; provided that the
--------
Company and its Subsidiaries shall not be required to maintain any such rights,
privileges or franchises, or the corporate existence of such Subsidiary, if the
failure to do so would not reasonably be expected to have a Material Adverse
Effect; and comply with all Contractual Obligations and Requirements of Law
except to the extent that failure to comply therewith would not, in the
aggregate, be reasonably expected to have a Material Adverse Effect.
7.5 Maintenance of Property; Insurance. Keep all property useful and
----------------------------------
necessary in the business of the Company and its Subsidiaries taken as a whole
in good working order and condition; maintain with financially sound and
reputable insurance companies insurance on all its property material to the
business of the Company and its Subsidiaries taken as a whole in at least such
amounts and against at least such risks as are usually insured against in the
same general area by companies engaged in the same or a similar business; and
furnish to each Holder, upon written request, full information as to the
insurance carried.
36
7.6 Inspection of Property; Books and Records; Discussions. Keep proper
------------------------------------------------------
books of records and account in which full, complete and correct entries in
conformity with all material Requirements of Law shall be made of all dealings
and transactions in relation to the business and activities of the Company and
its Subsidiaries; and permit representatives of any Holder, at any reasonable
time, upon reasonable notice, and as often as may reasonably be desired, to
visit and inspect any of the properties of the Company and its Subsidiaries and
examine and, to the extent reasonable, make abstracts from any of its books and
records and to discuss the business, operations, properties and financial and
other condition of the Company and its Subsidiaries with officers and employees
of the Company and its Subsidiaries and with the independent certified public
accountants of the Parent, in each case at the expense of the Company.
7.7 Notices. Promptly give notice (it being understood that each notice
-------
provided pursuant to this Section 7.7 shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Company proposes to take with respect thereto) to
each Holder of:
(a) as soon as possible after any Responsible Officer knows, or
reasonably should know, of the occurrence of any Default or Event of Default;
(b) as soon as possible after any Responsible Officer knows or
reasonably should know thereof, (i) any (A) default or event of default under
- -
any Contractual Obligation of the Company or any Subsidiary of the Company,
other than as previously disclosed to the Holders, or (B) litigation,
-
investigation or proceeding which may exist at any time between the Parent, the
Company or any Subsidiary of the Company and any Governmental Authority, which
in either case, if not cured or if adversely determined, as the case may be,
would reasonably be expected to have a Material Adverse Effect, or (ii) any Bank
--
Default Event or Senior Subordinated Default Event;
(c) as soon as possible after any Responsible Officer knows or
reasonably should know thereof, any litigation or proceeding which has a
reasonable possibility of an adverse determination which would result in a
judgment against the Parent, the Company or any Subsidiary of the Company of
$5,000,000 or more and which is not covered by insurance, or in which injunctive
or similar relief is sought that would reasonably be expected to have a Material
Adverse Effect;
(d) the following events, as soon as possible and in any event within
thirty (30) days after any Responsible Officer knows or reasonably should know
thereof:
(i) the occurrence or expected occurrence of any Reportable Event with
respect to any Single Employer Plan (other than a Reportable Event
described in Section 4043(c)(9) of ERISA), a failure to make any required
37
contribution to a Single Employer Plan or Multiemployer Plan, the creation
of any Lien on the property of the Parent, the Company or any Subsidiary of
the Company in favor of the PBGC or a Plan or any withdrawal from, or the
termination, Reorganization or Insolvency of, any Multiemployer Plan, if,
as a result thereof, the Parent, the Company or any Subsidiary of the
Company could reasonably be expected to incur any material liability;
(ii) the existence of an Underfunding under a Single Employer Plan
that exceeds ten percent (10%) of the value of the assets of such Single
Employer Plan, determined as of the most recent annual valuation date of
such Single Employer Plan on the basis of the actuarial assumptions used to
determine the funding requirements of such Single Employer Plan as of such
date;
(iii) the institution of proceedings or the taking of any other formal
action by the PBGC or the Parent, the Company, any Subsidiary of the
Company or any Commonly Controlled Entity or any Multiemployer Plan with
respect to the withdrawal from, or the termination, Reorganization or
Insolvency of, any Single Employer Plan or Multiemployer Plan if, as a
result thereof, the Parent, the Company or any Subsidiary of the Company
could reasonably be expected to incur any material liability; or
(iv) the occurrence or expected occurrence of any event or condition
under which the Parent, the Company, any Subsidiary of the Company or any
Commonly Controlled Entity has incurred or could incur any liability in
respect of a Former Plan;
(e) as soon as possible after any Responsible Officer knows, and
except as would not, individually or in the aggregate, reasonably be expected to
result in the payment of a Material Environmental Amount, that:
(i) any Governmental Authority has identified the Parent, the
Company or any Subsidiary of the Company as a potentially responsible party
under the Comprehensive Environmental Response, Compensation and Liability
Act or any similar Environmental Law for the cleanup of Materials of
Environmental Concern at any location, whether or not owned, leased or
operated by the Parent, the Company or any Subsidiary of the Company;
(ii) any Governmental Authority may revoke any permit pursuant to
Environmental Law held by the Parent, the Company or any Subsidiary of the
Company, or deny or refuse to renew any such permit sought by the Parent,
the Company or any Subsidiary of the Company; or
38
(iii) any property owned, leased, or operated by the Parent, the
Company or any Subsidiary of the Company is being listed on, or proposed
for listing on, the National Priorities List or the Comprehensive
Environmental Response, Compensation and Liability Information System
maintained by the United States Environmental Protection Agency or any
similar list maintained by any Governmental Authority;
(f) as soon as possible after any Responsible Officer knows or
reasonably should know thereof, any development or event which has had or would
reasonably be expected to have a Material Adverse Effect; and
(g) as soon as possible after any Responsible Officer knows or
reasonably should know thereof, any "Termination" as defined in Section 11 of
the Intercreditor Agreement.
7.8 Environmental Laws.
------------------
(a) Comply substantially with all Environmental Laws applicable to the
Company and its Subsidiaries, and obtain, comply substantially with and maintain
any and all licenses, approvals, notifications, registrations or permits
required by applicable Environmental Laws (collectively, "Environmental
-------------
Permits"); and
- -------
(b) take all reasonable efforts to ensure that all of its tenants,
subtenants, contractors, subcontractors and invitees comply substantially with
all Environmental Laws, and obtain, comply substantially with and maintain any
and all Environmental Permits applicable to any of them insofar as any failure
to so comply, obtain or maintain reasonably would be expected to adversely
affect the Company or any of its Subsidiaries. For purposes of this Section 7.8,
noncompliance shall be deemed not to constitute a breach of this covenant,
provided that, upon learning of any actual or suspected noncompliance, the
- --------
Company or its Subsidiaries, as appropriate, shall in a timely manner undertake
all reasonable efforts to achieve substantial compliance, and provided, further,
--------
that, in any case, such noncompliance, and any other such noncompliance with any
Environmental Law or Environmental Permit, individually or in the aggregate,
would not reasonably be expected to give rise to the payment of a Material
Environmental Amount.
7.9 Additional Collateral.
---------------------
(a) With respect to any owned real property or fixtures located on
owned real property, in each case with a purchase price or a fair market value
of at least $1,000,000, in which the Company or any of its Subsidiaries acquires
ownership rights at any time after the date hereof, promptly grant to the
Secured Parties, a Lien of record on all such owned real property and fixtures,
upon terms reasonably satisfactory in form and
39
substance to such Secured Parties (it being understood that such Lien shall be
subject to the Intercreditor Agreement), and in accordance with any applicable
requirements of any Governmental Authority (including, without limitation, any
appraisals of such property under the Financial Institutions Reform, Recovery
and Enforcement Act of 1989 which any Secured Party reasonably deems to be
required by law), provided that (i) nothing in this Section 7.9(a) shall defer
-------- -
or impair the attachment or perfection of any security interest in any
Collateral covered by any of the Note Security Documents which would attach or
be perfected pursuant to the terms thereof without action by the Company, any of
its Subsidiaries or any other Person and (ii) no such Lien shall be required to
--
be granted as contemplated by this Section 7.9(a) on any owned real property or
fixtures the acquisition of which is financed as permitted by Section
8.1(b)(iv), until such Indebtedness is repaid in full (and not refinanced as
permitted by Section 8.1(b)(iv)) or, as the case may be, the Company or its
Subsidiary determines not to proceed with such financing or refinancing. In
connection with any such grant to the Secured Parties of a Lien of record on any
such real property in accordance with this Section 7.9(a), the Company or such
Subsidiary shall deliver or cause to be delivered to the Secured Parties any
surveys, title insurance policies, environmental reports and other documents in
connection with such grant of such Lien obtained by it in connection with the
acquisition of such ownership rights in such real property or as any Secured
Party shall reasonably request (in light of the value of such real property and
the cost and availability of such surveys, title insurance policies,
environmental reports and other documents and whether the delivery of such
surveys, title insurance policies, environmental reports and other documents
would be customary in connection with such grant of such Lien in similar
circumstances).
(b) With respect to any Person that, subsequent to the date hereof,
becomes a Domestic Subsidiary or Foreign Subsidiary Holdco (other than to the
extent that compliance with this Section 7.9(b) would have an adverse tax
consequence to the Company), promptly upon the request of any Secured Party:
(i) (A) execute and deliver, or cause to be executed and delivered, to
-
the Investor, for the benefit of the Secured Parties, a new pledge
agreement or such amendments to the Guarantee and Collateral Agreement as
any Secured Party shall reasonably deem necessary or reasonably advisable
to grant to the Secured Parties a Lien on the Capital Stock of such
Subsidiary which is owned by the Company or any of its Domestic
Subsidiaries (provided that in no event shall more than sixty-five percent
--------
(65%) of the Capital Stock of any Foreign Subsidiary Holdco be required to
be so pledged; and it being understood that such Lien shall be subject to
the Intercreditor Agreement) and (B) (subject to the terms of the Guarantee
and Collateral Agreement) deliver to the Secured Parties the certificates
(if any) representing such Capital Stock, together with undated stock
powers executed and delivered in blank by a duly authorized officer of the
Company or such Subsidiary, as the case may be; and
40
(ii) cause any such new Domestic Subsidiary (A) to become a party to
-
the Guarantee and Collateral Agreement, in each case pursuant to
documentation which is in form and substance reasonably satisfactory to the
Secured Parties, and (B) to take all actions reasonably deemed by any
-
Secured Party to be necessary or reasonably advisable to cause the Lien
created by the Guarantee and Collateral Agreement to be duly perfected in
accordance with all applicable Requirements of Law, including, without
limitation, the filing of financing statements in such jurisdictions as may
be reasonably requested by any Secured Party.
(c) With respect to any Person that, subsequent to the date hereof,
becomes a Foreign Subsidiary (other than a Foreign Subsidiary Holdco) and which
has Capital Stock that is owned directly by the Company or a Domestic Subsidiary
(other than WWG) and with respect to any Foreign Subsidiary of WWG that,
subsequent to the date hereof, becomes a direct Subsidiary of the Company or of
a Domestic Subsidiary (other than WWG), promptly, upon the request of any
Secured Party, (i) execute and deliver to the Secured Parties a new Foreign
Pledge Agreement or such amendments to the relevant Foreign Pledge Agreement or
the Guarantee and Collateral Agreement as any Secured Party shall reasonably
deem necessary or reasonably advisable to grant to the Secured Parties a Lien on
the Capital Stock of such Foreign Subsidiary that is owned directly by the
Company or any of its Domestic Subsidiaries (other than WWG) (provided that in
--------
no event shall more than sixty-five percent (65%) of the Capital Stock of any
such Subsidiary be required to be so pledged; and it being understood that such
Lien shall be subject to the Intercreditor Agreement) and (ii) to the extent
deemed advisable by any Secured Party (subject to the terms of the Guarantee and
Collateral Agreement) deliver to the Secured Parties the certificates (if any)
representing such Capital Stock, together with undated stock powers executed and
delivered in blank by a duly authorized officer of the Company or such
Subsidiary, as the case may be.
(d) Notwithstanding anything to the contrary contained herein, (i) no
-
Subsidiary of the Company that had consolidated assets as of the most recently
completed fiscal quarter or consolidated gross revenues as of the most recently
completed period of four consecutive fiscal quarters, of less than $10,000,000
shall be required to comply with the provisions of this Section 7.9 (nor shall
the Company or any of its Subsidiaries be required to comply with the provisions
of this Section 7.9 with respect to any such Subsidiary) until the date that is
45 days after the earlier to occur of the Closing Date and the date on which the
Second Credit Agreement Amendment shall become effective in accordance with its
terms and (ii) the Company and its Subsidiaries shall not be required to (x)
-- -
make the representations and warranties set forth in Section 4 of the Guarantee
and Collateral Agreement or Sections 3.2, 3.6 or 3.18 of this Agreement or (y)
-
comply with the covenants set forth in Sections 5.2.1, 5.2.2, 5.2.4, 5.2.6,
5.2.7, 5.2.8, 5.2.9(b), 5.2.10, 5.2.11, 5.3.1, 5.3.2(iii), 5.3.3 or 6.7 of the
Guarantee and Collateral Agreement with respect to any Inactive Subsidiary or
any property or assets thereof so long as such Subsidiary is an Inactive
41
Subsidiary, and the exclusions of Inactive Subsidiaries from representations and
warranties and covenants described in this clause (ii) shall be given effect by
appropriate modifications (which shall be reasonably acceptable to each Secured
Party and the Company) to the Assumption Agreement entered into by the Inactive
Subsidiaries pursuant to Section 8.15 of the Guarantee and Collateral Agreement.
(e) Comply with subsection 14.15 of the Credit Agreement (entitled
Limitation on Inactive Subsidiaries) as amended by the Second Credit Agreement
Amendment and in effect on the Closing Date.
(f) In the event that any of WWG, Wandel & Goltermann Inc., a North
Carolina corporation, or Wavetek U.S. Inc., a Delaware corporation (collectively
the "Excluded Subsidiaries"), shall remain in existence as a Domestic Subsidiary
---------------------
on the Closing Date, promptly upon the request of any Secured Party:
(i) (A) execute and deliver, or cause to be executed and delivered, to
-
the Investor, for the benefit of the Secured Parties, a new pledge
agreement or such amendments to the Guarantee and Collateral Agreement as
any Secured Party shall reasonably deem necessary or reasonably advisable
to grant to the Secured Parties a Lien on the Capital Stock of such
Subsidiary which is owned by the Company or any of its Domestic
Subsidiaries and has been pledged to secure Indebtedness under the Credit
Agreement (it being understood that such Lien shall be subject to the
Intercreditor Agreement) and (B) (subject to the terms of the Guarantee and
-
Collateral Agreement) deliver to the Secured Parties the certificates (if
any) representing such Capital Stock, together with undated stock powers
executed and delivered in blank by a duly authorized officer of the Company
or such Subsidiary, as the case may be; and
(ii) cause any such Domestic Subsidiary (A) to become a party to the
-
Guarantee and Collateral Agreement, in each case pursuant to documentation
which is in form and substance reasonably satisfactory to the Secured
Parties, and (B) to take all actions reasonably deemed by any Secured Party
-
to be necessary or reasonably advisable to cause the Lien created by the
Guarantee and Collateral Agreement to be duly perfected in accordance with
all applicable Requirements of Law, including, without limitation, the
filing of financing statements in such jurisdictions as may be reasonably
requested by any Secured Party.
The Excluded Subsidiaries shall not be required to comply with Sections 7.10 and
7.11 prior to the Closing Date.
7.10 Liens. If after the date hereof, the Company or any of its
-----
Subsidiaries creates or suffers to exist a Lien on any of their respective
properties or assets securing any Bank Indebtedness (other than the CD&R Notes),
then the Company shall, and shall
42
cause each such Subsidiary to, create a Lien on such property or assets securing
the CD&R Notes pursuant to the Guarantee and Collateral Agreement (or, if
requested by any Secured Party, one or more other Note Security Documents in
form and substance reasonably satisfactory to the Secured Parties and
substantially equivalent to one or more security documents in respect of such
Bank Indebtedness), which Lien securing the CD&R Notes shall be on terms no less
favorable to the Holders thereof than the terms of such Lien securing such Bank
Indebtedness shall be to the holders of such Bank Indebtedness (it being
understood that such Lien securing the CD&R Notes shall be subject to the
Intercreditor Agreement).
7.11 Note Guarantors.
---------------
(a) From and after the date hereof, the Company will cause each
Subsidiary that Guarantees payment of any Bank Indebtedness (other than the CD&R
Notes) to execute and deliver to each Holder of CD&R Notes an instrument
pursuant to which such Subsidiary will Guarantee payment of the CD&R Notes
pursuant to the Guarantee and Collateral Agreement (or, if requested by any
Secured Party, one or more other Note Security Documents in form and substance
reasonably satisfactory to the Secured Parties), whereupon such Subsidiary will
become a Note Guarantor for all purposes under this Agreement.
(b) From and after the date hereof, the Parent shall Guarantee payment
of the Transferred Notes in accordance with the terms of Annex A hereto. From
and after the date hereof, the Company will cause each Domestic Subsidiary that
is a Significant Subsidiary and that Guarantees Indebtedness of the Company
(other than Bank Indebtedness), to execute and deliver to each Holder of
Transferred Notes an instrument pursuant to which such Subsidiary will Guarantee
payment of the Transferred Notes in accordance with the terms of Annex A hereto,
whereupon such Subsidiary will become a Note Guarantor in respect of the
Transferred Notes for all purposes under this Agreement, provided, however, each
--------
such Guarantee in respect of a Transferred Note (a "Springing Guarantee") by a
-------------------
Domestic Significant Subsidiary (a "Significant Subsidiary Guarantor") will be
--------------------------------
subject to termination and discharge under the following circumstances: Each
Significant Subsidiary Guarantor will automatically and unconditionally be
released from all obligations under its Springing Guarantee, and such Springing
Guarantee shall thereupon terminate and be discharged and of no further force or
effect, (i) concurrently with any sale or disposition (by merger or otherwise)
-
in accordance with the terms of this Agreement of any Significant Subsidiary
Guarantor or any interest therein by the Company or a Restricted Subsidiary,
following which such Significant Subsidiary Guarantor is no longer a Restricted
Subsidiary of the Company for the purposes of this Agreement and with respect to
the Notes, (ii) pursuant to the terms of its Springing Guarantee, (iii) at any
-- ---
time that such Significant Subsidiary Guarantor is released from all of its
obligations under all of its Springing Guarantees of payment of Indebtedness
(other than Bank Indebtedness) of the Company, (iv) upon the merger or
--
43
consolidation of any Significant Subsidiary Guarantor with and into the Company
or another Significant Subsidiary Guarantor that is the surviving Person in such
merger or consolidation and (v) upon payment in full of the aggregate principal
-
amount of all Transferred Notes then outstanding and all other Guaranteed
Obligations in respect of Transferred Notes then due and owing. Upon any such
occurrence specified in the preceding sentence, each Holder of Transferred Notes
shall execute any documents reasonably required in order to evidence such
release, discharge and termination of such Significant Subsidiary Guarantee (at
the expense of the Company).
Article VIII
Negative Covenants of the Company
---------------------------------
The Company hereby agrees that, from and after the date hereof and until
payment in full of the Principal Amount of the Notes, as well as any other
amount then due and owing under or with respect to the Notes:
8.1 Limitation on Indebtedness.
--------------------------
(a) The Company will not, and will not permit any Restricted
Subsidiary to, Incur any Indebtedness, provided, however, that the Company or
--------
any Note Guarantor Subsidiary may Incur Indebtedness if on the date of the
Incurrence of such Indebtedness, after giving effect to the Incurrence thereof,
the Consolidated Coverage Ratio would be greater than 2.00:1.00.
(b) Notwithstanding subsection (a) of this Section 8.1, the Company
and its Restricted Subsidiaries may Incur the following Indebtedness:
(i) Indebtedness Incurred pursuant to the Credit Facility (including
but not limited to in respect of letters of credit or bankers' acceptances
issued or created thereunder) and Indebtedness of any Foreign Subsidiary
that is a Restricted Subsidiary Incurred other than under the Credit
Facility, and (without limiting the foregoing), in each case, any
Refinancing Indebtedness in respect thereof, in a maximum principal amount
at any time outstanding not exceeding in the aggregate the amount equal to
(A) $410,000,000, plus (B) the amount, if any, by which the Borrowing Base
- ---- -
exceeds $110,000,000, plus (C) in the case of any refinancing of the Credit
---- -
Facility or any portion thereof, the aggregate amount of fees, underwriting
discounts, premiums and other costs and expenses incurred in connection
with such refinancing;
(ii) Indebtedness (A) of any Restricted Subsidiary to the Company or
-
(B) of the Company or any Restricted Subsidiary to any Restricted
-
Subsidiary, provided, that any subsequent issuance or transfer of any
--------
Capital Stock of such Restricted Subsidiary to which such Indebtedness is
owed, or other event, that
44
results in such Restricted Subsidiary ceasing to be a Restricted Subsidiary
or any other subsequent transfer of such Indebtedness (except to the
Company or a Restricted Subsidiary) will be deemed, in each case, an
Incurrence of such Indebtedness by the issuer thereof;
(iii) Indebtedness represented by the Notes, any Indebtedness
represented by the Senior Subordinated Notes, any Indebtedness outstanding
on the date hereof that was initially Incurred in accordance with Section
406(a) of the Senior Subordinated Note Indenture, and any Refinancing
Indebtedness Incurred in respect of any Indebtedness described in this
clause (iii) or subsection (a) of this Section 8.1;
(iv) Purchase Money Obligations and Capitalized Lease Obligations,
and any Refinancing Indebtedness with respect thereto, in an aggregate
principal amount at any time outstanding not exceeding an amount equal to
ten percent (10%) of Consolidated Total Assets at any time outstanding;
(v) Indebtedness of any Foreign Subsidiary that is a Restricted
Subsidiary Incurred for working capital purposes;
(vi) (A) Guarantees by the Company or any Restricted Subsidiary of
-
Indebtedness or any other obligation or liability of the Company or any
Restricted Subsidiary (other than any Indebtedness incurred by the Company
or such Restricted Subsidiary, as the case may be, in violation of this
Section 8.1) or (B) Indebtedness of the Company or any Restricted
-
Subsidiary arising by reason of any Lien granted by or applicable to such
Person securing Indebtedness of the Company or any Restricted Subsidiary
(other than any Indebtedness incurred by the Company or such Restricted
Subsidiary, as the case may be, in violation of this Section 8.1);
(vii) Indebtedness of the Company or any Restricted Subsidiary (A)
-
arising from the honoring of a check, draft or similar instrument of such
Person drawn against insufficient funds, provided that such Indebtedness is
extinguished within five (5) Business Days of its incurrence, or (B)
-
consisting of guarantees, indemnities, obligations in respect of earnouts
or other purchase price adjustments, or similar obligations, Incurred in
connection with the acquisition or disposition of any business, assets or
Person;
(viii) Indebtedness of the Company or any Restricted Subsidiary in
respect of (A) letters of credit, bankers' acceptances or other similar
-
instruments or obligations issued, or relating to liabilities or
obligations incurred, in the ordinary course of business (including those
issued to any governmental entity in connection with self-insurance under
applicable workers' compensation statutes),
45
or (B) completion guarantees, surety, judgment, appeal or performance
-
bonds, or other similar bonds, instruments or obligations, provided, or
relating to liabilities or obligations incurred, in the ordinary course of
business, or (C) Hedging Obligations entered into for bona fide hedging
-
purposes in the ordinary course of business, or (D) Management Guarantees,
-
or (E) the financing of insurance premiums in the ordinary course of
-
business;
(ix) Indebtedness of a Receivables Subsidiary secured by a Lien on
all or part of the assets disposed of in, or otherwise incurred in
connection with, a Financing Disposition;
(x) Indebtedness of any Person that is assumed by the Company or any
Restricted Subsidiary in connection with its acquisition of assets from
such Person or any Affiliate thereof or is issued and outstanding on or
prior to the date on which such Person was acquired by the Company or any
Restricted Subsidiary or merged or consolidated with or into any Restricted
Subsidiary (other than Indebtedness Incurred to finance, or otherwise in
connection with, such acquisition), provided that on the date of such
--------
acquisition, merger or consolidation, after giving effect thereto, (A) with
-
respect to any such Indebtedness of the Company or any Note Guarantor
Subsidiary, (1) the Company could Incur at least $1.00 of additional
-
Indebtedness pursuant to paragraph (a) of this Section 8.1 or (2) the
-
Consolidated Coverage Ratio is greater than it was on such date immediately
prior to giving effect to such acquisition and (B) with respect to any such
-
Indebtedness of any Restricted Subsidiary that is a not a Note Guarantor
Subsidiary, the Company could Incur at least $1.00 of additional
Indebtedness pursuant to paragraph (a) of this Section 8.1; and any
Refinancing Indebtedness with respect to any such Indebtedness;
(xi) Indebtedness of the Company or any Restricted Subsidiary in an
amount at any time outstanding not exceeding twice the amount of Excluded
Contributions made after May 21, 1998, provided that the proceeds of such
--------
Indebtedness and the related amount of such Excluded Contributions are used
to finance the acquisition of assets of any Person in a Related Business or
the merger or consolidation of such a Person into or with the Company or
any Restricted Subsidiary (including but not limited to payment of any
related fees and expenses) or to refinance any such acquisition, merger or
consolidation with such Indebtedness being Incurred for such refinancing
within nine (9) months of the closing of such acquisition, merger or
consolidation; and any Refinancing Indebtedness with respect to any such
Indebtedness; and
(xii) Indebtedness of the Company or any Restricted Subsidiary in an
aggregate principal amount at any time outstanding not exceeding an amount
equal to (a) twenty percent (20%) of Consolidated Total Assets minus (b)
- -
the
46
lesser of (x) $75.0 million and (y) the aggregate Principal Amount of Notes
- -
outstanding at any time.
(c) For purposes of determining compliance with, and the outstanding
principal amount of any particular Indebtedness Incurred pursuant to and in
compliance with, this Section 8.1, (i) any other obligation of the obligor on
-
such Indebtedness (or of any other Person who could have Incurred such
Indebtedness under this Section 8.1) arising under any Guarantee, Lien or letter
of credit, bankers' acceptance or other similar instrument or obligation
supporting such Indebtedness shall be disregarded to the extent that such
Guarantee, Lien or letter of credit, bankers' acceptance or other similar
instrument or obligation secures the principal amount of such Indebtedness; (ii)
--
in the event that Indebtedness meets the criteria of more than one of the types
of Indebtedness described in paragraph (b) of this Section 8.1, the Company, in
its sole discretion, shall classify such item of Indebtedness and only be
required to include the amount and type of such Indebtedness in one of such
clauses and (iii) the amount of Indebtedness issued at a price that is less than
---
the principal amount thereof shall be equal to the amount of the liability in
respect thereof determined in accordance with GAAP.
(d) For purposes of determining compliance with any United States
dollar-denominated restriction on the Incurrence of Indebtedness denominated in
a foreign currency, the United States dollar-equivalent principal amount of such
Indebtedness Incurred pursuant thereto shall be calculated based on the relevant
currency exchange rate in effect on the date that such Indebtedness was
Incurred, in the case of term Indebtedness, or first committed, in the case of
revolving credit Indebtedness, provided that (i) the United States
-------- -
dollar-equivalent principal amount of any such Indebtedness outstanding on May
21, 1998 shall be calculated based on the relevant currency exchange rate in
effect on May 21, 1998, (ii) if such Indebtedness is Incurred to refinance other
--
Indebtedness denominated in a foreign currency, and such refinancing would cause
the applicable United States dollar-denominated restriction to be exceeded if
calculated at the relevant currency exchange rate in effect on the date of such
refinancing, such United States dollar-denominated restriction shall be deemed
not to have been exceeded so long as the principal amount of such refinancing
Indebtedness does not exceed the principal amount of such Indebtedness being
refinanced and (iii) the United States dollar-equivalent principal amount of
---
Indebtedness denominated in a foreign currency and Incurred pursuant to the
Credit Agreement shall be calculated based on the relevant currency exchange
rate in effect on, at the Company's option, (x) May 21, 1998, (y) any date on
- -
which any of the respective commitments under the Credit Agreement shall be
reallocated between or among facilities or subfacilities thereunder, or on which
such rate is otherwise calculated for any purpose thereunder, or (z) the date of
-
such Incurrence. The principal amount of any Indebtedness Incurred to refinance
other Indebtedness, if Incurred in a different currency from the Indebtedness
being refinanced, shall be calculated based on the currency exchange rate
applicable to the currencies in
47
which such respective Indebtedness is denominated that is in effect on the date
of such refinancing.
(e) The Company shall not Incur any Indebtedness that is subordinated
in right of payment to any other Indebtedness of the Company, unless such
Indebtedness so Incurred is subordinated in right of payment to the Notes on
terms no less favorable to the Holders than the terms on which it is
subordinated to such other Indebtedness. No Note Guarantor shall Incur any
Indebtedness that is subordinated in right of payment to any other Indebtedness
of such Note Guarantor, unless such Indebtedness so Incurred is subordinated in
right of payment to any Note Guarantee of such Note Guarantor on terms no less
favorable to the Holders than the terms on which it is subordinated to such
other Indebtedness.
8.2 Limitation on Restricted Payments.
---------------------------------
(a) The Company shall not, and shall not permit any Restricted
Subsidiary, directly or indirectly, to (i) declare or pay any dividend or make
-
any distribution on or in respect of its Capital Stock (including any such
payment in connection with any merger or consolidation to which the Company is a
party) except (A) dividends or distributions payable solely in its Capital Stock
-
(other than Disqualified Stock) and (B) dividends or distributions payable to
-
the Company or any Restricted Subsidiary (and, in the case of any such
Restricted Subsidiary making such dividend or distribution, to other holders of
its Capital Stock on no more than a pro rata basis, measured by value); (ii)
--- ---- --
purchase, redeem, retire or otherwise acquire for value any Capital Stock of the
Company held by Persons other than the Company or a Restricted Subsidiary; (iii)
---
purchase, repurchase, redeem, defease or otherwise acquire or retire for value,
prior to scheduled maturity, scheduled repayment or scheduled sinking fund
payment, any Subordinated Obligations (other than a purchase, redemption,
defeasance or other acquisition or retirement for value in anticipation of
satisfying a sinking fund obligation, principal installment or final maturity,
in each case due within one year of the date of such acquisition or retirement);
or (iv) make any Investment (other than a Permitted Investment) in any Person
--
(any such dividend, distribution, purchase, redemption, repurchase, defeasance,
other acquisition or retirement or Investment being herein referred to as a
"Restricted Payment"), if at the time the Company or such Restricted Subsidiary
------------------
makes such Restricted Payment:
(1) a Default shall have occurred and be continuing (or would result
therefrom);
(2) the Company could not incur at least an additional $1.00 of
Indebtedness pursuant to paragraph (a) of Section 8.1; or
48
(3) the aggregate amount of such Restricted Payment and all other
Restricted Payments (the amount so expended, if other than in cash, to be
as determined in good faith by the Board of Directors, whose determination
shall be conclusive) declared or made subsequent to May 21, 1998 and then
outstanding would exceed the sum of:
(A) fifty percent (50%) of the Consolidated Net Income accrued
during the period (treated as one accounting period) from March 31,
1998 to the end of the most recent fiscal quarter ending prior to the
date of such Restricted Payment for which consolidated financial
statements of the Company are available (or, in case such Consolidated
Net Income shall be a negative number, one-hundred percent (100%) of
such negative number);
(B) the aggregate Net Cash Proceeds, and fair value (as determined
in good faith by the Board of Directors) of property or assets,
received (x) by the Company as capital contributions to the Company
-
after May 21, 1998 or from the issuance or sale (other than to a
Restricted Subsidiary) of its Capital Stock (other than Disqualified
Stock) after the Closing Date (other than Excluded Contributions) or
(y) by the Company or any Restricted Subsidiary from the issuance and
-
sale by the Company or any Restricted Subsidiary after May 21, 1998 of
Indebtedness that shall have been converted into or exchanged for
Capital Stock of the Company (other than Disqualified Stock), plus the
----
amount of cash, property or assets (determined as provided above)
received by the Company or any Restricted Subsidiary upon such
conversion or exchange;
(C) the aggregate amount equal to the net reduction since May 21,
1998 in Investments in Unrestricted Subsidiaries resulting from (x)
-
dividends, distributions, interest payments, return of capital,
repayments of Investments or other transfers of assets to the Company
or any Restricted Subsidiary from any Unrestricted Subsidiary, or (y)
-
the redesignation of any Unrestricted Subsidiary as a Restricted
Subsidiary (valued in each case as provided in the definition of
"Investment"), not to exceed in the case of any such Unrestricted
Subsidiary the aggregate amount of Investments (other than Permitted
Investments) made by the Company or any Restricted Subsidiary in such
Unrestricted Subsidiary after May 21, 1998; and
(D) in the case of any disposition or repayment since May 21, 1998
of any Investment constituting a Restricted Payment (without
duplication of any amount deducted in calculating the amount of
Investments at any time outstanding included in the amount of
Restricted
49
Payments), an amount in the aggregate equal to the lesser of the
return of capital, repayment or other proceeds with respect to all
such Investments and the initial amount of all such Investments.
(b) The provisions of subsection (a) of this Section 8.2 will not
prohibit any of the following (each, a "Permitted Payment"):
------------------
(i) any purchase, redemption, repurchase, defeasance or other
acquisition or retirement of Capital Stock of the Company or Subordinated
Obligations made by exchange (including any such exchange pursuant to the
exercise of a conversion right or privilege in connection with which cash
is paid in lieu of the issuance of fractional shares) for, or out of the
proceeds of the substantially concurrent issuance or sale of, Capital Stock
of the Company (other than Disqualified Stock and other than Capital Stock
issued or sold to a Subsidiary) or a substantially concurrent capital
contribution to the Company, provided, that the Net Cash Proceeds from any
--------
such issuance, sale or capital contribution since May 21, 1998 shall be
excluded in subsequent calculations under subsection (a) of this Section
8.2;
(ii) any purchase, redemption, repurchase, defeasance or other
acquisition or retirement of Subordinated Obligations (A) made by exchange
-
for, or out of the proceeds of the substantially concurrent issuance or
sale of, Indebtedness of the Company or Refinancing Indebtedness Incurred
in compliance with Section 8.1, (B) from Net Available Cash to the extent
-
permitted by Section 8.4 or (C) to the extent required by the agreement
-
governing such Subordinated Obligations, following the occurrence of a
Change of Control (or other similar event described therein as a "change of
control"), but only if the Company shall have repurchased all Notes
surrendered for repurchase pursuant to Sections 6.5, 6.6 and 8.4 prior to
purchasing or repaying such Subordinated Obligations;
(iii) dividends paid within sixty (60) days after the date of
declaration thereof if at such date of declaration such dividend would have
complied with the subsection (a) of this Section 8.2;
(iv) Investments or other Restricted Payments in an aggregate amount
outstanding at any time not to exceed the amount of Excluded Contributions,
provided that such Excluded Contributions shall not include any Excluded
--------
Contribution the proceeds of which were used to finance the acquisition of
assets from any Person in a Related Business or the merger or consolidation
of such a Person into or with the Company or any Restricted Subsidiary
pursuant to clause (xi) of subsection (b) of Section 8.1 (or, prior to the
date hereof, pursuant
50
to clause (xi) of paragraph (b) of Section 406 of the Senior Subordinated
Note Indenture);
(v) loans, advances, dividends or distributions by the Company to
the Parent to permit the Parent to repurchase or otherwise acquire its
Capital Stock (including any options, warrants or other rights in respect
thereof), or payments by the Company to repurchase or otherwise acquire
Capital Stock (including any options, warrants or other rights in respect
thereof), in each case from Management Investors, such payments, loans,
advances, dividends or distributions not to exceed an amount (net of
repayments of any such loans or advances) equal to (A) $25,000,000, plus
-
(B) $5,000,000 multiplied by the number of calendar years that have
-
commenced since May 21, 1998, plus the Net Cash Proceeds received by the
----
Company since May 21, 1998 from, or as a capital contribution from, the
issuance or sale to Management Investors of Capital Stock (including any
options, warrants or other rights in respect thereof), to the extent such
Net Cash Proceeds since May 21, 1998 are not included in any calculation
under clause (3)(B)(x) of subsection (a) of this Section 8.2;
(vi) the payment by the Company of, or loans, advances, dividends or
distributions by the Company to the Parent to pay, dividends on the common
stock or equity of the Company or the Parent following a public offering of
such common stock or equity, in an amount not to exceed in any fiscal year
six percent (6%) of the aggregate gross proceeds received by the Company in
or from such public offering;
(vii) Restricted Payments (including loans or advances) in an
aggregate amount outstanding at any time not to exceed $10,000,000 (net of
repayments of any such loans or advances); provided that any "Restricted
--------
Payments" (as defined in the Senior Subordinated Note Indenture)
outstanding on the date hereof under clause (vii) of paragraph (b) of
Section 408 of the Senior Subordinated Note Indenture shall be deemed
outstanding on such date under this clause (vii);
(viii) loans, advances, dividends or distributions to the Parent or
other payments by the Company or any Restricted Subsidiary (A) to satisfy
-
or permit the Parent to satisfy obligations under the Management
Agreements, (B) pursuant to the Tax Sharing Agreement or (C) to pay or
- -
permit the Parent to pay any Parent Expenses or any Related Taxes;
(ix) payments by the Company, or loans, advances, dividends or
distributions by the Company to the Parent to make payments, to holders of
Capital Stock of the Company or the Parent in lieu of issuance of
fractional shares of such Capital Stock, not to exceed $100,000 in the
aggregate outstanding at any time; and
51
(x) dividends or other distributions of Capital Stock, Indebtedness or
other securities of Unrestricted Subsidiaries.
provided that (A) in the case of clauses (iii), (vi), (vii) and (ix), the net
- -------- -
amount of any such Permitted Payment since May 21, 1998 shall be included in
subsequent calculations of the amount of Restricted Payments, (B) in the case of
-
clause (v), at the time of any calculation of the amount of Restricted Payments,
the net amount of Permitted Payments that have then actually been made under
clause (v) (or, prior to the date hereof, clause (v) of paragraph (b) of Section
408 of the Senior Subordinated Note Indenture) since May 21, 1998 that is in
excess of fifty percent (50%) of the total amount of Permitted Payments then
permitted under clause (v) shall be included in such calculation of the amount
of Restricted Payments, (C) in all cases other than pursuant to clauses (A) and
-
(B) immediately above, the net amount of any such Permitted Payment since May
21, 1998 shall be excluded in subsequent calculations of the amount of
Restricted Payments and (D) solely with respect to clause (vii), no Default or
-
Event of Default (and, prior to the date hereof, no Senior Subordinated Default
Event) shall have occurred or be continuing at the time of any such Permitted
Payment after giving effect thereto.
8.3 Limitation on Restrictions on Distributions from Restricted
-----------------------------------------------------------
Subsidiaries. The Company will not, and will not permit any Restricted
- ------------
Subsidiary to, create or otherwise cause to exist or become effective any
consensual encumbrance or restriction on the ability of any Restricted
Subsidiary to (x) pay dividends or make any other distributions on its Capital
-
Stock or pay any Indebtedness or other obligations owed to the Company, (y) make
-
any loans or advances to the Company or (z) transfer any of its property or
-
assets to the Company, except any encumbrance or restriction:
(a) pursuant to an agreement or instrument in effect at or entered
into on the date hereof (including, without limitation, the Credit Agreement,
the Senior Subordinated Note Indenture and this Agreement);
(b) pursuant to any agreement or instrument of a Person, or relating
to Indebtedness or Capital Stock of a Person, which Person is acquired by or
merged or consolidated with or into the Company or any Restricted Subsidiary, or
which agreement or instrument is assumed by the Company or any Restricted
Subsidiary in connection with an acquisition of assets from such Person, as in
effect at the time of such acquisition, merger or consolidation (except to the
extent that such Indebtedness was incurred to finance, or otherwise in
connection with, such acquisition, merger or consolidation), provided that for
--------
purposes of this clause (b), if another Person is the Successor Company, any
Subsidiary thereof or agreement or instrument of such Person or any such
Subsidiary shall be deemed acquired or assumed, as the case may be, by the
Company or a Restricted Subsidiary, as the case may be, when such Person becomes
the Successor Company;
52
(c) pursuant to an agreement or instrument (a "Refinancing Agreement")
---------------------
effecting a refinancing of Indebtedness Incurred pursuant to, or that otherwise
extends, renews, refunds, refinances or replaces, an agreement or instrument
referred to in clause (a) or (b) of this Section 8.3 or this clause (c) (an
"Initial Agreement") or contained in any amendment, supplement or other
-----------------
modification to an Initial Agreement (an "Amendment"), provided, however, that
--------- --------
the encumbrances and restrictions contained in any such Refinancing Agreement or
Amendment are not materially less favorable to the Holders taken as a whole than
encumbrances and restrictions contained in the Initial Agreement or Initial
Agreements to which such Refinancing Agreement or Amendment relates (as
determined in good faith by the Company);
(d) (i) that restricts in a customary manner the subletting,
-
assignment or transfer of any property or asset that is subject to a lease,
license or similar contract, or the assignment or transfer of any lease, license
or other contract, (ii) by virtue of any transfer of, agreement to transfer,
--
option or right with respect to, or Lien on, any property or assets of the
Company or any Restricted Subsidiary not otherwise prohibited by this Agreement,
(iii) contained in mortgages, pledges or other security agreements securing
---
Indebtedness of a Restricted Subsidiary to the extent restricting the transfer
of the property or assets subject thereto, (iv) pursuant to customary provisions
--
restricting dispositions of real property interests set forth in any reciprocal
easement agreements of the Company or any Restricted Subsidiary, (v) pursuant to
-
Purchase Money Obligations that impose encumbrances or restrictions on the
property or assets so acquired, (vi) on cash or other deposits or net worth
--
imposed by customers under agreements entered into in the ordinary course of
business, (vii) pursuant to customary provisions contained in agreements and
---
instruments entered into in the ordinary course of business (including but not
limited to leases and joint venture and other similar agreements entered into in
the ordinary course of business) or (viii) that arises or is agreed to in the
----
ordinary course of business and does not detract from the value of property or
assets of the Company or any Restricted Subsidiary in any manner material to the
Company or such Restricted Subsidiary;
(e) with respect to a Restricted Subsidiary (or any of its property or
assets) imposed pursuant to an agreement entered into for the direct or indirect
sale or disposition of all or substantially all the Capital Stock or assets of
such Restricted Subsidiary (or the property or assets that are subject to such
restriction) pending the closing of such sale or disposition;
(f) required by any applicable law, rule, regulation or order or by
any regulatory authority having jurisdiction over the Company or any Restricted
Subsidiary or any of their businesses; or
53
(g) pursuant to an agreement or instrument (i) relating to any
-
Indebtedness permitted to be Incurred subsequent to the date hereof pursuant to
the provisions of Section 8.1 if the Company determines that such encumbrance or
restriction will not cause the Company not to have the funds necessary to pay
the principal of or interest on the Notes, (ii) relating to any sale of
--
receivables by a Foreign Subsidiary that is a Restricted Subsidiary or (iii)
---
relating to Indebtedness of or a Financing Disposition to or by any Receivables
Entity.
8.4 Limitation on Sales of Assets and Subsidiary Stock.
--------------------------------------------------
(a) The Company will not, and will not permit any Restricted
Subsidiary to, make any Asset Disposition unless:
(i) the Company or such Restricted Subsidiary receives consideration
(including by way of relief from, or by any other Person assuming
responsibility for, any liabilities, contingent or otherwise) at the time
of such Asset Disposition at least equal to the fair market value of the
shares and assets subject to such Asset Disposition, as such fair market
value may be determined (and shall be determined, to the extent such Asset
Disposition or any series of related Asset Dispositions involves aggregate
consideration in excess of $10,000,000) in good faith by the Board of
Directors, whose determination shall be conclusive (including as to the
value of all non-cash consideration);
(ii) in the case of any Asset Disposition (or series of related Asset
Dispositions) having a fair market value of $10,000,000 or more, at least
seventy-five percent (75%) of the consideration therefor (excluding, in the
case of an Asset Disposition (or series of related Asset Dispositions) of
assets, any consideration by way of relief from, or by any other Person
assuming responsibility for, any liabilities, contingent or otherwise, that
are not Indebtedness) received by the Company or such Restricted Subsidiary
is in the form of cash, and provided that this clause (ii) shall not apply
--------
to any Asset Disposition (or series of related Asset Dispositions),
involving assets that accounted for less than two percent (2%) of
Consolidated EBITDA during the period of the most recent four (4)
consecutive fiscal quarters ending prior to the date of such Asset
Disposition for which consolidated financial statements of the Company are
available; and
(iii) an amount equal to one-hundred percent (100%) of the Net
Available Cash from such Asset Disposition is applied by the Company (or
any Restricted Subsidiary, as the case may be) as follows:
(A) first, either (1) to the extent the Company elects (or is
----- -
required by the provisions of this Agreement or the terms of the
Credit
54
Agreement or of Indebtedness of a Restricted Subsidiary that is not a
Note Guarantor of any of the Notes), to prepay, repay or purchase the
Notes, the Bank Indebtedness under the Credit Agreement or such
Indebtedness of a Restricted Subsidiary (in each case other than
Indebtedness owed to the Company or a Restricted Subsidiary) within
365 days after the date of such Asset Disposition or (2) to the extent
-
the Company or such Restricted Subsidiary elects, to reinvest in
Additional Assets (including by means of an investment in Additional
Assets by a Restricted Subsidiary with Net Available Cash received by
the Company or another Restricted Subsidiary) within 365 days from the
date of such Asset Disposition, or, if such reinvestment in Additional
Assets is a project that is authorized by the Board of Directors that
will take longer than such 365 days to complete, the period of time
necessary to complete such project;
(B) second, to the extent of the balance of such Net Available
------
Cash after application in accordance with clause (A) above, to make an
offer to purchase Notes pursuant and subject to the conditions of this
Section 8.4; and
(C) third, to the extent of the balance of such Net Available
-----
Cash after application in accordance with clauses (A) and (B) above,
to fund (to the extent consistent with any other applicable provision
of this Agreement) any general corporate purpose (including but not
limited to the repurchase, repayment or other acquisition or
retirement of any Subordinated Obligations to the extent otherwise
permitted hereby);
provided, however, that in connection with any prepayment, repayment or purchase
- --------
of Indebtedness pursuant to clause (A)(1) or (B) above, the Company or such
Restricted Subsidiary will retire such Indebtedness and will cause the related
loan commitment (if any) to be permanently reduced in an amount equal to the
principal amount so prepaid, repaid or purchased.
(b) Notwithstanding the foregoing provisions of this Section 8.4, the
Company and the Restricted Subsidiaries shall not be required to apply any Net
Available Cash in accordance with this Section 8.4 except to the extent that the
aggregate Net Available Cash from all Asset Dispositions that is not applied in
accordance with this Section 8.4 exceeds $15,000,000, it being understood that
lesser amounts of Net Available Cash shall be carried forward for future
application in accordance with this Section 8.4.
(c) For the purposes of clause (ii) of the first paragraph of this
Section 8.4, the following are deemed to be cash: (i) Temporary Cash Investments
-
and Cash Equivalents, (ii) the assumption of Indebtedness of the Company (other
--
than
55
Disqualified Stock of the Company) or any Restricted Subsidiary and the release
of the Company or such Restricted Subsidiary from all liability on payment of
the principal amount of such Indebtedness in connection with such Asset
Disposition, (iii) Indebtedness of any Restricted Subsidiary that is no longer a
---
Restricted Subsidiary as a result of such Asset Disposition, to the extent that
the Company and each other Restricted Subsidiary are released from any Guarantee
of payment of the principal amount of such Indebtedness in connection with such
Asset Disposition, (iv) securities received by the Company or any Restricted
--
Subsidiary from the transferee that are converted by the Company or such
Restricted Subsidiary into cash and (v) consideration consisting of Indebtedness
-
of the Company or any Restricted Subsidiary.
(d) In the event of an Asset Disposition that requires the purchase
of Notes pursuant to clause (iii)(B) of the first paragraph of this Section 8.4,
the Company will be required to purchase Notes tendered pursuant to an offer by
the Company for the Notes (the "Offer") at a purchase price of 100% of their
-----
Principal Amounts plus accrued and unpaid interest to the date of such purchase
in accordance with the procedures (including prorating in the event of
oversubscription) set forth in paragraph (e) of this Section 8.4. If the
aggregate purchase price of the Notes tendered pursuant to the Offer is less
than the Net Available Cash allotted to the purchase of Notes, the remaining Net
Available Cash will be available to the Company for use in accordance with
clause (iii)(C) of the subsection (a) of this Section 8.4. The Company shall not
be required to make an Offer for Notes pursuant to this Section 8.4 if the Net
Available Cash available therefor (after application of the proceeds as provided
in clause (iii)(A) of the first paragraph of this Section 8.4) is less than
$15,000,000 for any particular Asset Disposition (which lesser amounts shall be
carried forward for purposes of determining whether an Offer is required with
respect to the Net Available Cash from any subsequent Asset Disposition).
(e) The Company will, not later than five (5) days after the Company
becomes obligated to make an Offer pursuant to this Section 8.4, mail a notice
to each Holder stating: (i) that an Asset Disposition that requires the purchase
-
of a portion of the Notes has occurred and that such Holder has the right
(subject to the prorating described below) to require the Company, to purchase a
portion of such Holder's Notes at a purchase price in cash equal to one hundred
percent (100%) of the Principal Amount thereof, plus accrued and unpaid
interest, if any, to the date of purchase; (ii) the circumstances and relevant
--
facts and financial information regarding such Asset Disposition; (iii) the
---
repurchase date (which shall be no earlier than forty-five (45) days nor later
than sixty (60) days from the date such notice is mailed); (iv) the instructions
--
determined by the Company, consistent with this Section 8.4, that a Holder must
follow in order to have its Notes purchased; and (v) the amount of the Offer.
-
If, upon the expiration of the period for which the Offer remains open, the
aggregate Principal Amount of Notes surrendered by Holders exceeds the amount of
the Offer, the Company will select the Notes to be purchased on a pro rata
basis.
56
(f) The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to this
Section 8.4. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 8.4, the Company will
comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations under this Section 8.4 by virtue
thereof.
(g) The provisions of this Section 8.4 are in addition to and not in
limitation of the provisions of Section 6.6.
8.5 Limitation on Transactions with Affiliates.
------------------------------------------
(a) The Company will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, enter into or conduct any transaction or
series of related transactions (including the purchase, sale, lease or exchange
of any property or the rendering of any service) with any Affiliate of the
Company (an "Affiliate Transaction") unless (i) the terms of such Affiliate
--------------------- -
Transaction are not materially less favorable to the Company or such Restricted
Subsidiary, as the case may be, than those that could be obtained at the time in
a transaction with a Person who is not such an Affiliate and (ii), if such
--
Affiliate Transaction involves aggregate consideration in excess of $10,000,000,
the terms of such Affiliate Transaction have been approved by a majority of the
Disinterested Directors. For purposes of this paragraph, any Affiliate
Transaction shall be deemed to have satisfied the requirements set forth in this
paragraph if (x) such Affiliate Transaction is approved by a majority of the
-
Disinterested Directors or (y) in the event there are no Disinterested
-
Directors, a fairness opinion is provided by a nationally recognized appraisal
or investment banking firm with respect to such Affiliate Transaction.
(b) The provisions of the preceding subsection (a) of this Section
8.5 shall not apply to:
(i) any Restricted Payment Transaction;
(ii) (A) the entering into, maintaining or performance of any
-
employment contract, collective bargaining agreement, benefit plan, program
or arrangement, related trust agreement or any other similar arrangement
for or with any employee, officer or director heretofore or hereafter
entered into in the ordinary course of business, including vacation,
health, insurance, deferred compensation, severance, retirement, savings or
other similar plans, programs or arrangements, (B) the payment of
-
compensation, performance of indemnification or contribution obligations,
or any issuance, grant or award of stock, options, other equity-related
interests or other securities, to employees, officers or
57
directors in the ordinary course of business, (C) the payment of fees to
-
directors of the Company or any of its Subsidiaries, (D) any transaction
-
with an officer or director in the ordinary course of business not
involving more than $100,000 in any one case or (E) Management Advances and
-
payments in respect thereof;
(iii) any transaction with the Company, any Restricted Subsidiary, or
any Receivables Entity;
(iv) any transaction arising out of agreements or instruments in
existence on the date hereof, and any payments made pursuant thereto;
(v) the execution, delivery and performance of the Tax Sharing
Agreement and Management Agreements, including payment to CD&R or any
Affiliate of CD&R of fees of up to $1,000,000 in any fiscal year, plus all
out-of-pocket expenses incurred by CD&R or any such Affiliate in connection
with its performance of management consulting, monitoring, financial
advisory or other services with respect to the Company and its Restricted
Subsidiaries;
(vi) any transaction in the ordinary course of business on terms not
materially less favorable to the Company or the relevant Restricted
Subsidiary than those that could be obtained at the time in a transaction
with a Person who is not an Affiliate of the Company; and
(vii) any transaction in the ordinary course of business, or approved
by a majority of the Board of Directors, between the Company or any
Restricted Subsidiary and any Affiliate of the Company controlled by the
Company that is a joint venture or similar entity.
8.6 Limitation on Liens.
-------------------
(a) Without the prior written consent of the Majority CD&R Note
Holders, so long as any CD&R Notes are outstanding, the Company shall not, and
shall not permit any Subsidiary to, directly or indirectly, create or permit to
exist any Lien upon any of its property or assets, whether owned on the date of
this Agreement or thereafter acquired, except for Permitted Liens. Without in
any way limiting the foregoing, in the event that the Company or any of its
Subsidiaries shall create or permit to exist any such Lien that is not a
Permitted Lien securing any liability or obligation, the Company shall, and
shall cause each such Subsidiary to, make effective provision to secure the
Indebtedness due under the CD&R Notes or, in respect of Liens on any
Subsidiary's property or assets, any Note Guarantee of such Subsidiary in
respect of the CD&R Notes, (i) equally and ratably with any such liability or
-
obligation that ranks pari passu in right of payment with the CD&R Notes or (ii)
--
prior to any such liability or obligation that is subordinated in right of
payment to the CD&R Notes.
58
(b) Without the prior written consent of the Majority Transferred
Note Holders, so long as any Transferred Notes are outstanding, the Company
shall not, and shall not permit any Restricted Subsidiary to, directly or
indirectly, create or permit to exist any Lien (other than Permitted Liens) on
any of its property or assets (including Capital Stock of any other Person),
whether owned on the date of this Agreement or thereafter acquired, securing any
Indebtedness of the Company or any Note Guarantor of the Transferred Notes (the
"Initial Lien"), unless contemporaneously therewith effective provision is made
------------
to secure the Indebtedness due under the Transferred Notes or, in respect of
Liens on any Restricted Subsidiary's property or assets, any Note Guarantee of
such Restricted Subsidiary in respect of the Transferred Notes, (i) equally and
-
ratably with any such obligation that ranks pari passu in right of payment with
the Transferred Notes or (ii) prior to any such obligation that by its terms is
--
expressly subordinated in right of payment to the Transferred Notes, in each
case for so long as such obligation is so secured by such Initial Lien. Any such
Lien thereby created in favor of the Transferred Notes or any such Note
Guarantee will be automatically and unconditionally released and discharged upon
(i) the release and discharge of the Initial Lien to which it relates, or (ii)
- --
any sale, exchange or transfer to any Person not an Affiliate of the Company of
the property or assets secured by such Initial Lien, or of all of the Capital
Stock held by the Company or any Restricted Subsidiary in, or all or
substantially all the assets of, any Restricted Subsidiary creating such Lien.
8.7 Limitation on Optional Payments and Modifications of Debt Instruments
---------------------------------------------------------------------
and other Material Agreements. The Company shall not, and shall not permit any
- -----------------------------
of its Subsidiaries to, directly or indirectly:
(a) make any optional payment, prepayment, repurchase or redemption
of the Senior Subordinated Notes or make any optional payments on account
of or for a sinking or other analogous fund for the repurchase, redemption,
defeasance or other acquisition thereof (other than mandatory payments of
principal and interest and payments of, in each case, fees and expenses
required by the Senior Subordinated Notes or the Senior Subordinated Note
Indenture, only to the extent permitted under the subordination provisions,
if any, applicable thereto);
(b) make any amendment, supplement, modification or waiver of any of
the terms of the Senior Subordinated Notes or the Senior Subordinated Note
Indenture which (i) amends or modifies the subordination - provisions
-
contained in the Senior Subordinated Notes and the Senior Subordinated Note
Indenture, (ii) shortens the fixed maturity or increases the principal
--
amount of, or increases the rate or shortens the time of payment of
interest on, or increases the amount or shortens the time of payment of any
principal or premium payable whether at maturity, at a date fixed for
prepayment or by acceleration or otherwise of the Indebtedness evidenced by
the Senior Subordinated Notes or increases the amount
59
of, or accelerates the time of payment of, any fees or other amounts
payable in connection therewith to any holder of the Senior Subordinated
Notes, (iii) relates to any material affirmative or negative covenants or
---
any events of default or remedies under the Senior Subordinated Notes and
the Senior Subordinated Note Indenture, and the effect of which is to
subject the Company, or any of its Subsidiaries, to any more onerous or
more restrictive provisions or (iv) which otherwise adversely affects the
--
interests of the Holders as senior creditors with respect to the Senior
Subordinated Notes or the interests of the Holders hereunder in any
material respect;
(c) in the event of the occurrence of a Change of Control, repurchase
the Senior Subordinated Notes, unless the Company shall have (i) made, or
-
caused to have been made, payment in full of the Notes and any other
amounts then due and owing to any Holder under the Notes or this Agreement
(including, without limitation, accrued but unpaid interest on the Notes)
or (ii) made, or caused to have been made, an offer to pay the Notes and
--
any amounts then due and owing to each Holder under the Notes or this
Agreement (including, without limitation, accrued but unpaid interest on
the Notes), or caused to have been made, payment in full thereof to each
such Holder which has accepted such offer; or
(d) make any amendment, supplement, modification or waiver of any of
the terms of Section 14.12(d), (e) and (f) of the Credit Agreement as
amended by the Second Credit Agreement Amendment that adversely affects any
Holder without the consent of the Majority CD&R Note Holders.
8.8 Limitation on Negative Pledge Clauses. The Company shall not, and
-------------------------------------
shall not permit any of its Subsidiaries to, directly or indirectly, enter into
any agreement which prohibits or limits the ability of the Company or any of its
Subsidiaries to create, incur, assume or suffer to exist any Lien upon any of
its property or revenues, whether now owned or hereafter acquired, to secure the
obligations under the CD&R Notes or any Note Financing Document to the extent
relating to the CD&R Notes or, in the case of any Note Guarantor, its
obligations under its Note Guarantee of the CD&R Notes or any Note Financing
Document to the extent relating to such Note Guarantee, other than (a) the
-
Credit Facility, this Agreement and the other Note Financing Documents and any
related documents and (b) any industrial revenue or development bonds,
-
agreements governing any purchase money Liens, acquisition agreements or
Financing Leases or operating leases of real property entered into in the
ordinary course of business otherwise permitted hereby (in which case, any
prohibition or limitation shall only be effective against the assets financed,
acquired or leased thereby).
60
Article IX
Successor Company
-----------------
9.1 When the Company May Merge, etc.
-------------------------------
(a) The Company will not consolidate with or merge with or into, or
convey, transfer or lease all or substantially all its assets to, any Person,
unless:
(i) the resulting, surviving or transferee Person (the "Successor
---------
Company") will be a Person organized and existing under the laws of the
-------
United States of America, any State thereof or the District of Columbia and
the Successor Company (if not the Company) will expressly assume all the
obligations of the Company under this Agreement, the Notes and the other
Note Financing Documents by executing and delivering to the Holders an
agreement or one or more other documents or instruments in form reasonably
satisfactory to the Holders;
(ii) immediately after giving effect to such transaction (and
treating any Indebtedness that becomes an obligation of the Successor
Company or any Restricted Subsidiary as a result of such transaction as
having been Incurred by the Successor Company or such Restricted Subsidiary
at the time of such transaction), no Default or Event of Default will have
occurred and be continuing;
(iii) immediately after giving effect to such transaction, either (A)
-
the Successor Company could Incur at least $1.00 of additional Indebtedness
pursuant to paragraph 8.1(a) or (B) the Consolidated Coverage Ratio of the
-
Successor Company would equal or exceed the Consolidated Coverage Ratio of
the Company immediately prior to giving effect to such transaction;
(iv) each Note Guarantor (other than any party to any such
consolidation or merger) shall have delivered a document or instrument in
form and substance reasonably satisfactory to the Holders confirming its
Note Guarantee; and
(v) the Company shall have delivered to the Holders a certificate of
a Responsible Officer and an opinion of counsel (which counsel shall be
reasonably acceptable to the Holders), each to the effect that such
consolidation, merger or transfer complies with the provisions described in
this paragraph of this Section 9.1, and each in form and substance
reasonably satisfactory to the Holders, provided that (A) in giving such
-------- -
opinion such counsel may rely on a certificate of a Responsible Officer as
to compliance with the foregoing clauses (ii) and (iii) and as to any
matters of fact, and (B) no opinion of counsel will be required for a
-
consolidation, merger or transfer described in subsection (c) of this
Section 9.1.
61
(b) Any Indebtedness that becomes an obligation of the Company or any
Restricted Subsidiary (or that is deemed to be Incurred by any Restricted
Subsidiary that becomes a Restricted Subsidiary) as a result of any such
transaction undertaken in compliance with this Section 9.1, and any Refinancing
Indebtedness with respect thereto, shall be deemed to have been Incurred in
compliance with Section 8.1.
(c) Clauses (ii) and (iii) of subsection (a) of this Section 9.1 will
not apply to any transaction in which (A) any Restricted Subsidiary consolidates
-
with, merges into or transfers all or part of its properties and assets to the
Company or (B) the Company consolidates or merges with or into or transfers all
-
or substantially all its assets to (1) an Affiliate incorporated or organized
-
for the purpose of reincorporating or reorganizing the Company in another
jurisdiction or changing its legal structure to a corporation or other entity or
(2) a Restricted Subsidiary of the Company so long as all assets of the Company
-
and the Restricted Subsidiaries immediately prior to such transaction (other
than Capital Stock of such Restricted Subsidiary) are owned by such Restricted
Subsidiary and its Restricted Subsidiaries immediately after the consummation
thereof.
9.2 Successor Company Substituted. Upon any transaction involving the
-----------------------------
Company in accordance with Section 9.1, in which the Company is not the
Successor Company, the Successor Company will succeed to, and be substituted
for, and may exercise every right and power of, the Company under this
Agreement, and thereafter (other than in the case of a lease) the predecessor
Company shall be relieved of all obligations and covenants under this Agreement.
Article X
Events of Default
-----------------
10.1 Events of Default. An "Event of Default" occurs if, voluntarily or
----------------- ----------------
involuntarily, by operation of law or pursuant to any judgment, decree or order
of any Governmental Authority or otherwise:
(a) the Company defaults in any payment of interest on any Note when
due or any other amount payable under any Note Financing Document when due
(other than a payment governed by the following clause (b)), and such default
continues for a period of thirty (30) days;
(b) the Company defaults in the payment of the principal of any Note
when the same becomes due and payable, whether at the Maturity Date, upon
optional redemption, upon purchase, upon declaration of acceleration or
otherwise;
(c) the Company fails to comply with any covenant or obligation (x)
-
contained in Section 6.5 (other than a failure to purchase Notes, which shall be
governed
62
by the preceding clause (b)) or Article IX and such failure continues for a
period of thirty (30) days after notice thereof is given to the Company by any
Holder or (y) to issue shares of Common Stock or Warrants pursuant to Section
-
6.3, 6.7 or 13.9(b) or any other provision of any Note Financing Document and
such failure continues for a period of ten (10) days;
(d) the Company or any other Note Financing Party fails to comply
with any covenant or obligation (x) contained in Section 6.6 (other than a
-
failure to purchase Notes, which shall be governed by clause (b) of this Section
10.1), Article VII (other than any covenant or obligation referred to in clause
(o) of this Section 10.1) or Section 13.9 or (y) under any Note Financing
-
Document other than this Agreement and the Notes (other than any covenant or
obligation referred to in clauses (a), (b), (c), (o) and (p) of this Section
10.1), and in any such case, such failure continues for a period of thirty (30)
days after either a Responsible Officer shall have discovered or should have
discovered such default or notice thereof is given to the Company by any Holder;
(e) the Company or any other Note Financing Party fails to comply
with any of its covenants and obligations under this Agreement or any Note
(other than those referred to in clauses (a), (b), (c), (d), (o) and (p) of this
Section 10.1) and such failure continues for a period of sixty (60) days after
notice thereof is given to the Company by any Holder;
(f) (i) Any Senior Subordinated Default Event shall occur or exist or
-
(ii) any Bank Default Event shall occur or exist and either the Commitments (as
--
defined in the Credit Agreement) shall be terminated or the Loans (as defined in
the Credit Agreement) shall be declared due and payable;
(g) The Company, any Note Guarantor or any other Subsidiary of the
Company shall (i) default in any payment of principal of or interest of any
-
Indebtedness (other than the Notes), beyond the period of grace, if any,
provided in the instrument or agreement under which such Indebtedness was
created; or (ii) default in the observance or performance of any other agreement
--
or condition relating to any such Indebtedness or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such Indebtedness
(or a trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause, with the giving of notice or lapse of time if required,
such Indebtedness to become due prior to its stated maturity, and (in the case
of any such Indebtedness not constituting Subordinated Obligations) such
Indebtedness shall have so become due; provided, however, that no Default or
Event of Default shall exist under this paragraph unless the amount of any such
Indebtedness in respect of which any default or other event or condition
referred to in this paragraph shall have occurred shall be equal to at least
$15,000,000;
63
(h) the Parent, the Company or any Material Subsidiary shall commence
any case, proceeding or other action (i) under any existing or future law of any
-
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or
(ii) seeking appointment of a receiver, trustee, custodian, conservator or other
--
similar official for it or for all or any substantial part of its assets, or the
Parent, the Company or any Material Subsidiary shall make a general assignment
for the benefit of its creditors;
(i) there shall be commenced against any of the Parent, the Company
or any Material Subsidiary any case, proceeding or other action of a nature
referred to in clause (g) above which (i) results in the entry of an order for
-
relief or any such adjudication or appointment or (ii) remains undismissed,
--
undischarged or unbonded for a period of sixty (60) days;
(j) there shall be commenced against the Parent, the Company or any
Material Subsidiary any case, proceeding or other action seeking issuance of a
warrant of attachment, execution, distraint or similar process against all or
any substantial part of its assets which results in the entry of an order for
any such relief which shall not have been vacated, discharged, or stayed or
bonded pending appeal within sixty (60) days from the entry thereof;
(k) the Parent, the Company or any Material Subsidiary shall take any
action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (g), (h), or (i) of this
Section 10.1;
(l) the Parent, the Company or any Material Subsidiary shall
generally not, or shall be unable to, or shall admit in writing its inability
to, pay its debts as they become due;
(m) one or more judgments or decrees shall be entered against the
Company or any of its Active Subsidiaries involving in the aggregate a liability
(net of any insurance or indemnity payments actually received in respect thereof
prior to or within sixty (60) days from the entry thereof, or to be received in
respect thereof, in the event any appeal thereof shall be unsuccessful) of
$15,000,000 or more, and all such judgments or decrees shall not have been
vacated, discharged, stayed or bonded pending appeal within sixty (60) days from
the entry thereof;
(n) (i) Any Person shall engage in any "prohibited transaction" (as
-
defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan,
(ii) any "accumulated funding deficiency" (as defined in Section 302 of ERISA),
--
whether
64
or not waived, shall exist with respect to any Plan or any Lien in favor of the
PBGC or a Plan shall arise on the assets of the Company or any Commonly
Controlled Entity, (iii) a Reportable Event shall occur with respect to, or
---
proceedings shall commence to have a trustee appointed, or a trustee shall be
appointed, to administer or to terminate, any Single Employer Plan, which
Reportable Event or commencement of proceedings or appointment of a trustee is
reasonably likely to result in the termination of such Plan for purposes of
Title IV of ERISA (other than a standard termination pursuant to Section 4041(b)
of ERISA), (iv) any Single Employer Plan shall terminate for purposes of Title
--
IV of ERISA, (v) the Company or any Commonly Controlled Entity shall, or is
-
reasonably likely to, incur any liability in connection with a withdrawal from,
or the Insolvency or Reorganization of, a Multiemployer Plan, (vi) the
--
occurrence or expected occurrence of any event or condition which results or is
reasonably likely to result in the Company's or any Commonly Controlled Entity's
becoming responsible for any liability in respect of a Former Plan, or (vii) any
---
other event or condition shall occur or exist with respect to a Plan; and in
each case in clauses (i) through (vii) above, such event or condition, together
with all other such events or conditions, if any, would be reasonably expected
to result in liability which would have a Material Adverse Effect;
(o) (i) Any of the Note Security Documents (or any guarantee
-
thereunder by any Note Financing Party of the monetary obligations of the
Company hereunder) shall cease, for any reason, to be in full force and effect
other than pursuant to the terms hereof and thereof, or the Company or any other
Note Financing Party which is a party to any of the Note Security Documents
shall so assert in writing, (ii) the Company shall fail to perform any covenant
--
or obligation contained in Section 7.10, 7.11(a), 8.6(a) or 8.8 or (iii) the
---
Lien created by any of the Note Security Documents shall cease to be enforceable
and of the same effect as to perfection and priority purported to be created
thereby with respect to any significant portion of the Collateral (other than in
connection with any termination of such Lien in respect of any Collateral as
permitted hereby or by any Note Security Document), and such failure of such
Lien to be perfected and enforceable with such priority shall have continued
unremedied for a period of twenty (20) days; or
(p) (i) The Senior Subordinated Notes, for any reason, shall not be
-
or shall cease to be validly subordinated as provided therein and in the Senior
Subordinated Note Indenture to the obligations of the Company under this
Agreement, any Notes and the other Note Financing Documents or (ii) the Company
--
shall fail to perform any covenant or obligation contained in Section 8.7.
10.2 Acceleration of Maturity; Rescission and Annulment.
--------------------------------------------------
(a) If an Event of Default (other than an Event of Default specified
in clauses 10.1(h) through (l) with respect to the Company) occurs and is
continuing, the Holders of at least a twenty five percent (25%) of the aggregate
Principal Amount of the
65
outstanding Notes, by notice to the Company specifying the respective Event of
Default and that such notice is a "Notice of Acceleration," may declare the
principal of and accrued but unpaid interest on all the Notes to be due and
payable. Upon such declaration, such principal and interest will be due and
payable immediately.
(b) Notwithstanding subsection (a) of this Section 10.2, if an Event
of Default specified in clauses 10.1(h) through (l) with respect to the Company
occurs and is continuing, then the principal of and any accrued interest on the
outstanding Notes will ipso facto become and be immediately due and payable
---- -----
without any declaration or other act on the part of any Holder.
(c) The Holders of a majority in aggregate Principal Amount of the
outstanding Notes may, by notice to the Company, rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default have been cured or waived. No such
rescission shall affect any subsequent Default or impair any right consequent
thereto.
10.3 Unconditional Right of Holders to Receive Principal, Premium and
----------------------------------------------------------------
Interest. Notwithstanding any other provision of this Agreement or any other
- --------
Note Financing Document, each Holder's right to receive payment of the principal
of and all interest on the Note or Notes held by it on the Interest Payment
Dates and Stated Maturity expressed in such Note or Notes, and to institute suit
for the enforcement of any such payment on or after such Interest Payment Dates
and Stated Maturity, shall not be impaired without the consent of such Holder.
10.4 Restoration of Rights and Remedies. If any Holder has instituted
----------------------------------
any proceeding to enforce any right or remedy under this Agreement and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to such Holder, then and in every such case the Company,
any other obligor upon the Notes and the Holders shall, subject to any
determination in such proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Holders shall continue as though no such proceeding had been instituted.
10.5 Rights and Remedies Cumulative. No right or remedy herein
------------------------------
conferred upon the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
10.6 Delay or Omission Not Waiver. No delay or omission of any Holder
----------------------------
to exercise any right or remedy accruing upon any Event of Default shall impair
any such
66
right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article X or by law
to the Holders may be exercised from time to time, and as often as may be deemed
expedient, by the Holders.
10.7 Waiver of Past Defaults. The Holders of not less than a majority
-----------------------
in aggregate Principal Amount of the outstanding Notes may, on behalf of the
Holders of all of the Notes, waive any past Default hereunder and its
consequences, except a Default in the payment of the principal of or interest on
any Note (which may only be waived with the consent of each Holder of Notes
directly affected), and except as may otherwise be provided in Section 13.7.
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose,
but no such waiver shall extend to any subsequent or other Default or Event of
Default or impair any right consequent thereon. In case of any such waiver, the
Company, each Note Guarantor, any other obligor upon the Notes and the Holders
shall be restored to their former positions and rights hereunder and under the
Notes, respectively.
10.8 Waiver of Stay, Extension or Usury Laws. The Company covenants
---------------------------------------
(to the extent that it may lawfully do so) that it will not at any time insist
upon, or plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law or any usury or other similar law
wherever enacted, now or at any time hereafter in force, that would prohibit or
forgive the Company from paying all or any portion of the principal of (or
premium, if any) or interest on the Notes contemplated herein or in the Notes or
that may affect the covenants or the performance of this Agreement.
Article XI
Termination
-----------
11.1 Termination. This Agreement may be terminated prior to the
-----------
Closing (a) at any time by the written agreement of the Parent, the Company and
-
the Investor, and (b) at any time upon written notice given by any of the
-
Parent, the Company and the Investor to the other parties that the consummation
of the transactions contemplated hereby would violate, in whole or in part, a
Requirement of Law.
11.2 Effect of Termination. In the event of the termination of this
---------------------
Agreement pursuant to the provisions of Section 11.1, this Agreement shall
become void and have no effect, without any liability to any Person; provided
that the provisions of Sections, 13.1, 13.2, 13.3, 13.6, 13.7, 13.8, 13.9,
13.10, 13.11, 13.12, 13.13 and 13.14 shall survive any termination of this
Agreement.
67
Article XII
Definitions
-----------
"Active Subsidiaries" means each Subsidiary of the Company other than
-------------------
any Inactive Subsidiary.
"Affiliate" means, with respect to any Person, a Person that directly
---------
or indirectly through one or more intermediaries, controls, is controlled by, or
is under common control with, the first Person. "Control" (including the terms
-------
"controlled by" and "under common control with") means the possession, directly
------------- -------------------------
or indirectly, of the power to direct or cause the direction of the management
policies of a Person (whether through the ownership of voting securities, by
contract, as trustee or executor, or otherwise) and shall be deemed to exist
upon the ownership of securities entitling the holder thereof to exercise more
than 20% of the voting power in the election of directors of such Person (or
other Persons or body performing similar functions).
"Affiliate Transaction" has the meaning given to it in Section 8.5.
---------------------
"Agreement Currency" has the meaning given to it in Section 13.10.
------------------
"Amendment" has the meaning given to it in Section 8.3(c).
---------
"Asset Disposition" means any sale, lease, transfer or other
-----------------
disposition of shares of Capital Stock of a Restricted Subsidiary (other than
directors' qualifying shares, or, in the case of a Foreign Subsidiary, to the
extent required by any Requirement of Law), property or other assets (each
referred to for the purposes of this definition as a "disposition") by the
Company or any of its Restricted Subsidiaries (including any disposition by
means of a merger, consolidation or similar transaction), other than (a) a
-
disposition to the Company or a Restricted Subsidiary, (b) a disposition in the
-
ordinary course of business, (c) the sale or discount (with or without recourse,
-
and on customary or commercially reasonable terms) of accounts receivable or
notes receivable arising in the ordinary course of business, or the conversion
or exchange of accounts receivable for notes receivable, (d) any Restricted
-
Payment Transactions, (e) a disposition that is governed by the provisions
-
described under Article IX hereof, (f) any Financing Disposition, (g) any "fee
- -
in lieu" or other disposition of assets to any governmental authority or agency
that continue in use by the Company or any Restricted Subsidiary, so long as the
Company or any Restricted Subsidiary may obtain title to such assets upon
reasonable notice by paying a nominal fee, (h) any exchange of like property
-
pursuant to Section 1031 (or any successor section) of the Code, (i) any
-
financing transaction with respect to property built or acquired by the Company
or any Restricted Subsidiary after the Closing Date, including without
limitation any sale/leaseback transaction or asset securitization, (j) any
-
disposition arising from foreclosure, condemnation or similar action with
respect to any property or other assets, (k) any disposition of Capital Stock,
-
68
Indebtedness or other securities of an Unrestricted Subsidiary, (l) a
-
disposition of Capital Stock of a Restricted Subsidiary pursuant to an agreement
or other obligation with or to a Person (other than the Company or a Restricted
Subsidiary) from whom such Restricted Subsidiary was acquired, or from whom such
Restricted Subsidiary acquired its business and assets (having been newly formed
in connection with such acquisition), entered into in connection with such
acquisition, (m) a disposition of not more than five-percent (5%) of the
-
outstanding Capital Stock of a Foreign Subsidiary that is a Restricted
Subsidiary that has been approved by the Board of Directors, or (n) any
-
disposition or series of related dispositions for aggregate consideration not to
exceed $2.5 million.
"Average Life" means, as of the date of determination, with respect to
------------
any Indebtedness or Preferred Stock, the quotient obtained by dividing (a) the
-
sum of the products of the numbers of years from the date of determination to
the dates of each successive scheduled principal payment of such Indebtedness or
redemption or similar payment with respect to such Preferred Stock multiplied by
the amount of such payment by (b) the sum of all such payments.
-
"Bank Agent" means JPMorgan Chase Bank (as successor by merger to the
----------
Morgan Guaranty Trust Company of New York), and any successors thereto, in its
capacity as administrative agent under the Credit Agreement.
"Bank Default Event" means a "Default" or "Event of Default" as those
------------------
terms are defined in the Credit Agreement, or any other default or event of
default under the Credit Agreement.
"Bank Indebtedness" means any and all amounts, whether outstanding on
-----------------
the date hereof or thereafter incurred, payable under or in respect of the
Credit Facility, including without limitation principal, premium (if any),
interest (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company or any Restricted
Subsidiary whether or not a claim for post-filing interest is allowed in such
proceedings), fees, charges, expenses, reimbursement obligations, guarantees,
other monetary obligations of any nature and all other amounts payable
thereunder or in respect thereof.
"Board of Directors" means, unless the context otherwise requires, the
------------------
Board of Directors of the Company.
"Borrowing Base" means the sum (determined as of the end of the most
--------------
recently ended fiscal quarter for which consolidated financial statements of the
Company are available) of (a) sixty percent (60%) of Inventory of the Company
-
and its Restricted Subsidiaries and (b) eighty percent (80%) of Receivables of
-
the Company and its Restricted Subsidiaries.
69
"Business" has the meaning given to it in Section 3.17.
--------
"Business Day" means any day other than a Saturday, Sunday or other
------------
day on which banking institutions in the City of New York, New York are
authorized or obligated by any Requirement of Law to be closed.
"Capital Stock" means any and all shares, interests, participations or
-------------
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants or options to purchase any of the foregoing.
"Capitalized Lease Obligation" means an obligation that is required to
----------------------------
be classified and accounted for as a capitalized lease for financial reporting
purposes in accordance with GAAP. The stated maturity of any Capitalized Lease
Obligation shall be the date of the last payment of rent or any other amount due
under the related lease.
"CD&R" means Clayton, Dubilier & Rice, Inc., a Delaware corporation,
----
and any successors thereto.
"CD&R Group" means CD&R, Fund V, the Investor or any other investment
----------
fund or vehicle managed, sponsored or advised by CD&R, or any Affiliate of or
successor to CD&R, Fund V, the Investor or any such other investment fund or
vehicle.
"CD&R Investment" means the investment by the Investor in the Notes.
---------------
"CD&R Notes" means one or more Notes held by the Investor or any other
----------
member of the CD&R Group.
"Change of Control" means the occurrence of the following: (a) any
----------------- -
Person or "group" (within the meaning of Section 13(d) or 14(d) of the Exchange
Act), other than any of the Permitted Investors, shall have acquired a
percentage of shares of Voting Stock that is greater than as held in the
aggregate by the Permitted Investors or (b) the Permitted Investors shall cease
-
to hold in the aggregate at least (i) at any time prior to a New Equity
-
Financing, thirty-five percent (35%) of the outstanding Voting Stock of the
Parent or (ii) upon or at any time after a New Equity Financing, twenty-five
--
percent (25%) of the outstanding Voting Stock of the Parent or (c) a "Change of
-
Control" as defined in the Senior Subordinated Note Indenture. "Voting Stock"
------------
means shares of Capital Stock entitled to vote generally in the election of
directors and "Permitted Investors" means any of (x) the Investor, CD&R, Fund V,
------------------- -
any other investment fund or vehicle managed, sponsored or advised by CD&R, or
any Affiliate of or successor to the Investor, CD&R, Fund V or any such other
investment fund or vehicle, (y) any Management Investor and (z) for a period not
- -
exceeding three (3) Business Days, any Person acting in the capacity of an
underwriter in connection with a public or private offering of Capital Stock of
the Parent. "New Equity Financing" means the receipt by the
--------------------
70
Parent of at least $150,000,000 in gross cash proceeds from the issuance and
sale of newly-issued shares of Common Stock after the Closing Date to Persons
other than the Permitted Investors and "Management Investor" means,
-------------------
collectively, the officers, directors, employees and other members of the
management of the Parent, the Company or any Subsidiary of the Company, or
immediate family members or relatives thereof, or trusts or partnerships for the
benefit of any of the foregoing, or any of their heirs, executors or legal
representatives, who at any particular date shall beneficially own or have the
right to acquire, directly or indirectly, common stock of the Parent or the
Company.
"Change of Control Notice Event" means (a) the execution of any
------------------------------ -
written agreement (including, without limitation, any "letter of intent" or
other similar agreement which contemplates more complete documentation or
agreement) which, when fully performed by the parties thereto, would result in a
Change of Control or (b) the making of any written offer by any person (as such
-
term is used in section 13(d) and section 14(d)(2) of the Exchange Act as in
effect on the Closing Date) or related persons constituting a group (as such
term is used in Rule 13d-5 under the Exchange Act as in effect on the Closing
Date), which offer, if accepted by the requisite number of such Holders, would
result in a Change of Control.
"Change of Control Payment Date" has the meaning given to it in
------------------------------
Section 6.5.
"Closing" has the meaning given to it in Section 2.1.
-------
"Closing Date" has the meaning given to it in Section 2.1.
------------
"Code" means the Internal Revenue Code of 1986, as amended from time
----
to time.
"Collateral" means all assets of the Note Financing Parties, now owned
----------
or hereinafter acquired, upon which a Lien is purported to be created by any
Note Security Document.
"Common Stock" means the common stock, par value $0.01 per share, of
------------
the Parent.
"Commonly Controlled Entity" means an entity, whether or not
--------------------------
incorporated, which is under common control with the Parent, the Company or any
Subsidiary of the Company within the meaning of Section 4001 of ERISA or is part
of a group which includes the Parent, the Company or any Subsidiary of the
Company and which is treated as a single employer under Section 414(b) or 414(c)
of the Code.
"Company" has the meaning given to it in the Heading.
-------
71
"Consolidated Coverage Ratio" as of any date of determination means
---------------------------
the ratio of (x) the aggregate amount of Consolidated EBITDA of the Company and
the Restricted Subsidiaries for the period of the most recent four consecutive
fiscal quarters ending prior to the date of such determination for which
consolidated financial statements of the Company are available to (y)
-
Consolidated Interest Expense for such four fiscal quarters, provided that:
--------
(a) if since the beginning of such period the Company or any
Restricted Subsidiary has Incurred any Indebtedness that remains outstanding on
such date of determination or if the transaction giving rise to the need to
calculate the Consolidated Coverage Ratio is an Incurrence of Indebtedness,
Consolidated EBITDA and Consolidated Interest Expense for such period shall be
calculated after giving effect on a pro forma basis to such Indebtedness as if
such Indebtedness had been Incurred on the first day of such period (except that
in making such computation, the amount of Indebtedness under any revolving
credit facility outstanding on the date of such calculation shall be computed
based on (i) the average daily balance of such Indebtedness during such four
-
fiscal quarters or such shorter period for which such facility was outstanding
or (ii) if such facility was created after the end of such four fiscal quarters,
--
the average daily balance of such Indebtedness during the period from the date
of creation of such facility to the date of such calculation);
(b) if since the beginning of such period the Company or any
Restricted Subsidiary has repaid, repurchased, redeemed, defeased or otherwise
acquired, retired or discharged any Indebtedness (each, a "Discharge") or if the
---------
transaction giving rise to the need to calculate the Consolidated Coverage Ratio
involves a Discharge of Indebtedness (in each case other than Indebtedness
Incurred under any revolving credit facility unless such Indebtedness has been
permanently repaid), Consolidated EBITDA and Consolidated Interest Expense for
such period shall be calculated after giving effect on a pro forma basis to such
--- -----
Discharge of such Indebtedness, including with the proceeds of such new
Indebtedness, as if such Discharge had occurred on the first day of such period;
(c) if since the beginning of such period the Company or any
Restricted Subsidiary shall have disposed of any company, any business or any
group of assets constituting an operating unit of a business (any such
disposition, a "Sale"), the Consolidated EBITDA for such period shall be reduced
----
by an amount equal to the Consolidated EBITDA (if positive) attributable to the
assets that are the subject of such Sale for such period or increased by an
amount equal to the Consolidated EBITDA (if negative) attributable thereto for
such period and Consolidated Interest Expense for such period shall be reduced
by an amount equal to (i) the Consolidated Interest Expense attributable to any
-
Indebtedness of the Company or any Restricted Subsidiary repaid, repurchased,
redeemed, defeased or otherwise acquired, retired or discharged with respect to
the Company and its continuing Restricted Subsidiaries in connection with
such Sale for such period (including but not limited to through the assumption
of such Indebtedness by another Person) plus (ii) if the Capital Stock of any
---- --
Restricted Subsidiary is sold, the Consolidated Interest Expense for such period
attributable to the Indebtedness of such Restricted Subsidiary to the extent the
Company and its continuing Restricted Subsidiaries are no longer liable for such
Indebtedness after such Sale;
(d) if since the beginning of such period the Company or any
Restricted Subsidiary (by merger, consolidation or otherwise) shall have made an
Investment in any Person that thereby becomes a Restricted Subsidiary, or
otherwise acquired any company, any business or any group of assets constituting
an operating unit of a business, including any such Investment or acquisition
occurring in connection with a transaction causing a calculation to be made
hereunder (any such Investment or acquisition, a "Purchase"), Consolidated
--------
EBITDA and Consolidated Interest Expense for such period shall be calculated
after giving pro forma effect thereto (including the Incurrence of any related
Indebtedness) as if such Purchase occurred on the first day of such period; and
(e) if since the beginning of such period any Person became a
Restricted Subsidiary or was merged or consolidated with or into the Company or
any Restricted Subsidiary, and since the beginning of such period such Person
shall have Discharged any Indebtedness or made any Sale or Purchase that would
have required an adjustment pursuant to clause (b), (c) or (d) above if made by
the Company or a Restricted Subsidiary during such period, Consolidated EBITDA
and Consolidated Interest Expense for such period shall be calculated after
giving pro forma effect thereto as if such Discharge, Sale or Purchase occurred
on the first day of such period.
For purposes of this definition, whenever pro forma effect is to be given to any
Sale, Purchase or other transaction, or the amount of income or earnings
relating thereto and the amount of Consolidated Interest Expense associated with
any Indebtedness Incurred or repaid, repurchased, redeemed, defeased or
otherwise acquired, retired or discharged in connection therewith, the pro forma
calculations in respect thereof (including without limitation in respect of
anticipated cost savings or synergies relating to any such Sale, Purchase or
other transaction) shall be as determined in good faith by a responsible
financial or accounting officer of the Company. If any Indebtedness bears a
floating rate of interest and is being given pro forma effect, the interest
expense on such Indebtedness shall be calculated as if the rate in effect on the
date of determination had been the applicable rate for the entire period (taking
into account any Interest Rate Agreement applicable to such Indebtedness). If
any Indebtedness bears, at the option of the Company or a Restricted Subsidiary,
a rate of interest based on a prime or similar rate, a eurocurrency interbank
offered rate or other fixed or floating rate, and such Indebtedness is being
given pro forma effect, the interest expense on such Indebtedness shall be
calculated by applying such optional rate as the Company or such Restricted
Subsidiary may designate. If any Indebtedness that is being given pro forma
effect was Incurred
73
under a revolving credit facility, the interest expense on such Indebtedness
shall be computed based upon the average daily balance of such Indebtedness
during the applicable period. Interest on a Capitalized Lease Obligation shall
be deemed to accrue at an interest rate determined in good faith by a
responsible financial or accounting officer of the Company to be the rate of
interest implicit in such Capitalized Lease Obligation in accordance with GAAP.
"Consolidated EBITDA" means, for any period, the Consolidated Net Income
-------------------
for such period, plus the following to the extent deducted in calculating such
Consolidated Net Income: (a) provision for all taxes (whether or not paid,
-
estimated or accrued) based on income, profits or capital, (b) Consolidated
-
Interest Expense and any Receivables Fees, (c) depreciation, amortization
-
(including but not limited to amortization of goodwill and intangibles and
amortization and write-off of financing costs) and all other non-cash charges or
non-cash losses, (d) any expenses or charges related to any sale of Capital
-
Stock (other than Disqualified Stock) of the Company and (e) the amount of any
-
minority interest expense.
"Consolidated Net Income" means, for any period, the net income (loss) of
-----------------------
the Company and its Restricted Subsidiaries, determined on a consolidated basis
in accordance with GAAP and before any reduction in respect of Preferred Stock
dividends, if any; provided, that there shall not be included in such
--------
Consolidated Net Income:
(a) any net income (loss) of any Person if such Person is not a
Restricted Subsidiary, except that (i) subject to the limitations contained in
-
clause (d) below, the Company's equity in the net income of any such Person for
such period shall be included in such Consolidated Net Income up to the
aggregate amount actually distributed by such Person during such period to the
Company or a Restricted Subsidiary as a dividend or other distribution (subject,
in the case of a dividend or other distribution to a Restricted Subsidiary, to
the limitations contained in clause (c) below) and (ii) the Company's equity in
--
the net loss of such Person shall be included to the extent of the aggregate
Investment of the Company or any of its Restricted Subsidiaries in such Person;
(b) any net income (loss) of any Person acquired by the Company or a
Restricted Subsidiary in a pooling of interests transaction for any period prior
to the date of such acquisition;
(c) any net income (loss) of any Restricted Subsidiary that is not a
Note Guarantor Subsidiary if such Restricted Subsidiary is subject to
restrictions, directly or indirectly, on the payment of dividends or the making
of similar distributions by such Restricted Subsidiary, directly or indirectly,
to the Company by operation of the terms of such Restricted Subsidiary's charter
or any agreement, instrument, judgment, decree, order, statute or governmental
rule or regulation applicable to such Restricted Subsidiary
74
or its stockholders (other than (x) restrictions that have been waived or
-
otherwise released, (y) restrictions pursuant to the Notes or this Agreement and
-
(z) restrictions in effect on May 21, 1998 with respect to a Restricted
-
Subsidiary and other restrictions with respect to such Restricted Subsidiary
that taken as a whole are not materially less favorable to the Holders than such
restrictions in effect on May 21, 1998), except that (i) subject to the
-
limitations contained in clause (d) below, the Company's equity in the net
income of any such Restricted Subsidiary for such period shall be included in
such Consolidated Net Income up to the aggregate amount of any dividend or
distribution that was or that could have been made by such Restricted Subsidiary
during such period to the Company or another Restricted Subsidiary (subject, in
the case of a dividend that could have been made to another Restricted
Subsidiary, to the limitation contained in this clause) and (ii) the net loss of
--
such Restricted Subsidiary shall be included to the extent of the aggregate
Investment of the Company or any of its other Restricted Subsidiaries in such
Restricted Subsidiary;
(d) any gain or loss realized upon the sale or other disposition of
any asset of the Company or any Restricted Subsidiary (including pursuant to any
sale/leaseback transaction) that is not sold or otherwise disposed of in the
ordinary course of business (as determined in good faith by the Board of
Directors);
(e) any item classified as an extraordinary, unusual or nonrecurring
gain, loss or charge, including, without limitation, fees, expenses and charges
associated with any acquisition, merger or consolidation after the Closing Date;
(f) the cumulative effect of a change in accounting principles;
(g) all deferred financing costs written off and premiums paid in
connection with any early extinguishment of Indebtedness;
(h) any unrealized gains or losses in respect of Currency Agreements;
(i) any unrealized foreign currency transaction gains or losses in
respect of Indebtedness of any Person denominated in a currency other than the
functional currency of such Person; and
(j) any non-cash compensation charge arising from any grant of stock,
stock options or other equity-based awards.
In the case of any unusual or nonrecurring gain, loss or charge not included in
Consolidated Net Income pursuant to clause (f) above in any determination
thereof, the Company will deliver a certificate of a Responsible Officer to each
Holder promptly after the date on which Consolidated Net Income is so
determined, setting forth the nature and amount of such unusual or nonrecurring
gain, loss or charge.
75
"Consolidated Total Assets" means, as of any date of determination, the
-------------------------
total assets shown on the consolidated balance sheet of the Company and its
Restricted Subsidiaries as of the most recent date for which such a balance
sheet is available, determined on a consolidated basis in accordance with GAAP
(and, in the case of any determination relating to any Incurrence of
Indebtedness or any Investment, on a pro forma basis including any property or
assets being acquired in connection therewith), provided that for purposes of
--------
paragraph (b) of Section 8.1 and the definition of "Permitted Investment,"
Consolidated Total Assets shall not be less than $285,300,000 million.
"Constituent Person" has the meaning given to it in Section 6.3(i).
------------------
"Contractual Obligation" means, with respect to any Person, any
----------------------
provision of any material security issued by such Person or of any material
agreement, instrument or other undertaking to which such Person is a party or by
which it or any of its property is bound.
"Conversion Price" means, at any time, a price per share of Common
----------------
Stock equal to $1,000 divided by the number of shares of Common Stock delivered
upon conversion for each $1,000 Principal Amount of Notes as determined by the
Conversion Rate in effect at such time.
"Conversion Rate" has the meaning given to it in Section 6.3(a).
---------------
"Credit Agreement" means the credit agreement dated as of May 23, 2000,
----------------
among the Company, the banks and other financial institutions party thereto from
time to time, Credit Suisse First Boston, as syndication agent, The Chase
Manhattan Bank, as documentation agent, and the Bank Agent, as administrative
agent, as such agreement may be assumed by any successor in interest, and as
such agreement may be amended, supplemented, waived or otherwise modified from
time to time, or refunded, refinanced, restructured, replaced, renewed, repaid,
increased or extended from time to time (whether in whole or in part, whether
with the original agent and lenders or other agents and lenders or otherwise,
and whether provided under the original Credit Agreement or otherwise).
"Credit Facility" means the collective reference to the Credit
---------------
Agreement, any Credit Documents (as defined therein), any notes and letters of
credit issued pursuant thereto and any guarantee and collateral agreement,
patent and trademark security agreement, mortgages, letter of credit
applications and other guarantees, pledge agreements, security agreements and
collateral documents, and other instruments and documents, executed and
delivered pursuant to or in connection with any of the foregoing, in each case
as the same may be amended, supplemented, waived or otherwise modified from time
to time, or refunded, refinanced, restructured, replaced, renewed, repaid,
increased or extended from time to time (whether in whole or in part, whether
76
with the original agent and lenders or other agents and lenders or otherwise,
and whether provided under the original Credit Agreement or one or more other
credit agreements, indentures or financing agreements or otherwise). Without
limiting the generality of the foregoing, the term "Credit Facility" shall
include any agreement (i) changing the maturity of any Indebtedness incurred
-
thereunder or contemplated thereby, (ii) adding Subsidiaries of the Company as
--
additional borrowers or guarantors thereunder, (iii) increasing the amount of
---
Indebtedness incurred thereunder or available to be borrowed thereunder or (iv)
--
otherwise altering the terms and conditions thereof.
"Currency Agreement" means, in respect of a Person, any foreign exchange
------------------
contract, currency swap agreement or other similar agreement or arrangements
(including derivative agreements or arrangements), as to which such Person is a
party or a beneficiary.
"Current Market Price" means, on any date specified herein, (a) in the case
-------------------- -
of securities that have an existing public trading market, the amount per
security equal to (i) the average of the last sale price of such security,
-
regular way, for the five (5) consecutive trading days selected by the Company
commencing not more than ten (10) trading days before, and ending not later than
the earlier of the day in question and the day before the "ex" date with respect
to the issuance or distribution requiring such computation (the five (5) trading
days so selected by the Company, the "Trading Period"), or, if no such sale
--------------
takes place during such period, the average of the closing bid and asked prices
thereof during the Trading Period, in each case as officially reported on the
principal national securities exchange on which the same are then listed or
admitted to trading, or (ii) if no such security is then listed or admitted to
--
trading on any national securities exchange but such security is designated as a
national market system security by the NASD, the average of the last sale price
of such security, regular way, during the Trading Period, or if such security is
not so designated, the average of the reported closing bid and asked prices
thereof during the Trading Period as shown by the NASD automated quotation
system or, if no shares thereof are then quoted in such system, as published by
the National Quotation Bureau, Incorporated or any successor organization, and
in either case as reported by any member firm of the New York Stock Exchange
selected by the Company, and (b) in the case of securities that do not have an
-
existing public trading market and in the case of other property, the higher of
(i) the book value thereof as determined by agreement between the Company and
-
the Holder, or if the Company and the Holder fail to agree, by any firm of
independent public accountants of recognized standing selected by the Board of
Directors of the Company, as of the last day of any month ending within sixty
(60) days preceding the date as of which the determination is to be made and
(ii) the fair value thereof (w) determined by an agreement between the Company
-- -
and the Holder or (x) if the Company and the Holder fail to agree, determined
-
jointly by an independent investment banking firm retained by the Company and by
an independent investment banking firm retained by the Holder, either of which
firms may be an independent investment banking firm regularly retained
77
by the Company or the Holder or (y) if the Company or the Holder shall fail so
-
to retain an independent investment banking firm within five Business Days of
the retention of such firm by the Holders or the Company, as the case may be,
determined solely by the firm so retained or (z) if the firms so retained by the
-
Company and by such holders shall be unable to reach a joint determination
within fifteen (15) Business Days of the retention of the last firm so retained,
determined by another independent investment banking firm chosen by the first
two such firms and which is not a regular investment banking firm of the Company
or any such holder.
"Default" means any of the events specified in Section 10.1, whether or not
-------
any requirement for the giving of notice, the lapse of time, or both, or any
other condition, has been satisfied.
"Disinterested Director" means, with respect to any Affiliate Transaction,
----------------------
a member of the Board of Directors of the Parent having no material direct or
indirect financial interest in or with respect to such Affiliate Transaction. A
member of the Board of Directors shall not be deemed to have such a financial
interest by reason of such member's holding Capital Stock of the Parent or any
options, warrants or other rights in respect of such Capital Stock.
"Disqualified Stock" means, with respect to any Person, any Capital Stock
------------------
(other than Management Stock) that by its terms (or by the terms of any security
into which it is convertible or for which it is exchangeable or exercisable) or
upon the happening of any event (other than following the occurrence of a Change
of Control or other similar event described under such terms as a "change of
control" or an Asset Disposition) (a) matures or is mandatorily redeemable
-
pursuant to a sinking fund obligation or otherwise, (b) is convertible or
-
exchangeable for Indebtedness or Disqualified Stock or (c) is redeemable at the
-
option of the holder thereof (other than following the occurrence of a Change of
Control or other similar event described under such terms as a "change of
control," or an Asset Disposition), in whole or in part, in each case on or
prior to the Maturity Date.
"Domestic Subsidiary" means any Subsidiary of the Company organized under
-------------------
the laws of any jurisdiction within the United States (other than any Foreign
Subsidiary Holdco).
"Environmental Laws" means any and all foreign, Federal, state, local or
------------------
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority properly promulgated and
having the force and effect of law, or other Requirements of Law (including,
without limitation, common law) regulating, relating to or imposing liability or
standards of conduct concerning protection of the environment or human health as
related to the environment, as now or may at any relevant time hereafter be in
effect.
78
"Environmental Permits" has the meaning given to it in Section 7.8.
---------------------
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time.
"Event of Default" means any of the events specified in Section 10.1,
----------------
provided that any requirement for the giving of notice, the lapse of time, or
- --------
both, or any other condition, has been satisfied.
"Exchange Act" means the Securities Exchange Act of 1934, or any successor
------------
statute, and the rules and regulations of the SEC thereunder, as amended.
"Excluded Contribution" means Net Cash Proceeds, or the fair value, as
----------------------
determined in good faith by the Board of Directors, of property or assets,
received by the Company as capital contributions to the Company after the
Closing Date or from the issuance or sale (other than to a Restricted
Subsidiary) of Capital Stock (other than Disqualified Stock) of the Company, in
each case not previously included in the calculation set forth in subparagraph
(a)(3)(B)(x) of Section 8.2 for purposes of determining whether a Restricted
Payment may be made.
"Excluded Subsidiaries" has the meaning given to it in Section 7.9(f).
---------------------
"Financing Disposition" means any sale, transfer, conveyance or other
---------------------
disposition of property or assets by the Company or any Subsidiary of the
Company to any Receivables Entity, or by any Receivables Subsidiary, in each
case in connection with the Incurrence by a Receivables Entity of Indebtedness,
or obligations to make payments to the obligor on Indebtedness, which may be
secured by a Lien in respect of such property or assets.
"Financing Lease" means any lease of property, real or personal, the
---------------
obligations of the lessee in respect of which are required in accordance with
GAAP to be capitalized on a balance sheet of the lessee.
"Foreign Pledge Agreement" each pledge agreement (or analogous document),
------------------------
which pledge agreement (or analogous document) shall be in form and substance
reasonably satisfactory to the Secured Parties, pursuant to which the Company or
any of its Domestic Subsidiaries purports to grant a Lien on any portion of the
Capital Stock of any Foreign Subsidiary, as the same may be amended,
supplemented or otherwise modified from time to time.
"Foreign Subsidiary" means any Subsidiary of the Company that is organized
------------------
under the laws of any jurisdiction outside the United States of America, or that
is a Foreign Subsidiary Holdco.
79
"Foreign Subsidiary Holdco" means any Subsidiary of the Company that has no
-------------------------
material assets other than Capital Stock or other securities of one or more
Foreign Subsidiaries or other Foreign Subsidiary Holdcos, and other assets
relating to an ownership interest in such Capital Stock, securities or Foreign
Subsidiaries.
"Former Plan" means any employee benefit plan in respect of which the
-----------
Parent, the Company or any Subsidiary of the Company or a Commonly Controlled
Entity has engaged in a transaction described in Section 4069 or Section 4212(c)
of ERISA.
"Fund V" means Clayton, Dubilier & Rice Fund V Limited Partnership, a
------
Cayman Islands exempted limited partnership managed by CD&R, and its successors
and assigns who are members of the CD&R Group at the time of any such
assignment.
"GAAP" means generally accepted accounting principles in the United States
----
of America as in effect on May 21, 1998 (for purposes of the definitions of the
terms "Consolidated Coverage Ratio," "Consolidated EBITDA," "Consolidated
Interest Expense," "Consolidated Net Income" and "Consolidated Total Assets,"
all defined terms in this Agreement to the extent used in or relating to any of
the foregoing definitions, and all ratios and computations in this Agreement
based on any of the foregoing definitions) and as in effect from time to time
(for purposes of Section 8.1(c)(iii) and for all other purposes of this
Agreement), including those set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as approved by
a significant segment of the accounting profession. All ratios and computations
based on GAAP contained in this Agreement shall be computed in conformity with
GAAP.
"Governmental Authority" means any nation or government, any state or other
----------------------
political subdivision thereof, and any entity, authority or body exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guarantee and Collateral Agreement" has the meaning given to it in the
----------------------------------
Recitals.
"Guarantee" and "Guarantee Obligations" means, with respect to any Person
--------- ---------------------
(the "guaranteeing person"), any obligation of (a) the guaranteeing person or
--------------------
(b) another Person (including, without limitation, any bank under any letter of
-
credit) to induce the creation of which the guaranteeing person has issued a
reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends or
other obligations (the "primary obligations") of any other third Person (the
-------------------
"primary obligor") in any manner, whether directly or indirectly, including,
---------------
without limitation, any such obligation of the guaranteeing person, whether or
not contingent, (i) to purchase any such primary obligation or any property
-
constituting
80
direct or indirect security therefor, (ii) to advance or supply funds (A) for
-- -
the purchase or payment of any such primary obligation or (B) to maintain
-
working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency of the primary obligor, (iii) to purchase
---
property, securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation or (iv) otherwise to assure or hold harmless
--
the owner of any such primary obligation against loss in respect thereof;
provided, however, that the term Guarantee Obligation shall not include
- -------- -------
endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any guaranteeing person
shall be deemed to be the lower of (x) an amount equal to the stated or
-
determinable amount of the primary obligation in respect of which such Guarantee
Obligation is made and (y) the maximum amount for which such guaranteeing person
-
may be liable pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such primary obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or determinable, in which case
the amount of such Guarantee Obligation shall be such guaranteeing person's
maximum reasonably anticipated liability in respect thereof as determined by the
Company in good faith. (The term "Guarantee" used as a verb has a corresponding
---------
meaning.)
"Holder" means the Person in whose name a Note is registered in the
------
Register of Holders.
"Inactive Subsidiaries" means each Subsidiary of the Company listed on
---------------------
Schedule 3.16 so long as such Subsidiary is in compliance with Section 7.9(e).
"Incur" means issue, assume, enter into any Guarantee of, incur or
-----
otherwise become liable for; provided, however, that any Indebtedness or Capital
--------
Stock of a Person existing at the time such Person becomes a Subsidiary (whether
by merger, consolidation, acquisition or otherwise) shall be deemed to be
Incurred by such Subsidiary at the time it becomes a Subsidiary. Accrual of
interest, the accretion of accreted value and the payment of interest in the
form of additional Indebtedness will not be deemed to be an Incurrence of
Indebtedness. Any Indebtedness issued at a discount (including Indebtedness on
which interest is payable through the issuance of additional Indebtedness) shall
be deemed Incurred at the time of original issuance of the Indebtedness at the
initial accreted amount thereof. For purposes of this Agreement, all
Indebtedness of the Company and its Restricted Subsidiaries that is outstanding
on the date hereof and was initially Incurred in accordance with Section 406(b)
of the Senior Subordinated Note Indenture, shall be deemed Incurred on the date
hereof and outstanding under the respective clauses of Section 8.1(b)
corresponding to the respective clauses of Section 406(b) of the Senior
Subordinated Indenture under which such Indebtedness was initially Incurred and
is outstanding on the date hereof (with the United States dollar equivalent
principal amount of any Indebtedness denominated in a foreign
81
currency being calculated in accordance with Section 8.1(d) without giving
effect to such deemed new Incurrence thereof on the date hereof).
"Initial Agreement" has the meaning given to it in Section 8.3(c).
-----------------
"Initial Lien" has the meaning given to it in Section 8.6(b).
------------
"Initial Notes" has the meaning given to it in the Recitals.
-------------
"Indebtedness" means with respect to any Person on any date of
------------
determination (without duplication):
(a) the principal of indebtedness of such Person for
borrowed money;
(b) the principal of obligations of such Person evidenced
by bonds, debentures, notes or other similar instruments;
(c) all reimbursement obligations of such Person in
respect of letters of credit or other similar instruments (the amount of such
obligations being equal at any time to the aggregate then undrawn and unexpired
amount of such letters of credit or other instruments plus the aggregate amount
of drawings thereunder that have not then been reimbursed);
(d) all obligations of such Person to pay the deferred and
unpaid purchase price of property (except Trade Payables), which purchase price
is due more than one year after the date of placing such property in final
service or taking final delivery and title thereto;
(e) all Capitalized Lease Obligations of such Person;
(f) the redemption, repayment or other repurchase amount
of such Person with respect to any Disqualified Stock of such Person or (if such
Person is a Subsidiary of the Company other than a Note Guarantor Subsidiary)
any Preferred Stock of such Subsidiary, but excluding, in each case, any accrued
dividends (the amount of such obligation to be equal at any time to the maximum
fixed involuntary redemption, repayment or repurchase price for such Capital
Stock, or if less (or if such Capital Stock has no such fixed price), to the
involuntary redemption, repayment or repurchase price therefor calculated in
accordance with the terms thereof as if then redeemed, repaid or repurchased,
and if such price is based upon or measured by the fair market value of such
Capital Stock, such fair market value shall be as determined in good faith by
the board of directors or other governing body of the issuer of such Capital
Stock);
(g) all Indebtedness of other Persons secured by a Lien on
any asset of such Person, whether or not such Indebtedness is assumed by such
Person; provided, that
--------
82
the amount of Indebtedness of such Person shall be the
lesser of (i) the fair market value of such asset at such date of determination
-
(as determined in good faith by the Company) and (ii) the amount of such
--
Indebtedness of such other Persons;
(h) all Indebtedness of other Persons to the extent
Guaranteed by such Person; and
(i) to the extent not otherwise included in this
definition, net hedging obligations in respect of any Currency Agreements and
Interest Rate Agreements of such Person (the amount of any such obligation to be
equal at any time to the termination value of such agreement or arrangement
giving rise to such hedging obligation that would be payable by such Person at
such time).
The amount of Indebtedness of any Person at any date shall be determined as set
forth above or otherwise provided in this Agreement, or otherwise shall equal
the amount thereof that would appear on a balance sheet of such Person
(excluding any notes thereto) prepared in accordance with GAAP.
"Insolvency" means, with respect to any Multiemployer Plan, the
----------
condition that such Plan is insolvent within the meaning of Section 4245 of
ERISA.
"Intellectual Property" has the meaning given to it in Section 3.10.
---------------------
"Intercreditor Agreement" has the meaning given to it in the Recitals.
-----------------------
"Interest Payment" has the meaning given to it in Section 6.2.
----------------
"Interest Payment Date" has the meaning given to it in Section 6.1.
---------------------
"Interest Rate" has the meaning given to it in Section 6.1.
-------------
"Interest Rate Agreement" means, with respect to any Person, any
-----------------------
interest rate protection agreement, interest rate future agreement, interest
rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement (including derivative agreements or
arrangements), as to which such Person is party or a beneficiary.
"Investment" in any Person by any other Person means any direct or
----------
indirect advance, loan or other extension of credit (other than to customers,
suppliers, directors, officers or employees of any Person in the ordinary course
of business) or capital contribution (by means of any transfer of cash or other
property to others or any payment for property or services for the account or
use of others) to, or any purchase or acquisition of Capital Stock, Indebtedness
or other similar instruments issued by, such Person. For purposes of the
definition of "Unrestricted Subsidiary" and Section 8.2(a), (a)
----------------------- -
83
"Investment" shall include the portion (proportionate to the Company's equity
interest in such Subsidiary) of the fair market value of the net assets of any
Subsidiary of the Company at the time that such Subsidiary is designated an
Unrestricted Subsidiary, provided that upon a redesignation of such Subsidiary
--------
as a Restricted Subsidiary, the Company shall be deemed to continue to have a
permanent "Investment" in an Unrestricted Subsidiary in an amount (if positive)
equal to (x) the Company's "Investment" in such Subsidiary at the time of such
-
redesignation less (y) the portion (proportionate to the Company's equity
-
interest in such Subsidiary) of the fair market value of the net assets of such
Subsidiary at the time of such redesignation, (b) any property transferred to or
-
from an Unrestricted Subsidiary shall be valued at its fair market value at the
time of such transfer and (c) in each case under clause (a) or (b) above, fair
-
market value shall be as determined in good faith by the Board of Directors.
Guarantees shall not be deemed to be Investments. The amount of any Investment
outstanding at any time shall be the original cost of such Investment, reduced
(at the Company's option) by any dividend, distribution, interest payment,
return of capital, repayment or other amount or value received in respect of
such Investment; provided, that to the extent that the amount of Restricted
--------
Payments outstanding at any time since May 21, 1998 (including, prior to the
date hereof, pursuant to the Senior Subordinated Note Indenture) is so reduced
by any portion of any such amount or value that would otherwise be included in
the calculation of Consolidated Net Income, such portion of such amount or value
shall not be so included for purposes of calculating the amount of Restricted
Payments that may be made pursuant to paragraph (a) of Section 8.2.
"Investor" has the meaning given to it in the Heading.
--------
"Judgment Currency" has the meaning given to it in Section 13.10.
-----------------
"Lien" means any mortgage, pledge, hypothecation, assignment, security
----
deposit arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement and any
Financing Lease having substantially the same economic effect as any of the
foregoing).
"Majority CD&R Note Holders" means, at any time, Holders holding more
--------------------------
than fifty percent (50%) of the aggregate principal amount of CD&R Notes
outstanding at such time.
"Majority Holders" means, at any time, Holders holding more than fifty
----------------
percent (50%) of the aggregate principal amount of Notes outstanding at such
time.
84
"Majority Transferred Note Holders" means, at any time, Holders holding
---------------------------------
more than fifty percent (50%) of the aggregate principal amount of Transferred
Notes outstanding at such time.
"Management Advances" means (a) loans or advances made to directors,
------------------- -
officers or employees of the Parent, the Company or any Restricted Subsidiary
(i) in respect of travel, entertainment or moving-related expenses incurred in
-
the ordinary course of business, (ii) in respect of moving-related expenses
--
incurred in connection with any closing or consolidation of any facility or
(iii) in the ordinary course of business and (in the case of this clause (iii))
---
not exceeding $2,500,000 in the aggregate outstanding at any time, (b)
-
promissory notes of Management Investors acquired in connection with the
issuance of Management Stock to such Management Investors, (c) Management
-
Guarantees, or (d) other Guarantees of borrowings by Management Investors in
-
connection with the purchase of Management Stock, which Guarantees are permitted
under Section 8.1.
"Management Agreements" means, collectively, the Consulting Agreement
---------------------
and the Indemnification Agreement, each dated as of May 21, 1998, each between
the Company and CD&R (and its permitted successors and assigns thereunder), as
each may be amended, supplemented, waived or otherwise modified from time to
time in accordance with the terms thereof and of this Agreement.
"Management Guarantees" means guarantees (a) of up to an aggregate
--------------------- -
principal amount of $20,000,000 of borrowings by Management Investors in
connection with their purchase of Management Stock or (b) made on behalf of, or
-
in respect of loans or advances made to, directors, officers or employees of the
Parent, the Company or any Restricted Subsidiary (i) in respect of travel,
-
entertainment and moving-related expenses incurred in the ordinary course of
business, or (ii) in the ordinary course of business and (in the case of this
--
clause (ii)) not exceeding $2,500,000 million in the aggregate outstanding at
any time.
"Management Investors" means the officers, directors, employees and
--------------------
other members of the management of the Parent, the Company and any Subsidiary of
the Company, or family members or relatives thereof, or trusts or partnerships
for the benefit of any of the foregoing, or any of their heirs, executors,
successors and legal representatives, who at any date beneficially own or have
the right to acquire, directly or indirectly, Capital Stock of the Parent or the
Company.
"Management Stock" means Capital Stock of the Parent or the Company
----------------
(including any options, warrants or other rights in respect thereof) held by any
of the Management Investors.
85
"Material Adverse Effect" means a material adverse effect on (a) the
----------------------- -
business, operations, property or condition (financial or otherwise) of the
Parent, the Company and the Subsidiaries of the Company, taken as a whole, or
(b) the validity or enforceability of the Note Financing Documents as to any
-
Note Financing Parties party thereto or the rights and remedies of the Investor
or any other Holder hereunder and thereunder, taken as a whole.
"Material Environmental Amount" means an amount payable by the Parent,
-----------------------------
the Company or any Subsidiary of the Company in respect of or under any
Environmental Law for remedial costs, compliance costs, compensatory damages,
punitive damages, fines, penalties or any combination thereof in an amount that
would reasonably be expected to have a Material Adverse Effect.
"Material Subsidiary" means, at any date, any Subsidiary of the Company
-------------------
which at such date has assets with a market value in excess of $5,000,000 or
annual revenues in excess of $5,000,000.
"Materials of Environmental Concern" means any hazardous or toxic
----------------------------------
substances, materials, pollutants or wastes, defined or regulated as such in or
under any applicable Environmental Law, including, without limitation, gasoline
or petroleum (including, without limitation, crude oil or any fraction thereof)
or petroleum products, asbestos, polychlorinated biphenyls and urea-formaldehyde
insulation.
"Maturity Date" means December 31, 2007.
-------------
"Moody's" means Moody's Investors Service, Inc., and its successors.
-------
"Multiemployer Plan" means a Plan which is a multiemployer plan as
------------------
defined in Section 4001(a)(3) of ERISA.
"Net Available Cash" from an Asset Disposition means cash payments
------------------
received (including any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise, but only as
and when received, but excluding any other consideration received in the form of
assumption by the acquiring person of Indebtedness or other obligations relating
to the properties or assets that are the subject of such Asset Disposition or
received in any other non-cash form) therefrom, in each case net of (a) all
-
legal, title and recording tax expenses, commissions and other fees and expenses
incurred, and all Federal, state, provincial, foreign and local taxes required
to be paid or accrued as a liability under GAAP, as a consequence of such Asset
Disposition (including as a consequence of any transfer of funds in connection
with the application thereof in accordance with the covenant described in
Section 8.4), (b) all payments made, and all installment payments required to be
-
made, on any Indebtedness that is secured by any assets subject to such Asset
Disposition, in accordance with the
86
terms of any Lien upon such assets, or that must by its terms, or in order to
obtain a necessary consent to such Asset Disposition, or by applicable law, be
repaid out of the proceeds from such Asset Disposition, (c) all distributions
-
and other payments required to be made to minority interest holders in
Subsidiaries or joint ventures as a result of such Asset Disposition, or to any
other Person (other than the Company or a Restricted Subsidiary) owning a
beneficial interest in the assets disposed of in such Asset Disposition and (d)
-
any liabilities or obligations associated with the assets disposed of in such
Asset Disposition and retained by the Company or any Restricted Subsidiary after
such Asset Disposition, including without limitation pension and other
post-employment benefit liabilities, liabilities related to environmental
matters, and liabilities relating to any indemnification obligations associated
with such Asset Disposition.
"Net Cash Proceeds," with respect to any issuance or sale of any
-----------------
securities of the Company or any Subsidiary of the Company by the Company or any
Subsidiary of the Company, or any capital contribution, means the cash proceeds
of such issuance, sale or contribution net of attorneys' fees, accountants'
fees, underwriters' or placement agents' fees, discounts or commissions and
brokerage, consultant and other fees actually incurred in connection with such
issuance, sale or contribution and net of taxes paid or payable as a result
thereof.
"New Common Stock" means any newly-issued shares of Common Stock (or
----------------
securities convertible into or exercisable or exchangeable for newly-issued
shares of Common Stock) issued or proposed to be issued after the Closing Date,
other than (a) shares of Common Stock issued upon the exercise of any Warrant
-
issued by the Parent pursuant to this Agreement or upon the conversion of any of
the Notes pursuant to Section 6.3 and, (b) any issuance of shares of Common
-
Stock issuable as a result of an adjustment of the Conversion Rate under clauses
(i), (ii), (iii), (iv), (v) or (vi) of Section 6.3(c).
"New Issue Price" has the meaning given to it in Section 6.3(c).
---------------
"New Price Per Share" has the meaning given to it in Section
-------------------
6.3(c)(vi).
"New York Court" has the meaning given to it in Section 13.3.
--------------
"Non-electing Share" has the meaning given to it in Section 6.3(i).
------------------
"Note Financing Documents" means this Agreement, the Notes, the
------------------------
Intercreditor Agreement and the Note Security Documents.
"Note Financing Party" means the Parent, the Company and each
--------------------
Subsidiary of the Company that is a party to a Note Financing Document.
87
"Note Guarantee" means any Guarantee with respect to any of the Notes
--------------
by Parent or any Subsidiary of the Company.
"Note Guarantor" means Parent or any Restricted Subsidiary of the
--------------
Company that is party to a Note Guarantee.
"Note Guarantor Subsidiary" means any Restricted Subsidiary of the
-------------------------
Company that is a Note Guarantor of both the CD&R Notes and the Transferred
Notes (if any).
"Note Security Documents" means the Guarantee and Collateral Agreement
-----------------------
and all other security documents hereafter delivered to any of the Secured
Parties granting a Lien on any asset or assets of any Person to secure the
obligations and liabilities of the Company hereunder and under any of the other
Note Financing Documents or to secure any guarantee of any such obligations and
liabilities.
"Notes" means (a) the Initial Notes, (b) any additional promissory
----- - -
notes issued by the Company (i) in lieu of payment of an Interest Payment in
-
cash, in accordance with Section 6.2, (ii) in connection with any Optional
--
Redemption, in accordance with Section 6.4, (iii) in connection with any
---
repurchase offer, in accordance with Section 6.6, (iv) in connection with any
--
transfer of Notes, in accordance with Section 6.9, (v) in replacement of any
-
mutilated, destroyed, lost or stolen Notes, in accordance with Section 6.10 and
(vi) in connection with any repurchase offer, in accordance with Section 8.4.
--
"Offer" has the meaning given to it in Section 8.4(d).
-----
"Optional Redemption" has the meaning given to it in Section 6.4.
-------------------
"Parent" has the meaning given to it in the first paragraph of this
------
Agreement.
"Parent Expenses" means (a) costs (including all professional fees and
--------------- -
expenses) incurred by the Parent to comply with its reporting obligations under
federal or state laws or under this Indenture, including any reports filed with
respect to the Securities Act, Exchange Act or the respective rules and
regulations promulgated thereunder, (b) indemnification obligations of the
-
Parent owing to directors, officers, employees or other Persons under its
charter or by-laws or pursuant to written agreements with any such Person, (c)
-
other operational expenses of the Parent incurred in the ordinary course of
business and (d) expenses incurred by the Parent in connection with any public
-
offering of Capital Stock or Indebtedness (i) where the net proceeds of such
-
offering are intended to be received by or contributed or loaned to the Company
or a Restricted Subsidiary, or (ii) in a prorated amount of such expenses in
--
proportion to the amount of such net proceeds intended to be so received,
contributed or loaned or (iii) otherwise on an interim basis prior to completion
---
of such offering so long as the Parent shall cause the
88
amount of such expenses to be repaid to the Company or the relevant Restricted
Subsidiary out of the proceeds of such offering promptly if completed.
"PBGC" means the Pension Benefit Guaranty Corporation established
----
pursuant to Subtitle A of Title IV of ERISA.
"Permitted Investment" means an Investment by the Company or any
--------------------
Restricted Subsidiary in, or consisting of, any of the following:
(a) a Restricted Subsidiary, the Company, or a Person that
will, upon the making of such Investment, become a Restricted Subsidiary;
(b) another Person if as a result of such Investment such
other Person is merged or consolidated with or into, or transfers or conveys all
or substantially all its assets to, or is liquidated into, the Company or a
Restricted Subsidiary;
(c) Temporary Cash Investments or Cash Equivalents;
(d) receivables owing to the Company or any Restricted
Subsidiary, if created or acquired in the ordinary course of business;
(e) any securities or other Investments received as
consideration in, or retained in connection with, sales or other dispositions of
property or assets, including Asset Dispositions made in compliance with Section
8.4;
(f) securities or other Investments received in settlement
of debts created in the ordinary course of business and owing to the Company or
any Restricted Subsidiary, or as a result of foreclosure, perfection or
enforcement of any Lien, or in satisfaction of judgments, including in
connection with any bankruptcy proceeding or other reorganization of another
Person;
(g) Investments in existence or made pursuant to legally
binding written commitments in existence on the Closing Date;
(h) Currency Agreements, Interest Rate Agreements and
related hedging obligations, which obligations are Incurred in compliance with
Section 8.1;
(i) pledges or deposits (x) with respect to leases or
-
utilities provided to third parties in the ordinary course of business or (y)
-
otherwise described in the definition of "Permitted Liens";
(j) any Investment in a joint venture or similar entity
that is not a Restricted Subsidiary, or in any Related Business, in an aggregate
amount outstanding at any time not to exceed seven percent (7%) of Consolidated
Total Assets;
89
(k) (i) Investments in any Receivables Subsidiary, or in connection
-
with a Financing Disposition by or to any Receivables Entity, including
Investments of funds held in accounts permitted or required by the arrangements
governing such Financing Disposition or any related Indebtedness, or (ii) any
--
promissory note issued by the Company or the Parent, provided that if the Parent
receives cash from the relevant Receivables Entity in exchange for such note, an
equal cash amount is contributed by the Parent to the Company;
(l) bonds secured by assets leased to and operated by the Company
or any Restricted Subsidiary that were issued in connection with the financing
of such assets so long as the Company or any Restricted Subsidiary may obtain
title to such assets at any time by paying a nominal fee, canceling such bonds
and terminating the transaction;
(m) the Notes;
(n) any Investment to the extent made using Capital Stock of the
Company (other than Disqualified Stock), or Capital Stock of the Parent, as
consideration;
(o) Management Advances; and
(p) other Investments in an aggregate amount outstanding at any
time not to exceed ten percent (10%) of Consolidated Total Assets.
"Permitted Liens" means:
---------------
(a) Liens for taxes, assessments or other governmental charges not
yet delinquent or the nonpayment of which in the aggregate would not reasonably
be expected to have a material adverse effect on the Company and its Restricted
Subsidiaries, or that are being contested in good faith and by appropriate
proceedings if adequate reserves with respect thereto are maintained on the
books of the Company or a Subsidiary thereof, as the case may be, in accordance
with GAAP;
(b) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other like Liens arising in the ordinary course of
business in respect of obligations that are not overdue for a period of more
than sixty (60) days, or that are bonded or that are being contested in good
faith and by appropriate proceedings;
(c) pledges, deposits or Liens in connection with workers'
compensation, unemployment insurance and other social security and other similar
legislation or other insurance-related obligations (including, without
limitation, pledges or deposits securing liability to insurance carriers under
insurance or self-insurance arrangements);
90
(d) pledges, deposits or Liens to secure the performance of
bids, tenders, trade, government or other contracts (other than for borrowed
money), obligations for utilities, leases, licenses, statutory obligations,
completion guarantees, surety, judgment, appeal or performance bonds, other
similar bonds, instruments or obligations, and other obligations of a like
nature incurred in the ordinary course of business;
(e) easements (including reciprocal easement agreements),
rights-of-way, building, zoning and similar restrictions, utility agreements,
covenants, reservations, restrictions, encroachments, changes, and other similar
encumbrances or title defects incurred, or leases or subleases granted to
others, in the ordinary course of business, which do not in the aggregate
materially interfere with the ordinary conduct of the business of the Company
and its Subsidiaries, taken as a whole;
(f) Liens existing on, or provided for under written
arrangements existing on, the date hereof, or (in the case of any such Liens
securing Indebtedness of the Company or any of its Subsidiaries existing or
arising under written arrangements existing on the date hereof) securing any
Refinancing Indebtedness in respect of such Indebtedness so long as the Lien
securing such Refinancing Indebtedness is limited to all or part of the same
property or assets (plus improvements, accessions, proceeds or dividends or
distributions in respect thereof) that secured (or under such written
arrangements could secure) the original Indebtedness;
(g) (i) mortgages, liens, security interests, restrictions,
-
encumbrances or any other matters of record that have been placed by any
developer, landlord or other third party on property over which the Company or
any Restricted Subsidiary of the Company has easement rights or on any leased
property and subordination or similar agreements relating thereto and (ii) any
--
condemnation or eminent domain proceedings affecting any real property;
(h) Liens securing (i) Hedging Obligations Incurred in
-
compliance with clause (b)(viii)(C) of Section 8.1 or (ii) Purchase Money
--
Obligations or Capitalized Lease Obligations Incurred in compliance with Section
8.1; provided that, in the case of this clause (ii), (A) such Liens shall be
-------- -
created prior to or substantially simultaneously with or within six months of
the acquisition thereby financed or the date of the incurrence or assumption of
such Indebtedness and (B) such Liens do not at any time encumber any property
-
other than the property financed by such Indebtedness;
(i) Liens arising out of judgments, decrees, orders or awards
in respect of which the Company shall in good faith be prosecuting an appeal or
proceedings for review, which appeal or proceedings shall not have been finally
terminated, or if the period within which such appeal or proceedings may be
initiated shall not have expired;
91
(j) leases, subleases, licenses or sublicenses to third
parties;
(k) Liens (1) on Collateral securing Bank Indebtedness Incurred
-
under the Credit Agreement in compliance with Section 8.1, (2) on property or
-
assets of a Foreign Subsidiary that is a Restricted Subsidiary securing
Indebtedness of a Foreign Subsidiary that is a Restricted Subsidiary Incurred in
compliance with clause (b)(v) of Section 8.1, (3) securing the Notes or (4)
- -
securing Indebtedness or other obligations of any Receivables Entity;
(l) Liens existing on property or assets of a Person at the
time such Person becomes a Subsidiary of the Company (or at the time the Company
or a Restricted Subsidiary acquires such property or assets); provided, however,
--------
that such Liens are not created in connection with, or in contemplation of, such
other Person becoming such a Subsidiary (or such acquisition of such property or
assets), and that such Liens are limited to all or part of the same property or
assets (plus improvements, accessions, proceeds or dividends or distributions in
respect thereof) that secured (or, under the written arrangements under which
such Liens arose, could secure) the obligations to which such Liens relate;
(m) Liens on Capital Stock or other securities of an
Unrestricted Subsidiary that secure Indebtedness or other obligations of such
Unrestricted Subsidiary;
(n) any encumbrance or restriction (including, but not limited
to, put and call agreements) with respect to Capital Stock of any joint venture
or similar arrangement pursuant to any joint venture or similar agreement; and
(o) Liens securing Refinancing Indebtedness Incurred in respect
of any Indebtedness secured by, or securing any refinancing, refunding,
extension, renewal or replacement (in whole or in part) of any other obligation
secured by, any other Permitted Liens, provided that any such new Lien is
limited to all or part of the same property or assets (plus improvements,
accessions, proceeds or dividends or distributions in respect thereof) that
secured (or, under the written arrangements under which the original Lien arose,
could secure) the obligations to which such Liens relate;
(p) Liens securing the CD&R Notes; and
(q) Liens securing the Transferred Notes incurred pursuant to
Section 8.6(b).
For purposes of Section 8.6(b), "Permitted Liens" shall also mean and include
Liens securing (1) other Hedging Obligations, Purchase Money Obligations and
-
Capitalized Lease Obligations Incurred in compliance with Section 8.1, (2)
-
Indebtedness Incurred in compliance with clause (b)(i), (b)(iv), (b)(v),
(b)(vii), (b)(viii) or (b)(x) of Section 8.1, (3) Bank Indebtedness, (4)
- -
commercial bank Indebtedness, (5) Indebtedness of any
-
92
Restricted Subsidiary that is not a Note Guarantor of the Transferred Notes, (6)
-
the Notes or (7) Indebtedness or other obligations of any Receivables Entity
-
"Permitted Payment" has the meaning given to it in Section 8.2(b).
-----------------
"Plan" means any employee benefit plan that is covered by ERISA and in
----
respect of which the Parent, the Company, any Subsidiary of the Company or a
Commonly Controlled Entity is an "employer" as defined in Section 3(5) of ERISA.
"Preferred Stock" as applied to the Capital Stock of any corporation
---------------
means Capital Stock of any class or classes (however designated) that by its
terms is preferred as to the payment of dividends, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"Principal Amount" means, with respect to any Note, the principal amount
----------------
that will become due and payable to the Holder thereof on the Maturity Date, as
adjusted from time to time to account for the partial redemption or repurchase
of such Note by the Company prior to the Maturity Date.
"Properties" has the meaning given to it in Section 3.17.
----------
"Purchase Money Obligations" means any Indebtedness Incurred to finance
--------------------------
or refinance the acquisition, leasing, construction or improvement of property
(real or personal) or assets, and whether acquired through the direct
acquisition of such property or assets or the acquisition of the Capital Stock
of any Person owning such property or assets, or otherwise.
"Purchase Price" has the meaning given to it in Section 1.3.
--------------
"Receivable" means a right to receive payment arising from a sale or
----------
lease of goods or services by a Person pursuant to an arrangement with another
Person pursuant to which such other Person is obligated to pay for goods or
services under terms that permit the purchase of such goods and services on
credit, as determined in accordance with GAAP.
"Receivables Entity" means (a) any Receivables Subsidiary or (b) any
------------------ - -
other Person that is engaged in the business of acquiring, selling, collecting,
financing or refinancing Receivables, accounts (as defined in the Uniform
Commercial Code as in effect in any jurisdiction from time to time), other
accounts and/or other receivables, and/or related assets.
"Receivables Fees" means distributions or payments made directly or by
----------------
means of discounts with respect to any participation interest issued or sold in
connection with, and
93
other fees paid to a Person that is not a Restricted Subsidiary in connection
with, any Receivables Financing.
"Receivables Financing" means any financing of Receivables of the Company
---------------------
or any Restricted Subsidiary that have been transferred to a Receivables Entity
in a Financing Disposition.
"Receivables Subsidiary" means a Subsidiary of the Company that (a) is
---------------------- -
engaged solely in the business of acquiring, selling, collecting, financing or
refinancing Receivables, accounts (as defined in the Uniform Commercial Code as
in effect in any jurisdiction from time to time) and other accounts and
receivables (including any thereof constituting or evidenced by chattel paper,
instruments or general intangibles), all proceeds thereof and all rights
(contractual and other), collateral and other assets relating thereto, and any
business or activities incidental or related to such business, and (b) is
-
designated as a "Receivables Subsidiary" by the Board of Directors.
"Redemption Date" has the meaning given to it in Section 6.4.
---------------
"Redemption Notice" has the meaning given to it in Section 6.4.
-----------------
"Redemption Price" has the meaning given to it in Section 6.4.
----------------
"Refinancing Agreement" has the meaning given to it in Section 8.3(c).
---------------------
"refinance" means, for purposes of Articles VIII and IX, to refinance,
---------
refund, replace, renew, repay, modify, restate, defer, substitute, supplement,
reissue, resell or extend (including pursuant to any defeasance or discharge
mechanism); and the terms "refinances," "refinanced" and "refinancing" as used
for any purpose of Articles VIII and IX shall have a correlative meaning.
"Refinancing Indebtedness" means Indebtedness that is Incurred to
------------------------
refinance any Indebtedness existing on the date of this Agreement or Incurred in
compliance with this Agreement (including Indebtedness of the Company that
refinances Indebtedness of any Restricted Subsidiary (to the extent permitted in
this Agreement) and Indebtedness of any Restricted Subsidiary that refinances
Indebtedness of another Restricted Subsidiary) including Indebtedness that
refinances Refinancing Indebtedness; provided, that (a) the Refinancing
-------- -
Indebtedness has an Average Life at the time such Refinancing Indebtedness is
Incurred that is equal to or greater than the Average Life of the Indebtedness
being refinanced, (b) such Refinancing Indebtedness is Incurred in an aggregate
-
principal amount (or if issued with original issue discount, an aggregate issue
price) that is equal to or less than the sum of (x) the aggregate principal
-
amount (or if issued with original issue discount, the aggregate accreted value)
then outstanding of the Indebtedness being refinanced, plus (y) fees,
-
underwriting discounts, premiums and other costs and expenses incurred in
connection with such Refinancing Indebtedness, (c) in the event that the
-
94
Indebtedness to be refinanced is subordinated in right of payment to the Notes
or any Note Guarantee, such new Indebtedness, by its terms or by the terms of
any agreement or instrument pursuant to which such new Indebtedness is issued or
remains outstanding, is made subordinate in right of payment to the Notes or
such Note Guarantee at least to the same extent that the Indebtedness to be
refinanced is subordinated to the Notes or such Note Guarantee, and (d)
-
Refinancing Indebtedness shall not include (x) Indebtedness of a Restricted
-
Subsidiary that is not a Note Guarantor Subsidiary that refinances Indebtedness
of the Company or a Note Guarantor that was incurred pursuant to paragraph (a)
of Section 8.1 or (prior to the date hereof) Section 406(a) of the Senior
Subordinated Note Indenture or (y) Indebtedness of the Company or a Restricted
-
Subsidiary that refinances Indebtedness of an Unrestricted Subsidiary.
"Register of Holders" has the meaning given to it in Section 6.8.
-------------------
"Registration Rights Agreement" means that certain Registration Rights
-----------------------------
Agreement, dated as of May 21, 1998, and subsequently amended on May 23, 2000,
among the Parent, the Investor, Fund V and certain other parties, as such
agreement may be amended, supplemented, waived or otherwise modified from time
to time in accordance with the terms thereof and of this Agreement.
"Related Business" means those businesses in which the Company or any of
----------------
its Subsidiaries is engaged on the date of this Agreement, or that are related,
complementary, incidental or ancillary thereto or extensions, developments or
expansions thereof.
"Related Taxes" means (a) any taxes, charges or assessments, including
------------- -
but not limited to sales, use, transfer, rental, ad valorem, value-added, stamp,
property, consumption, franchise, license, capital, net worth, gross receipts,
excise, occupancy, intangibles or similar taxes, charges or assessments (other
than federal, state or local taxes measured by income and federal, state or
local withholding imposed on payments made by the Parent), required to be paid
by the Parent by virtue of its being incorporated or having Capital Stock
outstanding (but not by virtue of owning stock or other equity interests of any
corporation or other entity other than the Company or any of its Subsidiaries),
or being a holding company parent of the Company or receiving dividends from or
other distributions in respect of the Capital Stock of the Company, or having
guaranteed any obligations of the Company or any Subsidiary thereof, or having
made any payment in respect of any of the items for which the Company is
permitted to make payments to the Parent pursuant to Section 8.2, or (b) any
-
other federal, state, foreign, provincial or local taxes measured by income for
which the Parent is liable up to an amount not to exceed with respect to such
federal taxes the amount of any such taxes that the Company would have been
required to pay on a separate company basis or on a consolidated basis if the
Company had filed a consolidated return on behalf of an affiliated group (as
defined in Section 1504 of the Code, or an analogous provision of state, local
or foreign law) of which it were the common parent, or with respect to state
95
and local taxes, on a combined basis if the Company had filed a combined return
on behalf of an affiliated group consisting only of the Company and its
Subsidiaries.
"Reorganization" means, with respect to any Multiemployer Plan, the
--------------
condition that such plan is in reorganization within the meaning of Section 4241
of ERISA.
"Reportable Event" means any of the events set forth in Section 4043(b)
----------------
of ERISA, other than those events as to which the thirty day notice period is
waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg. ss. 2615.
"Requirement of Law" means, as to any Person, the Certificate of
------------------
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject; provided that the foregoing shall not apply to
--------
any non-binding recommendation of any Governmental Authority.
"Responsible Officer" means the chief executive officer and the President
-------------------
of the Company or, with respect to financial matters, the chief financial
officer of the Company.
"Restricted Payment" has the meaning given to it in Section 8.2(a). For
------------------
purposes of this Agreement, all Investments and Restricted Payments of the
Company and its Restricted Subsidiaries outstanding on the date hereof that have
been made since May 21, 1998 in accordance with Section 408(b) of the Senior
Subordinated Note Indenture, or (in the case of any Investment) the definition
of "Permitted Investments" contained in such indenture, shall be deemed made on
the date hereof and outstanding under the respective clauses of Section 8.2(b)
and the definition of "Permitted Investments" contained herein corresponding to
the respective clauses of Section 408(b) of the Senior Subordinated Note
Indenture and the definition of "Permitted Investments" contained in such
indenture under which such Investments and Restricted Payments were made and are
outstanding on the date hereof.
"Restricted Payment Transaction" means any Restricted Payment permitted
------------------------------
pursuant to Section 8.2, any Permitted Payment, any Permitted Investment, or any
transaction specifically excluded from the definition of the term "Restricted
Payment."
"Restricted Subsidiary" means any Subsidiary of the Company other than an
---------------------
Unrestricted Subsidiary.
"S&P" means Standard & Poor's Ratings Service, a division of The
---
McGraw-Hill Companies, Inc., and its successors.
"SEC" means the United States Securities and Exchange Commission.
---
96
"Second Credit Agreement Amendment" means the Second Amendment, dated as
---------------------------------
of December 27, 2001, to the Credit Agreement.
"Secured Parties" means the Investor and each other member of the CD&R
---------------
Group that is a Holder.
"Securities Act" means the Securities Act of 1933, or any successor
--------------
statute, and the rules and regulations of the SEC thereunder, as amended.
"Senior Subordinated Default Event" means a "Default" or "Event of
---------------------------------
Default", as those terms are defined in the Senior Subordinated Note Indenture,
or any other default or event of default under the Senior Subordinated Note
Indenture.
"Senior Subordinated Note Indenture" means the Indenture, dated as of May
----------------------------------
21, 1998, among the Parent, the Company and State Street Bank and Trust Company,
as Trustee, relating to the 9 3/4% Senior Subordinated Notes Due 2008 of the
Company, as the same may be amended, supplemented or otherwise modified from
time to time in accordance with the terms thereof and of this Agreement.
"Senior Subordinated Notes" means the Company's 9 3/4% Senior
-------------------------
Subordinated Notes due 2008, in an aggregate principal amount not exceeding
$270,000,000 outstanding at any time, issued and outstanding pursuant to the
Senior Subordinated Note Indenture.
"Significant Subsidiary" means any Restricted Subsidiary that would be a
----------------------
"significant subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC, as in effect on May 21, 1998.
"Significant Subsidiary Guarantor" has the meaning given to it in Section
--------------------------------
7.11.
"Single Employer Plan" means any Plan which is covered by Title IV of
--------------------
ERISA, but which is not a Multiemployer Plan.
"Solvent", when used with respect to any Person, means that, as of any
-------
date of determination, (a) the amount of the assets of such Person, at a fair
-
valuation, will, as of such date, exceed the amount of all liabilities of such
Person, contingent or otherwise, as of such date, (b) the present fair saleable
-
value of the assets of such Person will, as of such date, be greater than the
amount that will be required to pay the probable liability of such Person on its
debts as such debts become absolute and matured, (c) such Person will not have,
-
as of such date, an unreasonably small amount of capital with which to conduct
its business, and (d) such Person will be able to pay its debts as they mature.
-
For purposes of determining whether a Person is Solvent, the amount of any
contingent liability shall be computed as the amount that, in light of all the
facts and circumstances
97
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.
"Specified Change" has the meaning given to it in Section 13.7.
----------------
"Springing Guarantee" has the meaning given to it in Section 7.11.
-------------------
"Stated Maturity" means, with respect to any security, the date specified
---------------
in such security as the fixed date on which the payment of principal of such
security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency beyond the control of the issuer unless such contingency has
occurred).
"Subordinated Obligations" means (a) any Indebtedness represented by any
------------------------ -
Senior Subordinated Note or any Guarantee thereof or (b) any Indebtedness of the
-
Company or any Note Guarantor (whether outstanding on the date of this Agreement
or thereafter Incurred) that is subordinated in right of payment to the Notes,
any Note Guarantee or any other Indebtedness of the Company or any Note
Guarantor.
"Subsidiary" of any Person means any corporation, association,
----------
partnership or other entity of which more than 50% of the total voting power of
shares of Capital Stock or other equity or ownership interests (including
partnership interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by (i) such Person
or (ii) one or more Subsidiaries of such Person.
"Successor Company" has the meaning given to it in Section 9.1.
-----------------
"Tax Sharing Agreement" means the Tax Sharing Agreement, dated as of May
---------------------
21, 1998, between the Parent and the Company, as the same may be amended,
supplemented, waived or otherwise modified from time to time in accordance with
the terms thereof and of this Agreement.
"Temporary Cash Investments" means any of the following: (a) any
-------------------------- -
investment in (i) direct obligations of the United States of America or any
-
agency or instrumentality thereof or obligations Guaranteed by the United States
of America or any agency or instrumentality thereof or (ii) direct obligations
--
of any foreign country recognized by the United States of America rated at least
"A" by S&P or "A-1" by Moody's (or, in either case, the equivalent of such
rating by such organization or, if no rating of S&P or Moody's then exists, the
equivalent of such rating by any nationally recognized rating organization), (b)
-
overnight bank deposits, and investments in time deposit accounts, certificates
of deposit, bankers' acceptances and money market deposits (or, with respect to
foreign banks, similar instruments) maturing not more than one year after the
date of
98
acquisition thereof issued by (i) any lender under the Credit Agreement
-
or (ii) a bank or trust company that is organized under the laws of the United
--
States of America, any state thereof or any foreign country recognized by the
United States of America having capital and surplus aggregating in excess of
$250,000,000 (or the foreign currency equivalent thereof) and whose long term
debt is rated at least "A" by S&P or "A-1" by Moody's (or, in either case, the
equivalent of such rating by such organization or, if no rating of S&P or
Moody's then exists, the equivalent of such rating by any nationally recognized
rating organization) at the time such Investment is made, (c) repurchase
-
obligations with a term of not more than thirty (30) days for underlying
securities of the types described in clause (a) or (b) above entered into with a
bank meeting the qualifications described in clause (c) above, (d) Investments
-
in commercial paper, maturing not more than two-hundred and seventy (270) days
after the date of acquisition, issued by a Person (other than the Company or any
of its Subsidiaries), with a rating at the time as of which any Investment
therein is made of "P-2" (or higher) according to Moody's or "A-2" (or higher)
according to S&P (or, in either case, the equivalent of such rating by such
organization or, if no rating of S&P or Moody's then exists, the equivalent of
such rating by any nationally recognized rating organization), (e) Investments
-
in securities maturing not more than one year after the date of acquisition
issued or fully guaranteed by any state, commonwealth or territory of the United
States of America, or by any political subdivision or taxing authority thereof,
and rated at least "A" by S&P or "A" by Moody's (or, in either case, the
equivalent of such rating by such organization or, if no rating of S&P or
Moody's then exists, the equivalent of such rating by any nationally recognized
rating organization), (f) Preferred Stock (other than of the Company or any of
-
its Subsidiaries) having a rating of "A" or higher by S&P or "A2" or higher by
Moody's (or, in either case, the equivalent of such rating by such organization
or, if no rating of S&P or Moody's then exists, the equivalent of such rating by
any nationally recognized rating organization), (g) investment funds investing
ninety-five percent (95%) of their assets in securities of the type described in
clauses (a)-(f) above (which funds may also hold reasonable amounts of cash
pending investment and/or distribution), (h) any money market deposit accounts
-
issued or offered by a domestic commercial bank or a commercial bank organized
and located in a country recognized by the United States of America, in each
case, having capital and surplus in excess of $250,000,000 (or the foreign
currency equivalent thereof), or investments in money market funds complying
with the risk limiting conditions of Rule 2a-7 (or any successor rule) of the
SEC under the Investment Company Act of 1940, as amended, and (i) similar
-
short-term investments approved by the Board of Directors in the ordinary course
of business.
"Trade Payables" means, with respect to any Person, any accounts
--------------
payable or any indebtedness or monetary obligation to trade creditors created,
assumed or guaranteed by such Person arising in the ordinary course of business
in connection with the acquisition of goods or services.
99
"Transactions" means the CD&R Investment, the effectiveness of the
------------
Second Credit Agreement Amendment and all other transactions relating thereto.
"Transaction Agreements" means (a) this Agreement, (b) Amendment No. 2
---------------------- - -
to the Registration Rights Agreement, (c) the Guarantee and Collateral
-
Agreement, (d) the Intercreditor Agreement, (e) the Notes, (f) the Second Credit
- - -
Agreement Amendment, (g) the Note Security Documents and (h) the Warrants.
- -
"Transferred Notes" means one or more Notes held by any Person other
-----------------
than the Investor or a member of the CD&R Group.
"Trigger Event" has the meaning given to it in Section 6.3(j).
-------------
"Underfunding" means an excess of all accrued benefits under a Plan
------------
(based on those assumptions used to fund such Plan), determined as of the most
recent annual valuation date, over the value of the assets of such Plan
allocable to such accrued benefits.
"Unrestricted Subsidiary" means (a) any Subsidiary of the Company that
----------------------- -
at the time of determination is an Unrestricted Subsidiary, as designated by the
Board of Directors in the manner provided below, and (b) any Subsidiary of an
-
Unrestricted Subsidiary; provided that any Subsidiary of the Company that on the
--------
date hereof is an "Unrestricted Subsidiary" (as defined in the Senior
Subordinated Note Indenture) for purposes of the Senior Subordinated Note
Indenture (if any) shall, as of the date hereof, be deemed to have been
designated an Unrestricted Subsidiary hereunder as of the date on which such
Subsidiary became an "Unrestricted Subsidiary" (as defined in the Senior
Subordinated Note Indenture). The Board of Directors may designate any
Subsidiary of the Company (including any newly acquired or newly formed
Subsidiary of the Company) to be an Unrestricted Subsidiary unless such
Subsidiary or any of its Subsidiaries owns any Capital Stock or Indebtedness of,
or owns or holds any Lien on any property of, the Company or any other
Restricted Subsidiary of the Company that is not a Subsidiary of the Subsidiary
to be so designated, provided that either (A) the Subsidiary to be so designated
-------- -
has total consolidated assets of $1,000 or less or (B) if such Subsidiary has
-
consolidated assets greater than $1,000, then such designation would be
permitted under Section 8.2. The Board of Directors may designate any
Unrestricted Subsidiary to be a Restricted Subsidiary, provided that immediately
--------
after giving effect to such designation either (x) the Company could incur at
-
least $1.00 of additional Indebtedness under paragraph (a) of Section 8.1 or (y)
-
the Consolidated Coverage Ratio would be greater than it was immediately prior
to giving effect to such designation.
"Warrant" has the meaning given to it in Section 1.2.
-------
100
"WWG" means Wavetek Wandel Goltermann LLC, a Delaware limited liability
---
company, and any successors thereto.
Article XIII
Miscellaneous
-------------
13.1 Notices. Except as otherwise specifically provided for in this
-------
Agreement, notices and other communications given pursuant to this Agreement
shall be in writing and shall be deemed to have been duly given (a) on receipt,
-
if delivered personally, (b) three Business Days after being mailed by
-
first-class, registered or certified mail, return receipt requested, postage
prepaid, (c) one Business Day after being sent by internationally recognized
-
courier (appropriately marked for two-day delivery) or (d) upon transmission, if
-
it is sent by telecopy (so long as the transmitting machine records electronic
confirmation of due transmission) to the address or telecopy number set forth
below, or such other address or telecopy number as may be specified to the other
parties hereto from time to time:
(i) if to the Parent, at
Acterna Corporation
20410 Observation Drive
Germantown, Maryland 20876
Fax: (301) 353-1536
Attention: General Counsel
(ii) if to the Company, at
Acterna LLC
20410 Observation Drive
Germantown, Maryland 20876
Fax: (301) 353-1536
Attention: General Counsel
(iii) if to the Investor, at
Clayton, Dubilier & Rice Fund VI Limited Partnership
1403 Foulk Road, Suite 106
Wilmington, Delaware 19803
Attention: General Partner
(iv) if to any Holder other than the Investor, at the
address or facsimile number of such Holder recorded in the Register of
Holders (or such other address or facsimile number provided to the
Company in writing for use under this Section 13.1 by such Holder).
101
(v) Copies of any notice or other communication given under this
Agreement shall be given to:
Clayton, Dubilier & Rice, Inc.
375 Park Avenue
New York, New York 10152
Fax: (212) 407-5254
Attention: Brian Finn
and
Debevoise & Plimpton
919 Third Avenue
New York, New York 10022
Fax: (212) 909-6836
Attention: Franci J. Blassberg, Esq.
13.2 Governing Law, etc. This Agreement shall be governed by and
------------------
construed in accordance with the laws of the State of New York.
13.3 Jurisdiction; Waiver of Jury Trial; Waiver of Punitive Damages.
--------------------------------------------------------------
(a) Each of the parties hereto irrevocably and unconditionally (i)
-
agrees that any legal suit, action or proceeding brought by any party hereto
arising out of or based upon this Agreement or the transactions contemplated
hereby may be brought in the United States District Court for the Southern
District of New York or any New York State court sitting in the Borough of
Manhattan, in the City of New York (each, a "New York Court"), (ii) waives, to
-------------- --
the fullest extent it may effectively do so, any objection which it may now or
hereafter have to the laying of venue of any such proceeding brought in the New
York Court, and any claim that any such action or proceeding brought in the New
York Court has been brought in an inconvenient forum and (iii) submits to the
---
non-exclusive jurisdiction of the New York Court in any suit, action or
proceeding. Each of the parties agrees that a judgment in any suit, action or
proceeding brought in the New York Court shall be conclusive and binding upon it
and may be enforced in any other courts to whose jurisdiction it is or may be
subject, by suit upon such judgment.
(b) EACH OF THE PARTIES AGREES AND ACKNOWLEDGES THAT ANY CONTROVERSY
THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND
NCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR
102
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY TRANSACTION
AGREEMENT, OR THE BREACH, TERMINATION OR VALIDITY OF THIS AGREEMENT OR ANY
TRANSACTION AGREEMENT.
(c) Each of the parties waives, to the maximum extent not prohibited
by law, any right it may have to claim or recover any punitive damages in any
legal action or proceeding referred to in this Section 13.3.
13.4 Binding Effect. This Agreement shall be binding upon and inure to the
--------------
benefit of the parties hereto and their respective heirs, successors and
assigns.
13.5 Assignment. This Agreement and the other Note Financing Documents may
----------
not be assigned or otherwise transferred (by merger, consolidation, operation of
law or otherwise) by the Parent or the Company without the prior written consent
of the Majority CD&R Note Holders, and any attempt to so assign or otherwise
transfer this Agreement or any other Note Financing Document without such
consent shall be void and of no effect. The Investor and each other Holder may
assign or otherwise transfer this Agreement or any other Note Financing Document
to any Person without the consent of the Parent or the Company.
13.6 No Third-Party Beneficiaries. Nothing in this Agreement shall be
----------------------------
construed as conferring any rights upon any person or entity other than the
parties hereto, each Holder and their respective heirs, successors and permitted
assigns.
13.7 Amendment; Waivers, etc.
-----------------------
(a) Neither this Agreement nor any other Note Financing Document, nor
any terms hereof or thereof, may be amended, supplemented, modified or waived
except in accordance with the provisions of this Section 13.7.
(b) Except as set forth in the succeeding paragraphs of this Section
13.7, the Majority Holders may (i) enter into with the relevant Note Financing
-
Parties written amendments, supplements or modifications to this Agreement and
the other Note Financing Documents for the purpose of adding any provisions to
this Agreement or the other Note Financing Documents or changing in any manner
the rights of the Holders or of the Note Financing Parties hereunder or
thereunder or (ii) waive at any Note Financing Party's request on such terms and
--
conditions as the Majority Holders may specify in such instrument, any of the
requirements of this Agreement or the other Note Financing Documents or any
Default or Event of Default and its consequences (any such amendment,
supplement, modification or waiver, a "Specified Change"); provided, that
---------------- --------
without the written consent of all Holders, no Specified Change shall reduce the
percentage specified in the definition of "Majority Holders".
103
(c) Without the written consent of the Majority CD&R Note Holders, no
Specified Change shall amend, supplement, modify or waive any of the provisions
of Sections 6.6, 6.9, 7.9, 7.10, 7.11(a), 8.6(a), 8.8 or 13.5, or any provision
of any Note Security Document, or the definition of "Majority CD&R Note
Holders";
(d) Without the written consent of the Majority Transferred Note
Holders, no Specified Change shall amend, supplement, modify or waive any of the
provisions of Sections 7.11(b) and 8.6(b), Annex A or the definition of
"Majority Transferred Note Holders";
(e) Without the written consent of the Majority CD&R Note Holders, no
Specified Change shall take any action which has the effect of releasing any of
the Collateral securing any CD&R Notes or any of the Note Guarantors from their
Guarantee in respect of any CD&R Note (except as permitted hereby or by any Note
Financing Document).
(f) Subject to Section 10.7, without the written consent of each
Holder directly affected thereby, no Specified Change shall reduce the Principal
Amount of any Note, extend the Maturity Date or any Interest Payment Date,
reduce the Interest Rate or any fee payable hereunder or extend the scheduled
date of any payment thereof or amend, modify or waive any provision of this
Section 13.7(f).
(g) Without the written consent of the Majority CD&R Note Holders, no
Specified Change shall consent to the assignment or transfer by the Company of
any of its rights and obligations under this Agreement and the other Note
Financing Documents.
(h) Any such waiver and any such amendment, supplement or modification
shall apply equally to each of the Holders and shall be binding upon the Note
Financing Parties and the Holders (including all future Holders). In the case of
any waiver, each of the Note Financing Parties and the Holders shall be restored
to their former positions and rights hereunder and under the other Note
Financing Documents, and any Default or Event of Default waived shall be deemed
to be cured and not continuing; no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereon.
(i) No delay or omission of any Holder to exercise any right, remedy,
power or privilege hereunder or under the other Transaction Agreements shall
impair such right, remedy, power or privilege or operate as a waiver thereof or
acquiescence therein; nor shall any single or partial exercise of any right,
remedy, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege. The
rights, remedies, powers and privileges herein provided
104
are cumulative and not exclusive of any rights, remedies, powers and privileges
provided hereunder or now or hereafter existing at law or in equity or
otherwise.
13.8 Survival of Representations and Warranties. All representations and
------------------------------------------
warranties made hereunder, in the other Transaction Agreements and in any
certificate delivered pursuant hereto or in connection herewith shall survive
the execution and delivery of this Agreement and the purchase and sale of the
Notes and the issuance of the Warrants hereunder.
13.9 Payment of Expenses and Taxes.
-----------------------------
(a) The Company agrees (i) to pay or reimburse each Holder for all its
-
reasonable out-of-pocket costs and expenses incurred in connection with the
preparation and execution of, and any amendment, supplement or modification to,
or proposed amendment, supplement or modification to, this Agreement and the
other Transaction Agreements and any other documents prepared in connection
herewith or therewith, and the consummation and administration of the
transactions contemplated hereby and thereby, including, without limitation, the
reasonable fees and disbursements of counsel to the Holders; (ii) to pay or
--
reimburse each Holder for all its reasonable costs and expenses incurred in
connection with the enforcement or preservation of any rights under this
Agreement, the other Transaction Agreements and any such other documents,
including, without limitation, the reasonable fees and disbursements of counsel
to the Holders; (iii) to pay, indemnify, and hold each Holder harmless from, any
---
and all recording and filing fees and any and all liabilities with respect to,
or resulting from any delay in paying, stamp, excise and other similar taxes, if
any, which may be payable or determined to be payable in connection with the
execution and delivery of, or consummation or administration of any of the
transactions contemplated by, or any amendment, supplement or modification of,
or any waiver or consent under or in respect of, this Agreement, the other
Transaction Agreements and any such other documents and (iv) to pay, indemnify,
--
and hold harmless each Holder from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of this
Agreement, the other Transaction Agreements and any such other documents, or the
use of the proceeds of the Notes, including, without limitation, any of the
foregoing relating to the violation of, noncompliance with or liability under,
any Environmental Law applicable to the operations of the Company, any of its
Subsidiaries or any of the Properties (all the foregoing in this clause (iv),
collectively, the "indemnified liabilities"), provided that the Company shall
----------------------- --------
have no obligation under this Section 13.9(a)(iv) to any Holder with respect to
indemnified liabilities arising from (A) the gross negligence or willful
-
misconduct of such Holder (or any of its respective directors, trustees,
officers, employees, agents, successors and assigns) or (B) claims made or legal
-
proceedings commenced against such Holder by any securityholder or creditor
thereof arising out of
105
and based upon rights afforded any such securityholder or creditor solely in its
capacity as such.
(b) Notwithstanding the foregoing provisions of Section 13.9(a),
except as provided in clauses (ii) and (iii) of Section 13.9(a) and subject to
the provisions of this Section 13.9(b), the Company shall have no obligation
under Section 13.9(a) to any Holder with respect to any withholding or deduction
required by any Governmental Authority to be made by the Company from any
payment by the Company to such Holder of principal of or interest on any Note,
for or on account of any tax, levy, impost or duty, or any charge or fee in the
nature of a tax, levy, impost or duty, that is imposed, levied, collected or
assessed by such Governmental Authority (a "withholding tax"). If any payment of
---------------
withholding tax shall be required by any Governmental Authority to be made by
the Company from any payment of principal of or interest on any Note, the
Company shall give notice thereof to the Holder of such Note no later than 15
Business Days prior to such payment. If any payment of withholding tax shall be
required by any Governmental Authority to be made by the Company from any
payment of principal of or interest on any Note in cash, a portion of such
payment of principal or interest equal to the amount of such withholding tax
paid to such Governmental Authority shall be deemed to have been paid to the
Holder of such Note for all purposes of this Agreement. If any payment of
withholding tax shall be required by any Governmental Authority to be made by
the Company from any payment of interest on any Note through the issuance of an
additional Note as provided in Section 6.2(a), the Company shall withhold and
reduce the face value of such additional Note by an amount equal to the amount
of such withholding tax paid to such Governmental Authority, and a portion of
such payment of interest equal to the amount of face value so withheld and
reduced shall be deemed to have been paid to the Holder of such Note for all
purposes of this Agreement, provided that the Parent shall, upon such
withholding and reduction of face amount, issue and deliver Warrants to the
Holder of such Note that entitle such Holder to purchase a number of shares of
Common Stock (or other property) that shall fairly compensate such Holder for
the loss of the conversion rights pursuant to Section 6.3 with respect to the
face amount of such additional Note so withheld and reduced, and with respect to
the face amount of any additional Notes that would have been issued in respect
of interest on any such additional Note if the face amount thereof had not been
so withheld and reduced, the provisions of such Warrants and the issuance and
delivery thereof to be effected as provided in Section 6.7, with such changes as
may be necessary or appropriate under the circumstances. The Company and the
relevant Holder shall use their respective good faith efforts to agree on the
number of such shares of Common Stock (or other property) and the provisions of
such Warrants. The Company and the relevant Holder shall use their respective
good faith efforts to avoid or minimize the payment of withholding tax from any
payment of principal of or interest on the Notes, provided that such Holder
shall not be required to (x) change its place of organization or any office or
-
other place of business thereof or (y) take other any action or refrain from
-
taking any action, which action or inaction, in its reasonable judgment, would
be significantly disadvantageous to
106
its business or operations or would require it to incur additional costs. Such
efforts shall include but not be limited to such Holder's provision of all
applicable withholding certificates, compliance certificates and representations
relating to status, subject to the proviso to the preceding sentence. Nothing in
this Section 13.9(b) shall be construed to require any Holder to disclose any of
such Holder's books, records or tax filings to the Company or any other party.
(c) The agreements in this Section 13.9 shall survive repayment of
the Notes and all other amounts payable hereunder and the issuance of the
Warrants.
13.10 Judgment Currency.
-----------------
(a) If for the purpose of obtaining judgment in any court it is
necessary to convert a sum due hereunder in one currency into another 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 each Holder could purchase the first currency with such other
currency in the City of New York, New York for the first currency on the
Business Day preceding the day on which final judgment is given.
(b) The obligation of the Company in respect of any sum due from it
to any Holder hereunder shall, notwithstanding any judgment in a currency (the
"Judgment Currency") other than that in which such sum is denominated in
-----------------
accordance with the applicable provisions of this Agreement (the "Agreement
---------
Currency"), be discharged only to the extent that on the Business Day following
- --------
receipt by such Holder of any sum adjudged to be so due in the Judgment Currency
such Holder may in accordance with normal banking procedures purchase the
Agreement Currency with the Judgment Currency; if the amount of Agreement
Currency so purchased is less than the sum originally due to such Holder in the
Agreement Currency, the Company agrees notwithstanding any such judgment to
indemnify such Holder against such loss, and if the amount of the Agreement
Currency so purchased exceeds the sum originally due to any Holder, such Holder
agrees to remit to the Company such excess.
13.11 Entire Agreement. This Agreement and the other Transaction Agreements
----------------
(when executed and delivered) constitute the entire agreement and supersede all
prior agreements and understandings, both written and oral, between the parties
with respect to the subject matter hereof and thereof.
13.12 Severability. If any provision of this Agreement is held to be
------------
invalid or unenforceable for any reason, it shall be adjusted rather than
voided, if possible, in order to achieve the intent of the parties hereto to the
maximum extent possible. In any event, the invalidity or unenforceability of any
provision of this Agreement in any jurisdiction shall not affect the validity or
enforceability of the remainder of this Agreement in that
107
jurisdiction or the validity or enforceability of this Agreement, including that
provision, in any other jurisdiction.
13.13 Headings. The headings contained in this Agreement are for purposes
--------
of convenience only and shall not affect the meaning or interpretation of this
Agreement.
13.14 Rules of Construction. For all purposes of this Agreement, except as
---------------------
otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Agreement have the meanings assigned to them
in this Agreement;
(b) "or" is not exclusive;
(c) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with GAAP;
(d) the words "herein," "hereof" and "hereunder" and other words of
------- ------ ---------
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision;
(e) all references to "$" or "dollars" shall refer to the lawful currency
- -------
of the United States of America;
(f) the words "include," "included" and "including" as used herein
------- -------- ---------
shall be deemed in each case to be followed by the phrase "without limitation,"
------------------
if not expressly followed by such phrase or the phrase "but not limited to";
------------------
(g) words in the singular include the plural, and words in the plural
include the singular; and
(h) any reference to a Section or Article refers to such Section or
Article of this Agreement.
13.15 Schedules. As soon as practicable after the date hereof, but in any
---------
event no later than five (5) Business Days prior to the Closing Date, the Parent
and the Company shall deliver all Schedules to this Agreement and the Guarantee
and Collateral Agreement to the Investor, which Schedules shall be subject in
all respects to review and approval by the Investor. Unless the context
otherwise requires, if the Closing shall occur, all references to any "Schedule"
herein shall be deemed to be a reference to a Schedule hereto delivered pursuant
this Section 13.15, as if such Schedule had been delivered on the date hereof.
Notwithstanding anything to the contrary herein, from and after the Closing
Date, this Agreement shall be construed as if all such Schedules hereto
delivered pursuant to this Section 13.15 had been delivered on the date hereof.
108
13.16 Counterparts. This Agreement may be executed in several counterparts,
------------
each of which shall be deemed an original and all of which shall together
constitute one and the same instrument.
109
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
ACTERNA CORPORATION
By:
--------------------------------------------
Name:
Title:
ACTERNA LLC
By:
--------------------------------------------
Name:
Title:
CLAYTON, DUBILIER & RICE FUND VI
LIMITED PARTNERSHIP
By: CD&R Associates VI Limited
Partnership, its general partner
By: CD&R Investment Associates VI,
Inc., its managing general partner
By:
--------------------------------------------
Name:
Title:
110
Annex A
Terms of Note Guarantees of Transferred Notes
1. Guarantees Generally.
--------------------
(a) Parent Guarantee. Parent, as a primary obligor and not merely as
----------------
surety, hereby irrevocably and fully and unconditionally Guarantees, on a senior
basis, the punctual payment when due, whether at the Maturity Date, by
acceleration or otherwise, of all monetary obligations of the Company under the
Agreement and the Transferred Notes, whether for principal of or interest on the
Transferred Notes, expenses, indemnification or otherwise (all such obligations
guaranteed by Parent being herein called the "Parent Guaranteed Obligations").
-----------------------------
(b) Note Guarantees. Any Significant Subsidiary Guarantor from time to time
---------------
party hereto, as primary obligor and not merely as surety, hereby jointly and
severally, irrevocably and fully and unconditionally Guarantees, on a senior
basis, the punctual payment when due, whether at the Maturity Date, by
acceleration or otherwise, of all monetary obligations of the Company under the
Agreement and the Transferred Notes, whether for principal of or interest on the
Transferred Notes, expenses, indemnification or otherwise (all such obligations
guaranteed by such Significant Subsidiary Guarantors being herein called the
"Springing Guaranteed Obligations").
--------------------------------
Any term or provision of the Agreement notwithstanding, each Springing
Guarantee shall not exceed the maximum amount that can be guaranteed by the
applicable Significant Subsidiary Guarantor without rendering the Springing
Guarantee, as it relates to such Significant Subsidiary Guarantor, voidable
under applicable law relating to fraudulent conveyance or fraudulent transfer or
similar laws affecting the rights of creditors generally.
(c) Further Agreements of Parent Guarantor and any Significant Subsidiary
---------------------------------------------------------------------
Guarantor. (i) Parent, in its capacity as guarantor of the Parent Guaranteed
- ---------
Obligations hereunder (in such capacity, the "Parent Guarantor") and any
----------------
Significant Subsidiary Guarantor from time to time party hereto (each of the
Parent Guarantor and any Significant Subsidiary Guarantor, a "Guarantor") each
---------
hereby agrees that (to the fullest extent permitted by law) its obligations
hereunder shall be unconditional, irrespective of the validity, regularity or
enforceability of the Agreement, the Transferred Notes or the obligations of the
Company or any other Guarantor to the Holders of the Transferred Notes hereunder
or thereunder, the absence of any action to enforce the same, any waiver or
consent by any Holder of Transferred Notes with respect to any provisions hereof
or thereof, any release of any other Guarantor, the recovery of any judgment
against the Company, any action to enforce the same, whether or not a notation
concerning its respective Parent Guarantee or Springing Guarantee is made on any
particular Transferred Note, or any other circumstance that might otherwise
constitute a legal or equitable discharge or defense of a guarantor.
(ii) Each Guarantor hereby waives (to the fullest extent permitted by law)
the benefit of diligence, presentment, demand of payment, filing of claims with
a court in the event of insolvency or bankruptcy of the Company, any right to
require a proceeding first against the Company, protest, notice and all demands
whatsoever and covenants that its Parent Guarantee or (except as otherwise
provided in Section 7.11(b) of the Agreement) Springing Guarantee, as the case
may be, will not be discharged except by complete performance of the obligations
contained in the Transferred Notes, the Agreement, and its Parent Guarantee or
Springing Guarantee, as the case may be. Such Parent Guarantee or Springing
Guarantee, as the case may be, is a guarantee of payment and not of collection.
Each Guarantor further agrees (to the fullest extent permitted by law) that, as
between it, on the one hand, and the Holders of the Transferred Notes, on the
other hand, subject to the provisions of this Annex A, (1) the maturity of the
-
obligations guaranteed by its Parent Guarantee or Springing Guarantee, as the
case may be, may be accelerated as and to the extent provided in Article X of
the Agreement for the purposes of such Parent Guarantee or Springing Guarantee,
as the case may be, notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the obligations guaranteed by such
Parent Guarantee or Springing Guarantee, as the case may be, and (2) in the
-
event of any acceleration of such obligations as provided in Article X of the
Agreement, such obligations (whether or not due and payable) shall forthwith
become due and payable by such Guarantor in accordance with the terms of the
provisions of this Annex A for the purpose of such Parent Guarantee or Springing
Guarantee, as the case may be. No Holder of Transferred Notes shall have any
obligation to enforce or exhaust any rights or remedies or to take any other
steps under any security for the Parent Guaranteed Obligations or the Springing
Guaranteed Obligations (collectively, the "Guaranteed Note Obligations") or
---------------------------
against the Company or any other Person or any property of the Company or any
other Person before the Holder of Transferred Notes is entitled to demand
payment and performance by any or all Guarantors of their obligations under
their respective Parent Guarantee or Significant Guarantees or under the
Agreement.
(iii) The Parent Guarantee and, unless and until terminated in accordance
with Section 7.11(b) of the Agreement, any Springing Guarantee, shall remain in
full force and effect and continue to be effective should any petition be filed
by or against the Company for liquidation or reorganization, should the Company
become insolvent or make an assignment for the benefit of creditors or should a
receiver or trustee be appointed for all or any significant part of the
Company's assets, and shall, to the fullest extent permitted by law, continue to
be effective or be reinstated, as the case may be, if at any time payment and
performance of the Transferred Notes are, pursuant to applicable law, rescinded
or reduced in amount, or must otherwise be restored or returned by any obligee
on such Transferred Notes, whether as a "voidable preference," "fraudulent
transfer" or otherwise, all as though such payment or performance had not been
made. In the event that any payment, or any part thereof, is rescinded, reduced,
restored or returned, the
A-2
Transferred Notes shall, to the fullest extent permitted by law, be reinstated
and deemed reduced only by such amount paid and not so rescinded, reduced,
restored or returned.
(d) Each Guarantor that makes a payment or distribution under the Parent
Guarantee or any Springing Guarantee, as the case may be, shall have the right
to seek contribution from the Company or any non-paying Guarantor that has also
Guaranteed the Guaranteed Note Obligations in respect of which such payment or
distribution is made, so long as the exercise of such right does not impair the
rights of the Holders of the Transferred Notes under the Parent Guarantee or
such Springing Guarantee.
(e) Each Guarantor acknowledges that it will receive direct and indirect
benefits from the financing arrangements contemplated by the Agreement and that
its Parent Guarantee or its Springing Guarantee, as the case may be, and the
waiver set forth in Section 3 of this Annex A is knowingly made in contemplation
of such benefits.
(f) Each Guarantor also hereby agrees to pay any and all reasonable
out-of-pocket expenses (including reasonable counsel fees and expenses) incurred
by the Holders of Transferred Notes in enforcing any rights under its Parent
Guarantee or its Springing Guarantee, as the case may be.
2. Continuing Guarantees. (a) The Parent Guarantee shall be a continuing
---------------------
Guarantee and shall (i) remain in full force and effect until payment in full of
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the Principal Amount of all outstanding Transferred Notes (whether by payment at
maturity, purchase, redemption, defeasance, retirement or other acquisition) and
all other Parent Guaranteed Obligations then due and owing, (ii) be binding upon
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Parent and (iii) inure to the benefit of and be enforceable by the Holders of
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Transferred Notes and their permitted successors, transferees and assigns.
(b) Each Springing Guarantee shall be a continuing Guarantee and shall (i)
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remain in full force and effect until payment in full of the principal amount of
all outstanding Transferred Notes (whether by payment at maturity, purchase,
redemption, defeasance, retirement or other acquisition) and all other
Guaranteed Obligations then due and owing, unless earlier terminated as provided
in Section 7.11(b) of the Agreement, (ii) be binding upon such Guarantor and
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(iii) inure to the benefit of and be enforceable by the Holders of the
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Transferred Notes and their permitted successors, transferees and assigns.
3. Waiver of Subrogation. Each of the Parent Guarantor and each
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Significant Subsidiary Guarantor hereby irrevocably waives any claim or other
rights that it may now or hereafter acquire against the Company that arise from
the existence, payment, performance or enforcement of the Company's obligations
under the Transferred Notes and the Agreement or such Guarantor's obligations
under its Parent Guarantee or Springing Guarantee, as the case may be, and the
Agreement, including, without
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limitation, any right of subrogation, reimbursement, exoneration,
indemnification, and any right to participate in any claim or remedy of any
Holder of Transferred Notes against the Company, whether or not such claim,
remedy or right arises in equity, or under contract, statute or common law,
until the Agreement is discharged and all of the Transferred Notes are
discharged and paid in full. If any amount shall be paid to a Guarantor in
violation of the preceding sentence and the Transferred Notes shall not have
been paid in full, such amount shall have been deemed to have been paid to such
Guarantor for the benefit of, and held in trust for the benefit of, the Holders
of the Transferred Notes, and shall forthwith be paid to the Holders of
Transferred Notes to be credited and applied upon the Transferred Notes, whether
matured or unmatured, in accordance with the terms of the Agreement and this
Annex A.
4. Notation Not Required. Neither the Company nor any Guarantor shall be
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required to make a notation on the Transferred Notes to reflect the Parent
Guarantee or any Springing Guarantee or any such release, termination or
discharge thereof.
5. Successors and Assigns of the Parent Guarantor and the Other
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Guarantors. All covenants and agreements in the Agreement or the terms of this
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Annex A by each Guarantor shall bind its respective successors and assigns,
whether so expressed or not.
6. Execution and Delivery of Note Guarantees. Concurrently with the
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execution and delivery of the instrument required to be delivered under Section
7.11(b) of the Agreement, the Company shall deliver to the Holders of
Transferred Notes an opinion of counsel (which counsel shall be reasonably
satisfactory to the Majority Transferred Note Holders) in form and substance
reasonably satisfactory to the Majority Transferred Note Holders to the effect
that such instrument has been duly authorized, executed and delivered by the
relevant Significant Subsidiary Guarantor and that, subject to the applicable
bankruptcy, insolvency, fraudulent transfer, fraudulent conveyance,
reorganization, moratorium and other laws now or hereafter in effect affecting
creditors' rights or remedies generally and the general principles of equity
(including standards of materiality, good faith, fair dealing and
reasonableness), whether considered in a proceeding at law or at equity such
instrument is a valid and binding agreement of such Significant Subsidiary
Guarantor, enforceable against such Significant Subsidiary Guarantor in
accordance with its terms.
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