Exhibit 4.1
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WATTS INDUSTRIES, INC.
$125,000,000 Senior Notes
$50,000,000 4.87% Senior Notes, Series A, due May 15, 2010
$75,000,000 5.47% Senior Notes, Series B, due May 15, 2013
_____________________
NOTE PURCHASE AGREEMENT
_____________________
Dated as of May 15, 2003
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SERIES A PPN: 942749 A* 3
SERIES B PPN: 942749 A@ 1
TABLE OF CONTENTS
Section Page
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1. AUTHORIZATION OF NOTES...................................................1
2. SALE AND PURCHASE OF NOTES...............................................1
3. CLOSING..................................................................2
4. CONDITIONS TO CLOSING....................................................2
4.1. Representations and Warranties.....................................2
4.2. Performance; No Default............................................2
4.3. Compliance Certificates............................................3
4.4. Opinions of Counsel................................................3
4.5. Purchase Permitted By Applicable Law, etc..........................3
4.6. Sale of Other Notes................................................3
4.7. Payment of Special Counsel Fees....................................3
4.8. Private Placement Number...........................................4
4.9. Changes in Corporate Structure.....................................4
4.10. Proceedings and Documents..........................................4
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................4
5.1. Organization; Power and Authority..................................4
5.2. Authorization, etc.................................................4
5.3. Disclosure.........................................................5
5.4. Organization and Ownership of Shares of Subsidiaries; Affiliates...5
5.5. Financial Statements...............................................6
5.6. Compliance with Laws, Other Instruments, etc.......................6
5.7. Governmental Authorizations, etc...................................6
5.8. Litigation; Observance of Agreements, Statutes and Orders..........7
5.9. Taxes..............................................................7
5.10. Title to Property; Leases..........................................7
5.11. Licenses, Permits, etc.............................................8
5.12. Compliance with ERISA..............................................8
5.13. Private Offering by the Company....................................9
5.14. Use of Proceeds; Margin Regulations................................9
5.15. Existing Debt; Future Liens.......................................10
5.16. Foreign Assets Control Regulations, Anti-Terrorism Order, etc.....10
5.17. Status under Certain Statutes.....................................10
5.18. Environmental Matters.............................................10
6. REPRESENTATIONS OF THE PURCHASERS.......................................11
6.1. Purchase for Investment...........................................11
6.2. Source of Funds...................................................11
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7. INFORMATION AS TO COMPANY...............................................13
7.1. Financial and Business Information................................13
7.2. Officer's Certificate.............................................15
7.3. Inspection........................................................16
8. PREPAYMENT OF THE NOTES.................................................17
8.1. No Scheduled Prepayments..........................................17
8.2. Optional Prepayments with Make-Whole Amount.......................17
8.3. Allocation of Partial Prepayments.................................17
8.4. Maturity; Surrender, etc..........................................17
8.5. Purchase of Notes.................................................18
8.6. Make-Whole Amount.................................................18
9. AFFIRMATIVE COVENANTS...................................................19
9.1. Compliance with Law...............................................19
9.2. Insurance.........................................................19
9.3. Maintenance of Properties.........................................20
9.4. Payment of Taxes and Claims.......................................20
9.5. Corporate Existence, etc..........................................20
10. NEGATIVE COVENANTS......................................................20
10.1. Fixed Charge Coverage Ratio.......................................21
10.2. Priority Debt.....................................................21
10.3. Liens.............................................................21
10.4. Sale of Assets....................................................22
10.5. Mergers, Consolidations, etc......................................23
10.6. Designation of Restricted and Unrestricted Subsidiaries...........24
10.7. Nature of Business................................................25
10.8. Transactions with Affiliates......................................25
11. EVENTS OF DEFAULT.......................................................25
12. REMEDIES ON DEFAULT, ETC................................................27
12.1. Acceleration......................................................27
12.2. Other Remedies....................................................28
12.3. Rescission........................................................28
12.4. No Waivers or Election of Remedies, Expenses, etc.................29
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES...........................29
13.1. Registration of Notes.............................................29
13.2. Transfer and Exchange of Notes....................................29
13.3. Replacement of Notes..............................................30
14. PAYMENTS ON NOTES.......................................................30
14.1. Place of Payment..................................................30
14.2. Home Office Payment...............................................30
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15. EXPENSES, ETC...........................................................31
15.1. Transaction Expenses..............................................31
15.2. Survival..........................................................31
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT............31
17. AMENDMENT AND WAIVER....................................................32
17.1. Requirements......................................................32
17.2. Solicitation of Holders of Notes..................................32
17.3. Binding Effect, etc...............................................32
17.4. Notes held by Company, etc........................................33
18. NOTICES.................................................................33
19. REPRODUCTION OF DOCUMENTS...............................................33
20. CONFIDENTIAL INFORMATION................................................34
21. SUBSTITUTION OF PURCHASER...............................................35
22. MISCELLANEOUS...........................................................35
22.1. Successors and Assigns............................................35
22.2. Payments Due on Non-Business Days.................................35
22.3. Severability......................................................35
22.4. Construction......................................................35
22.5. Counterparts......................................................36
22.6. Governing Law.....................................................36
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SCHEDULE A -- Information Relating to Purchasers
SCHEDULE B -- Defined Terms
SCHEDULE B-1 -- Existing Investments
SCHEDULE 4.9 -- Changes in Corporate Structure
SCHEDULE 5.3 -- Disclosure
SCHEDULE 5.4 -- Subsidiaries; Affiliates
SCHEDULE 5.5 -- Financial Statements
SCHEDULE 5.11 -- Licenses, Permits, etc.
SCHEDULE 5.14 -- Use of Proceeds
SCHEDULE 5.15 -- Existing Debt
SCHEDULE 10.3 -- Liens
EXHIBIT 1(a) -- Form of Series A Senior Note
EXHIBIT 1(b) -- Form of Series B Senior Note
EXHIBIT 4.4(a) -- Form of Opinion of Counsel for the Company
EXHIBIT 4.4(b) -- Form of Opinion of Special Counsel for the Purchasers
EXHIBIT B-1 -- Form of Subsidiary Guaranty
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WATTS INDUSTRIES, INC.
815 Chestnut Street
North Andover, MA 01845
(978) 688-1811
Fax: (978) 794-1848
$125,000,000 Senior Notes
$50,000,000 4.87% Senior Notes, Series A, due May 15, 2010
$75,000,000 5.47% Senior Notes, Series B, due May 15, 2013
Dated as of May 15, 2003
TO EACH OF THE PURCHASERS LISTED IN
THE ATTACHED SCHEDULE A:
Ladies and Gentlemen:
WATTS INDUSTRIES, INC., a Delaware corporation (the "Company"),
agrees with you as follows:
1. AUTHORIZATION OF NOTES.
The Company has authorized the issue and sale of $125,000,000
aggregate principal amount of its Senior Notes consisting of $50,000,000
aggregate principal amount of its 4.87% Senior Notes, Series A, due May 15, 2010
(the "Series A Notes") and $75,000,000 aggregate principal amount of its 5.47%
Senior Notes, Series B, due May 15, 2013 (the "Series B Notes" and, collectively
with the Series A Notes the "Notes", such term to include any such notes issued
in substitution therefor pursuant to Section 13 of this Agreement). The Notes
shall be substantially in the forms set out in Exhibits 1(a) and 1(b), with such
changes therefrom, if any, as may be approved by you and the Company. Certain
capitalized terms used in this Agreement are defined in Schedule B; references
to a "Schedule" or an "Exhibit" are, unless otherwise specified, to a Schedule
or an Exhibit attached to this Agreement.
2. SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this Agreement, the Company
will issue and sell to you and each of the other purchasers named in Schedule A
(the "Other Purchasers"), and you and the Other Purchasers will purchase from
the Company, at the Closing provided for in Section 3, Notes in the principal
amount and series specified opposite your names in Schedule A at the purchase
price of 100% of the principal amount thereof. Your obligation hereunder and the
obligations of the Other Purchasers are several and not joint obligations and
you shall have no liability to any Person for the performance or non-performance
by any Other Purchaser hereunder.
3. CLOSING.
The sale and purchase of the Notes to be purchased by you and the
Other Purchasers shall occur at the offices of Gardner Carton & Douglas LLC, 191
N. Wacker Drive, Suite 3700, Chicago, Illinois 60606 at 9:00 a.m., Chicago time,
at a closing (the "Closing") on May 15, 2003 or on such other Business Day
thereafter on or prior to May 30, 2003 as may be agreed upon by the Company and
you and the Other Purchasers. At the Closing the Company will deliver to you the
Notes to be purchased by you in the form of a single Note (or such greater
number of Notes in denominations of at least $100,000 as you may request) dated
the date of the Closing and registered in your name (or in the name of your
nominee), against delivery by you to the Company or its order of immediately
available funds in the amount of the purchase price therefor by wire transfer of
immediately available funds for the account of the Company to account number
9429158549 at Fleet National Bank, 100 Federal Street, Boston, MA 02110, ABA No.
011-000-138. If at the Closing the Company fails to tender such Notes to you as
provided above in this Section 3, or any of the conditions specified in Section
4 shall not have been fulfilled to your satisfaction, you shall, at your
election, be relieved of all further obligations under this Agreement, without
thereby waiving any rights you may have by reason of such failure or such
nonfulfillment.
4. CONDITIONS TO CLOSING.
Your obligation to purchase and pay for the Notes to be sold to you
at the Closing is subject to the fulfillment to your satisfaction, prior to or
at the Closing, of the following conditions:
4.1. Representations and Warranties.
The representations and warranties of the Company in this Agreement
shall be correct when made and at the time of the Closing.
4.2. Performance; No Default.
The Company shall have performed and complied with all agreements
and conditions contained in this Agreement required to be performed or complied
with by it prior to or at the Closing and after giving effect to the issue and
sale of the Notes (and the application of the proceeds thereof as contemplated
by Section 5.14) no Default or Event of Default shall have occurred and be
continuing. Neither the Company nor any Subsidiary shall have entered into any
transaction since the date of the Memorandum that would have been prohibited by
Section 10 had such Section applied since such date.
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4.3. Compliance Certificates.
(a) Officer's Certificate. The Company shall have delivered to you
an Officer's Certificate, dated the date of the Closing, certifying that
the conditions specified in Sections 4.1, 4.2 and 4.9 have been fulfilled.
(b) Secretary's Certificate. The Company shall have delivered to you
a certificate certifying as to the resolutions attached thereto and other
corporate proceedings relating to the authorization, execution and
delivery of the Notes and the Agreement.
4.4. Opinions of Counsel.
You shall have received opinions in form and substance satisfactory
to you, dated the date of the Closing (a) from Goodwin Procter LLP, special
counsel to the Company, in the form set forth in Exhibit 4.4(a) (and the Company
instructs its counsel to deliver such opinion to you) and (b) from Gardner
Carton & Douglas LLC, your special counsel in connection with such transactions,
substantially in the form set forth in Exhibit 4.4(b) and covering such other
matters incident to such transactions as you may reasonably request.
4.5. Purchase Permitted By Applicable Law, etc.
On the date of the Closing your purchase of Notes shall (i) be
permitted by the laws and regulations of each jurisdiction to which you are
subject, without recourse to provisions (such as Section 1405(a)(8) of the New
York Insurance Law) permitting limited investments by insurance companies
without restriction as to the character of the particular investment, (ii) not
violate any applicable law or regulation (including, without limitation,
Regulation U, T or X of the Board of Governors of the Federal Reserve System)
and (iii) not subject you to any tax, penalty or liability under or pursuant to
any applicable law or regulation, which law or regulation was not in effect on
the date hereof. If requested by you, you shall have received an Officer's
Certificate certifying as to such matters of fact as you may reasonably specify
to enable you to determine whether such purchase is so permitted.
4.6. Sale of Other Notes.
Contemporaneously with the Closing the Company shall sell to the
Other Purchasers and the Other Purchasers shall purchase the Notes to be
purchased by them at the Closing as specified in Schedule A.
4.7. Payment of Special Counsel Fees.
Without limiting the provisions of Section 15.1, the Company shall
have paid on or before the Closing the fees, charges and disbursements of your
special counsel referred to in Section 4.4, to the extent reflected in a
statement of such counsel rendered to the Company at least one Business Day
prior to the Closing.
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4.8. Private Placement Number.
A Private Placement Number issued by Standard & Poor's CUSIP Service
Bureau (in cooperation with the Securities Valuation Office of the National
Association of Insurance Commissioners) shall have been obtained by Gardner
Carton & Douglas LLC for each series of the Notes.
4.9. Changes in Corporate Structure.
Except as specified in Schedule 4.9, the Company shall not have
changed its jurisdiction of incorporation or been a party to any merger or
consolidation and shall not have succeeded to all or any substantial part of the
liabilities of any other entity, at any time following the date of the most
recent financial statements referred to in Schedule 5.5.
4.10. Proceedings and Documents.
All corporate and other proceedings in connection with the
transactions contemplated by this Agreement and all documents and instruments
incident to such transactions shall be satisfactory to you and your special
counsel, and you and your special counsel shall have received all such
counterpart originals or certified or other copies of such documents as you or
they may reasonably request.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to you that:
5.1. Organization; Power and Authority.
The Company is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation, and is duly
qualified as a foreign corporation and is in good standing in each jurisdiction
in which such qualification is required by law, other than those jurisdictions
as to which the failure to be so qualified or in good standing would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. The Company has the corporate power and authority to own or hold
under lease the properties it purports to own or hold under lease, as described
in the Memorandum, to transact the business it transacts and proposes to
transact as described in the Memorandum, to execute and deliver this Agreement
and the Notes and to perform the provisions hereof and thereof.
5.2. Authorization, etc.
This Agreement and the Notes have been duly authorized by all
necessary corporate action on the part of the Company, and this Agreement
constitutes, and upon execution and delivery thereof each Note will constitute,
a legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as such enforceability may be
limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally and
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(ii) general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
5.3. Disclosure.
The Company, through its agent, Banc of America Securities LLC, has
delivered to you and each Other Purchaser a copy of a Confidential Private
Placement Memorandum, dated April 2003, which includes the Company's Annual
Report on Form 10-K for the year ended December 31, 2002 (the "Form 10-K" and,
together with the Confidential Private Placement Memorandum, the "Memorandum"),
relating to the transactions contemplated hereby. The Memorandum fairly
describes, in all material respects, the general nature of the business and
principal properties of the Company and its Subsidiaries. Except as disclosed in
Schedule 5.3, this Agreement, the Memorandum, the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 2003 (the "Form 10-Q"), the documents,
certificates or other writings delivered to you by or on behalf of the Company
in connection with the transactions contemplated hereby and the financial
statements listed in Schedule 5.5, taken as a whole, do not contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein not misleading in light of the circumstances under
which they were made. Except as disclosed in the Memorandum and the Form 10-Q or
as expressly described in Schedule 5.3, or in one of the documents, certificates
or other writings identified therein, or in the financial statements listed in
Schedule 5.5, since December 31, 2002, there has been no change in the financial
condition, operations, business or properties of the Company or any Subsidiary
except changes that individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect. There is no fact known to the
Company that would reasonably be expected to have a Material Adverse Effect that
has not been set forth herein or in the Memorandum or the Form 10-Q or in the
other documents, certificates and other writings delivered to you by or on
behalf of the Company specifically for use in connection with the transactions
contemplated hereby.
5.4. Organization and Ownership of Shares of Subsidiaries; Affiliates.
(a) Schedule 5.4 contains (except as noted therein) complete and
correct lists of: (i) the Company's Subsidiaries, showing, as to each
Subsidiary, the correct name thereof, the jurisdiction of its
organization, whether such Subsidiary is a Restricted Subsidiary and the
percentage of shares of each class of its capital stock or similar equity
interests outstanding owned by the Company and each other Subsidiary, (ii)
the Company's Affiliates, other than Subsidiaries, and (iii) the Company's
directors and senior officers.
(b) All of the outstanding shares of capital stock or similar equity
interests of each Subsidiary shown in Schedule 5.4 as being owned by the
Company and its Subsidiaries have been validly issued, are fully paid and
nonassessable and are owned by the Company or another Subsidiary free and
clear of any Lien (except as otherwise disclosed in Schedule 5.4).
(c) Each Subsidiary identified in Schedule 5.4 is a corporation or
other legal entity duly organized, validly existing and in good standing
under the laws of its
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jurisdiction of organization, and is duly qualified as a foreign
corporation or other legal entity and is in good standing in each
jurisdiction in which such qualification is required by law, other than
those jurisdictions as to which the failure to be so qualified or in good
standing would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Each such Subsidiary has the
corporate or other power and authority to own or hold under lease the
properties it purports to own or hold under lease and to transact the
business it transacts and proposes to transact.
(d) No Subsidiary is a party to, or otherwise subject to, any legal
restriction or any agreement (other than this Agreement, the agreements
listed on Schedule 5.4 and customary limitations imposed by corporate or
limited partnership law statutes) restricting the ability of such
Subsidiary to pay dividends out of profits or make any other similar
distributions of profits to the Company or any of its Subsidiaries that
owns outstanding shares of capital stock or similar equity interests of
such Subsidiary.
5.5. Financial Statements.
The Company has delivered to you and each Other Purchaser copies of
the financial statements of the Company and its Subsidiaries listed on Schedule
5.5. All of said financial statements (including in each case the related
schedules and notes) fairly present in all material respects the consolidated
financial position of the Company and its Subsidiaries as of the respective
dates specified in such Schedule and the consolidated results of their
operations and cash flows for the respective periods so specified and have been
prepared in accordance with GAAP consistently applied throughout the periods
involved except as set forth in the notes thereto (subject, in the case of any
interim financial statements, to normal year-end adjustments).
5.6. Compliance with Laws, Other Instruments, etc.
The execution, delivery and performance by the Company of this
Agreement and the Notes will not (i) contravene, result in any breach of, or
constitute a default under, or result in the creation of any Lien in respect of
any property of the Company or any Subsidiary under, any indenture, mortgage,
deed of trust, loan, purchase or credit agreement, lease, corporate charter or
by-laws, or any other agreement or instrument to which the Company or any
Subsidiary is bound or by which the Company or any Subsidiary or any of their
respective properties may be bound or affected, (ii) conflict with or result in
a breach of any of the terms, conditions or provisions of any order, judgment,
decree, or ruling of any court, arbitrator or Governmental Authority applicable
to the Company or any Subsidiary or (iii) violate any provision of any statute
or other rule or regulation of any Governmental Authority, including, without
limitation, the USA Patriot Act, applicable to the Company or any Subsidiary.
5.7. Governmental Authorizations, etc.
No consent, approval or authorization of, or registration, filing or
declaration with, any Governmental Authority is required in connection with the
execution, delivery or performance by the Company of this Agreement or the
Notes.
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5.8. Litigation; Observance of Agreements, Statutes and Orders.
(a) Except as disclosed under the caption "Business-Product
Liability, Environmental and Other Litigation Matters" in the Form 10-K or
in the Form 10-Q, there are no actions, suits or proceedings pending or,
to the knowledge of the Company, threatened against or affecting the
Company or any Subsidiary or any property of the Company or any Subsidiary
in any court or before any arbitrator of any kind or before or by any
Governmental Authority that, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect.
(b) Except as disclosed under the caption "Business-Product
Liability, Environmental and Other Litigation Matters" in the Form 10-K or
in the Form 10-Q, neither the Company nor any Subsidiary is in default
under any term of any agreement or instrument to which it is a party or by
which it is bound, or any order, judgment, decree or ruling of any court,
arbitrator or Governmental Authority or is in violation of any applicable
law, ordinance, rule or regulation (including Environmental Laws and the
USA Patriot Act) of any Governmental Authority, which default or
violation, individually or in the aggregate, would reasonably be expected
to have a Material Adverse Effect.
5.9. Taxes.
The Company and its consolidated Subsidiaries have filed all tax
returns that are required to have been filed in any jurisdiction, and have paid
all taxes shown to be due and payable on such returns and all other taxes and
assessments levied upon them or their properties, assets, income or franchises,
to the extent such taxes and assessments have become due and payable and before
they have become delinquent, except for the filing of any tax returns of which
the failure to file, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect and except for the payment of any
taxes and assessments (i) the amount of which is not individually or in the
aggregate Material or (ii) the amount, applicability or validity of which is
currently being contested in good faith by appropriate proceedings and with
respect to which the Company or a consolidated Subsidiary, as the case may be,
has established adequate reserves in accordance with GAAP. The Company knows of
no basis for any other tax or assessment that would reasonably be expected to
have a Material Adverse Effect. The charges, accruals and reserves on the books
of the Company and its consolidated Subsidiaries in respect of Federal, state or
other taxes for all fiscal periods are adequate. The Federal income tax
liabilities of the Company and its consolidated Subsidiaries have been
determined by the Internal Revenue Service and paid for all fiscal years up to
and including the fiscal year ended June 30, 1999.
5.10. Title to Property; Leases.
The Company and its Subsidiaries have good and sufficient title to
their respective properties that individually or in the aggregate are Material,
including all such properties reflected in the most recent audited balance sheet
referred to in Section 5.5 or purported to have been acquired by the Company or
any Subsidiary after said date (except as sold or otherwise disposed of in the
ordinary course of business), in each case free and clear of
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Liens prohibited by this Agreement. All leases that individually or in the
aggregate are Material are valid and subsisting and are in full force and
effect in all material respects.
5.11. Licenses, Permits, etc.
Except as disclosed in Schedule 5.11,
(a) the Company and its Subsidiaries own or possess all licenses,
permits, franchises, authorizations, patents, copyrights, service marks,
trademarks and trade names, or rights thereto, that individually or in the
aggregate are Material, without known conflict with the rights of others;
(b) to the best knowledge of the Company, no product of the Company
infringes in any material respect any license, permit, franchise,
authorization, patent, copyright, service mark, trademark, trade name or
other right owned by any other Person; and
(c) to the best knowledge of the Company, there is no Material
violation by any Person of any right of the Company or any of its
Subsidiaries with respect to any patent, copyright, service mark,
trademark, trade name or other right owned or used by the Company or any
of its Subsidiaries.
5.12. Compliance with ERISA.
(a) The Company and each ERISA Affiliate have operated and
administered each Plan in compliance with all applicable laws except for
such instances of noncompliance as have not resulted in and would not
reasonably be expected to result in a Material Adverse Effect. Neither the
Company nor any ERISA Affiliate has incurred any liability pursuant to
Title I or IV of ERISA or the penalty or excise tax provisions of the Code
relating to employee benefit plans (as defined in Section 3 of ERISA), and
no event, transaction or condition has occurred or exists that would
reasonably be expected to result in the incurrence of any such liability
by the Company or any ERISA Affiliate, or in the imposition of any Lien on
any of the rights, properties or assets of the Company or any ERISA
Affiliate, in either case pursuant to Title I or IV of ERISA or to such
penalty or excise tax provisions or to Section 401(a)(29) or 412 of the
Code, other than such liabilities or Liens as would not be individually or
in the aggregate Material.
(b) The amount (determined under GAAP) by which the present value of
the aggregate benefit liabilities under each of the Plans (other than
Multiemployer Plans), determined as of the end of such Plan's most
recently ended plan year on the basis of the actuarial assumptions
specified for funding purposes in such Plan's most recent actuarial
valuation report, exceeded the aggregate current value of the assets of
such Plan allocable to such benefit liabilities is disclosed in the notes
to financial statements accompanying the most recent audited financial
statements of the Company listed on Schedule 5.5. The term "benefit
liabilities" has the meaning specified in section 4001 of ERISA and the
terms "current value" and "present value" have the meaning specified in
section 3 of ERISA.
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(c) The Company and its ERISA Affiliates have not incurred
withdrawal liabilities (and are not subject to contingent withdrawal
liabilities) under section 4201 or 4204 of ERISA in respect of
Multiemployer Plans that individually or in the aggregate are Material.
(d) The expected postretirement benefit obligation (determined as of
the last day of the Company's most recently ended fiscal year in
accordance with Financial Accounting Standards Board Statement No. 106,
without regard to liabilities attributable to continuation coverage
mandated by section 4980B of the Code) of the Company and its Subsidiaries
is not Material.
(e) The execution and delivery of this Agreement and the issuance
and sale of the Notes hereunder will not involve any transaction that is
subject to the prohibitions of section 406 of ERISA or in connection with
which a tax could be imposed pursuant to section 4975(c)(1)(A)-(D) of the
Code. The representation by the Company in the first sentence of this
Section 5.12(e) is made in reliance upon and subject to the accuracy of
your representation in Section 6.2 as to the sources of the funds used to
pay the purchase price of the Notes to be purchased by you.
5.13. Private Offering by the Company.
Neither the Company nor anyone acting on its behalf has offered the
Notes or any similar securities for sale to, or solicited any offer to buy any
of the same from, or otherwise approached or negotiated in respect thereof with,
any person other than you and the Other Purchasers and not more than 50 other
Institutional Investors, each of which has been offered the Notes at a private
sale for investment. Neither the Company nor anyone acting on its behalf has
taken, or will take, any action that would subject the issuance or sale of the
Notes to the registration requirements of Section 5 of the Securities Act.
5.14. Use of Proceeds; Margin Regulations.
The Company will apply the proceeds of the sale of the Notes to
refinance Debt of the Company as set forth in Schedule 5.14 and for general
corporate purposes. No part of the proceeds from the sale of the Notes will be
used, directly or indirectly, for the purpose of buying or carrying any margin
stock within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System (12 CFR 221), or for the purpose of buying or carrying or
trading in any securities under such circumstances as to involve the Company in
a violation of Regulation X of said Board (12 CFR 224) or to involve any broker
or dealer in a violation of Regulation T of said Board (12 CFR 220). Margin
stock does not constitute more than 1% of the value of the consolidated assets
of the Company and its Subsidiaries and the Company does not have any present
intention that margin stock will constitute more than 1% of the value of such
assets. As used in this Section, the terms "margin stock" and "purpose of buying
or carrying" shall have the meanings assigned to them in said Regulation U.
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5.15. Existing Debt; Future Liens.
(a) Except as described therein, Schedule 5.15 sets forth a complete
and correct list of all outstanding Debt of the Company and its
Subsidiaries as of March 31, 2003, since which date there has been no
Material change in the amounts, interest rates, sinking funds, installment
payments or maturities of the Debt of the Company or its Subsidiaries.
Neither the Company nor any Subsidiary is in default and no waiver of
default is currently in effect, in the payment of any principal or
interest on any Debt of the Company or such Subsidiary and no event or
condition exists with respect to any Debt of the Company or any Subsidiary
that would permit (or that with notice or the lapse of time, or both,
would permit) one or more Persons to cause such Debt to become due and
payable before its stated maturity or before its regularly scheduled dates
of payment.
(b) Except as disclosed in Schedule 5.15, neither the Company nor
any Subsidiary has agreed or consented to cause or permit in the future
(upon the happening of a contingency or otherwise) any of its property,
whether now owned or hereafter acquired, to be subject to a Lien not
permitted by Section 10.3.
5.16. Foreign Assets Control Regulations, Anti-Terrorism Order, etc.
Neither the sale of the Notes by the Company hereunder nor its use
of the proceeds thereof will violate (a) the Trading with the Enemy Act, as
amended, (b) any of the foreign assets control regulations of the United States
Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto or (c) to the knowledge of the
Company, the Anti-Terrorism Order. Without limiting the foregoing, neither the
Company nor any Subsidiary (i) is a blocked person described in Section 1 of the
Anti-Terrorism Order or (ii) engages in any dealings or transactions, or is
otherwise associated, with any such person.
5.17. Status under Certain Statutes.
Neither the Company nor any Subsidiary is subject to regulation
under the Investment Company Act of 1940, as amended, the Public Utility Holding
Company Act of 1935, as amended, the Interstate Commerce Act, as amended by the
ICC Termination Act, as amended, or the Federal Power Act, as amended.
5.18. Environmental Matters.
Except as disclosed under the caption "Business-Product Liability,
Environmental and Other Litigation Matters" in the Form 10-K or in the Form
10-Q, neither the Company nor any Subsidiary has knowledge of any claim or has
received any notice of any claim, and no proceeding has been instituted raising
any claim against the Company or any of its Subsidiaries or any of their
respective real properties now or formerly owned, leased or operated by any of
them or other assets, alleging any damage to the environment or violation of any
Environmental Laws, except, in each case, such as would not reasonably be
expected to result in a Material Adverse Effect. Except as disclosed in the Form
10-K or the Form 10-Q,
10
(a) neither the Company nor any Subsidiary has knowledge of any
facts which would give rise to any claim, public or private, of violation
of Environmental Laws or damage to the environment emanating from,
occurring on or in any way related to real properties now or formerly
owned, leased or operated by any of them or to other assets or their use,
except, in each case, such as would not reasonably be expected to result
in a Material Adverse Effect;
(b) neither the Company nor any of its Subsidiaries has stored any
Hazardous Materials on real properties now or formerly owned, leased or
operated by any of them or disposed of any Hazardous Materials in a manner
contrary to any Environmental Laws in each case in any manner that would
reasonably be expected to result in a Material Adverse Effect; and
(c) all buildings on all real properties now owned, leased or
operated by the Company or any of its Subsidiaries are in compliance with
applicable Environmental Laws, except where failure to comply would not
reasonably be expected to result in a Material Adverse Effect.
6. REPRESENTATIONS OF THE PURCHASERS.
6.1. Purchase for Investment.
You represent that you are purchasing the Notes for your own account
or for one or more separate accounts maintained by you or for the account of one
or more pension or trust funds and not with a view to the distribution thereof,
provided that the disposition of your or their property shall at all times be
within your or their control. You understand that the Notes have not been
registered under the Securities Act and may be resold only if registered
pursuant to the provisions of the Securities Act or if an exemption from
registration is available, except under circumstances where neither such
registration nor such an exemption is required by law, and that the Company is
not required to register the Notes.
6.2. Source of Funds.
You represent that at least one of the following statements is an
accurate representation as to each source of funds (a "Source") to be used by
you to pay the purchase price of the Notes to be purchased by you hereunder:
(a) the Source is an "insurance company general account" (as the
term is defined in the United States Department of Labor's Prohibited
Transaction Exemption ("PTE") 95-60) in respect of which the reserves and
liabilities (as defined by the annual statement for life insurance
companies approved by the National Association of Insurance Commissioners
(the "NAIC Annual Statement") for the general account contract(s) held by
or on behalf of any employee benefit plan together with the amount of the
reserves and liabilities for the general account contract(s) held by or on
behalf of any other employee benefit plans maintained by the same employer
(or affiliate thereof as defined in PTE 95-60) or by the same employee
organization in the general account do
11
not exceed 10% of the total reserves and liabilities of the general
account (exclusive of separate account liabilities) plus surplus as set
forth in the NAIC Annual Statement filed with such Purchaser's state of
domicile; or
(b) the Source is a separate account that is maintained solely in
connection with such Purchaser's fixed contractual obligations under which
the amounts payable, or credited, to any employee benefit plan (or its
related trust) that has any interest in such separate account (or to any
participant or beneficiary of such plan (including any annuitant)) are not
affected in any manner by the investment performance of the separate
account; or
(c) the Source is either (i) an insurance company pooled separate
account, within the meaning of PTE 90-1 (issued January 29, 1990), or (ii)
a bank collective investment fund, within the meaning of PTE 91-38 (issued
July 12, 1991) and, except as you have disclosed to the Company in writing
pursuant to this paragraph (c), no employee benefit plan or group of plans
maintained by the same employer or employee organization beneficially owns
more than 10% of all assets allocated to such pooled separate account or
collective investment fund; or
(d) the Source constitutes assets of an "investment fund" (within
the meaning of Part V of PTE 84-14 (the "QPAM Exemption")) managed by a
"qualified professional asset manager" or "QPAM" (within the meaning of
Part V of the QPAM Exemption), no employee benefit plan's assets that are
included in such investment fund, when combined with the assets of all
other employee benefit plans established or maintained by the same
employer or by an affiliate (within the meaning of Section V(c)(1) of the
QPAM Exemption) of such employer or by the same employee organization and
managed by such QPAM, exceed 20% of the total client assets managed by
such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption are
satisfied, neither the QPAM nor a person controlling or controlled by the
QPAM (applying the definition of "control" in Section V(e) of the QPAM
Exemption) owns a 5% or more interest in the Company and (i) the identity
of such QPAM and (ii) the names of all employee benefit plans whose assets
are included in such investment fund have been disclosed to the Company in
writing pursuant to this clause (d); or
(e) the Source constitutes assets of a "plan(s)" (within the meaning
of Section IV of PTE 96-23 (the "INHAM Exemption")) managed by an
"in-house asset manager" or "INHAM" (within the meaning of Part IV of the
INHAM exemption), the conditions of Part I(a), (g) and (h) of the INHAM
Exemption are satisfied, neither the INHAM nor a person controlling or
controlled by the INHAM (applying the definition of "control" in Section
IV(h) of the INHAM Exemption) owns a 5% or more interest in the Company
and (i) the identity of such INHAM and (ii) the name(s) of the employee
benefit plan(s) whose assets constitute the Source have been disclosed to
the Company in writing pursuant to this clause (e); or
(f) the Source is a governmental plan; or
12
(g) the Source is one or more employee benefit plans, or a separate
account or trust fund comprised of one or more employee benefit plans,
each of which has been identified to the Company in writing pursuant to
this paragraph (g); or
(h) the Source does not include assets of any employee benefit plan,
other than a plan exempt from the coverage of ERISA.
As used in this Section 6.2, the terms "employee benefit plan", "governmental
plan" and "separate account" shall have the respective meanings assigned to such
terms in Section 3 of ERISA.
7. INFORMATION AS TO COMPANY.
7.1. Financial and Business Information
The Company will deliver to each holder of Notes that is an
Institutional Investor:
(a) Quarterly Statements -- within 60 days after the end of each
quarterly fiscal period in each fiscal year of the Company (other than the
last quarterly fiscal period of each such fiscal year), duplicate copies
of,
(i) consolidated balance sheet of the Company and its
Subsidiaries as at the end of such quarter,
(ii) consolidated statements of income of the Company and its
Subsidiaries for such quarter and (in the case of the second and
third quarters) for the portion of the fiscal year ending with such
quarter, and
(iii) consolidated statements of cash flows of the Company and
its Subsidiaries for such quarter or (in the case of the second and
third quarters) for the portion of the fiscal year ending with such
quarter,
setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year, all in reasonable
detail, prepared in accordance with GAAP applicable to quarterly financial
statements generally, and certified by a Senior Financial Officer as
fairly presenting, in all material respects, the financial position of the
companies being reported on and their results of operations and cash
flows, subject to changes resulting from year-end adjustments, provided
that delivery within the time period specified above of copies of the
Company's Quarterly Report on Form 10-Q prepared in compliance with the
requirements therefor and filed with the Securities and Exchange
Commission shall be deemed to satisfy the requirements of this Section
7.1(a);
(b) Annual Statements -- within 105 days after the end of each
fiscal year of the Company, duplicate copies of,
(i) consolidated balance sheet of the Company and its
Subsidiaries, as at the end of such year, and
13
(ii) consolidated statements of income, changes in
shareholders' equity and cash flows of the Company and its
Subsidiaries, for such year,
setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail, prepared in accordance
with GAAP, and accompanied by an opinion of independent certified public
accountants of recognized national standing, which opinion shall state
that such financial statements present fairly, in all material respects,
the financial position of the companies being reported upon and their
results of operations and cash flows and have been prepared in conformity
with GAAP, and that the examination of such accountants in connection with
such financial statements has been made in accordance with generally
accepted auditing standards, and that such audit provides a reasonable
basis for such opinion in the circumstances, provided that the delivery
within the time period specified above of the Company's Annual Report on
Form 10-K for such fiscal year (together with the Company's annual report
to shareholders, if any, prepared pursuant to Rule 14a-3 under the
Exchange Act) prepared in accordance with the requirements therefor and
filed with the Securities and Exchange Commission shall be deemed to
satisfy the requirements of this Section 7.1(b);
(c) Unrestricted Subsidiaries -- if, at the time of delivery of any
financial statements pursuant to Section 7.1(a) or (b), Unrestricted
Subsidiaries account for more than 10% of (i) the consolidated total
assets of the Company and its Subsidiaries reflected in the balance sheet
included in such financial statements or (ii) the consolidated revenues of
the Company and its Subsidiaries reflected in the consolidated statement
of income included in such financial statements, an unaudited balance
sheet for all Unrestricted Subsidiaries taken as whole as at the end of
the fiscal period included in such financial statements and the related
unaudited statements of income, stockholders' equity and cash flows for
such Unrestricted Subsidiaries for such period, together with
consolidating statements reflecting all eliminations or adjustments
necessary to reconcile such group financial statements to the consolidated
financial statements of the Company and its Subsidiaries shall be
delivered together with the financial statements required pursuant to
Sections 7.1(a) and (b);
(d) SEC and Other Reports -- promptly upon their becoming available,
one copy of (i) each financial statement, report, notice or proxy
statement sent by the Company or any Restricted Subsidiary to public
securities holders generally, and (ii) each regular or periodic report,
each registration statement other than registration statements on Form S-8
(without exhibits except as expressly requested by such holder), and each
prospectus and all amendments thereto filed by the Company or any
Restricted Subsidiary with the Securities and Exchange Commission and of
all press releases and other statements made available generally by the
Company or any Restricted Subsidiary to the public concerning developments
that are Material;
(e) Notice of Default or Event of Default -- promptly, and in any
event within five Business Days after a Responsible Officer becoming aware
of the existence of any Default or Event of Default or that any Person has
given any notice or taken any action with respect to a claimed default
hereunder or that any Person has given notice or taken any action with
respect to a claimed default of the type referred to in Section 11(f), a
14
written notice specifying the nature and period of existence thereof and
what action the Company is taking or proposes to take with respect
thereto;
(f) ERISA Matters -- promptly, and in any event within five Business
Days after a Responsible Officer becoming aware of any of the following, a
written notice setting forth the nature thereof and the action, if any,
that the Company or an ERISA Affiliate proposes to take with respect
thereto:
(i) with respect to any Plan, any reportable event, as defined
in section 4043(b) of ERISA and the regulations thereunder, for
which notice thereof has not been waived pursuant to such
regulations as in effect on the date hereof; or
(ii) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of, proceedings under
section 4042 of ERISA for the termination of, or the appointment of
a trustee to administer, any Plan, or the receipt by the Company or
any ERISA Affiliate of a notice from a Multiemployer Plan that such
action has been taken by the PBGC with respect to such Multiemployer
Plan; or
(iii) any event, transaction or condition that would result in
the incurrence of any liability by the Company or any ERISA
Affiliate pursuant to Title I or IV of ERISA or the penalty or
excise tax provisions of the Code relating to employee benefit
plans, or in the imposition of any Lien on any of the rights,
properties or assets of the Company or any ERISA Affiliate pursuant
to Title I or IV of ERISA or such penalty or excise tax provisions,
if such liability or Lien, taken together with any other such
liabilities or Liens then existing, would reasonably be expected to
have a Material Adverse Effect;
(g) Notices from Governmental Authority -- promptly, and in any
event within 30 days of receipt thereof, copies of any notice to the
Company or any Subsidiary from any Federal or state Governmental Authority
relating to any order, ruling, statute or other law or regulation that
would reasonably be expected to have a Material Adverse Effect; and
(h) Requested Information -- with reasonable promptness, such other
data and information relating to the business, operations, affairs,
financial condition, assets or properties of the Company or any of its
Subsidiaries or relating to the ability of the Company to perform its
obligations hereunder and under the Notes as from time to time may be
reasonably requested by any such holder of Notes.
7.2. Officer's Certificate.
Each set of financial statements delivered to a holder of Notes
pursuant to Section 7.1(a) or (b) shall be accompanied by a certificate of a
Senior Financial Officer setting forth:
15
(a) Covenant Compliance -- the information (including detailed
calculations) required in order to establish whether the Company was in
compliance with the requirements of Section 10.1 through Section 10.8,
inclusive, during the quarterly or annual period covered by the statements
then being furnished (including with respect to each such Section, where
applicable, the calculations of the maximum or minimum amount, ratio or
percentage, as the case may be, permissible under the terms of such
Sections, and the calculation of the amount, ratio or percentage then in
existence); and
(b) Event of Default -- a statement that such officer has reviewed
the relevant terms hereof and has made, or caused to be made, under his or
her supervision, a review of the transactions and conditions of the
Company and its Subsidiaries from the beginning of the quarterly or annual
period covered by the statements then being furnished to the date of the
certificate and that such review shall not have disclosed the existence
during such period of any condition or event that constitutes a Default or
an Event of Default or, if any such condition or event existed or exists
(including any such event or condition resulting from the failure of the
Company or any Subsidiary to comply with any Environmental Law),
specifying the nature and period of existence thereof and what action the
Company shall have taken or proposes to take with respect thereto.
7.3. Inspection.
The Company will permit the representatives of each holder of Notes
that is an Institutional Investor:
(a) No Default -- if no Default or Event of Default then exists, at
the expense of such holder and upon reasonable prior notice to the
Company, to visit the principal executive office of the Company, to
discuss the affairs, finances and accounts of the Company and its
Subsidiaries with the Company's officers, and (with the consent of the
Company, which consent will not be unreasonably withheld) its independent
public accountants, and (with the consent of the Company, which consent
will not be unreasonably withheld) to visit the other offices and
properties of the Company and each Restricted Subsidiary, all at such
reasonable times and as often as may be reasonably requested in writing;
and
(b) Default -- if a Default or Event of Default then exists, at the
expense of the Company, to visit and inspect any of the offices or
properties of the Company or any Subsidiary, to examine all their
respective books of account, records, reports and other papers, to make
copies and extracts therefrom, and to discuss their respective affairs,
finances, and accounts with their respective officers and independent
public accountants (and by this provision the Company authorizes said
accountants to discuss the affairs, finances and accounts of the Company
and its Subsidiaries), all at such times and as often as may be requested.
16
8. PREPAYMENT OF THE NOTES.
8.1. No Scheduled Prepayments.
No regularly scheduled prepayments are due on the Notes prior to
their stated maturity.
8.2. Optional Prepayments with Make-Whole Amount .
The Company may, at its option, upon notice as provided below,
prepay at any time all, or from time to time any part of, Notes in an amount not
less than $1,000,000 in the aggregate in the case of a partial prepayment, at
100% of the principal amount so prepaid, plus the Make-Whole Amount determined
for the prepayment date with respect to such principal amount. The Company will
give each holder of Notes written notice of each optional prepayment under this
Section 8.2 not less than 30 days and not more than 60 days prior to the date
fixed for such prepayment. Each such notice shall specify such date, the
aggregate principal amount of the Notes to be prepaid on such date, the
principal amount of each Note held by such holder to be prepaid (determined in
accordance with Section 8.3), and the interest to be paid on the prepayment date
with respect to such principal amount being prepaid, and shall be accompanied by
a certificate of a Senior Financial Officer as to the estimated Make-Whole
Amount due in connection with such prepayment (calculated as if the date of such
notice were the date of the prepayment), setting forth the details of such
computation. Two Business Days prior to such prepayment, the Company shall
deliver to each holder of Notes a certificate of a Senior Financial Officer
specifying the calculation of such Make-Whole Amount as of the specified
prepayment date.
8.3. Allocation of Partial Prepayments.
In the case of each partial prepayment of Notes of a series pursuant
to this Section 8, the principal amount of the Notes of the series to be prepaid
shall be allocated among all of the Notes of such series at the time outstanding
in proportion, as nearly as practicable, to the respective unpaid principal
amounts thereof not theretofore called for prepayment.
8.4. Maturity; Surrender, etc.
In the case of each prepayment of Notes pursuant to this Section 8,
the principal amount of each Note to be prepaid shall mature and become due and
payable on the date fixed for such prepayment, together with interest on such
principal amount accrued to such date and the applicable Make-Whole Amount, if
any. From and after such date, unless the Company shall fail to pay such
principal amount when so due and payable, together with the interest and
Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall
cease to accrue. Any Note paid or prepaid in full shall be surrendered to the
Company and canceled and shall not be reissued, and no Note shall be issued in
lieu of any prepaid principal amount of any Note.
17
8.5. Purchase of Notes.
The Company will not and will not permit any Affiliate to purchase,
redeem, prepay or otherwise acquire, directly or indirectly, any of the
outstanding Notes except upon the payment or prepayment of the Notes in
accordance with the terms of this Agreement and the Notes. The Company will
promptly cancel all Notes acquired by it or any Affiliate pursuant to any
payment, prepayment or purchase of Notes pursuant to any provision of this
Agreement and no Notes may be issued in substitution or exchange for any such
Notes.
8.6. Make-Whole Amount.
The term "Make-Whole Amount" means, with respect to any Note, an
amount equal to the excess, if any, of the Discounted Value of the Remaining
Scheduled Payments with respect to the Called Principal of such Note over the
amount of such Called Principal, provided that the Make-Whole Amount may in no
event be less than zero. For the purposes of determining the Make-Whole Amount,
the following terms have the following meanings:
"Called Principal" means, with respect to any Note, the principal of
such Note that is to be prepaid pursuant to Section 8.2 or has become or
is declared to be immediately due and payable pursuant to Section 12.1, as
the context requires.
"Discounted Value" means, with respect to the Called Principal of
any Note, the amount obtained by discounting all Remaining Scheduled
Payments with respect to such Called Principal from their respective
scheduled due dates to the Settlement Date with respect to such Called
Principal, in accordance with accepted financial practice and at a
discount factor (applied on the same periodic basis as that on which
interest on the Notes is payable) equal to the Reinvestment Yield with
respect to such Called Principal.
"Reinvestment Yield" means, with respect to the Called Principal of
any Note, .50% over the yield to maturity implied by (i) the yields
reported, as of 10:00 A.M. (New York City time) on the second Business Day
preceding the Settlement Date with respect to such Called Principal, on
the display designated as the "PX1 Screen" on the Bloomberg Financial
Market Service (or such other display as may replace the PX1 Screen on
Bloomberg Financial Market Service) for actively traded U.S. Treasury
securities having a maturity equal to the Remaining Average Life of such
Called Principal as of such Settlement Date, or (ii) if such yields are
not reported as of such time or the yields reported as of such time are
not ascertainable, the Treasury Constant Maturity Series Yields reported,
for the latest day for which such yields have been so reported as of the
second Business Day preceding the Settlement Date with respect to such
Called Principal, in Federal Reserve Statistical Release H.15 (519) (or
any comparable successor publication) for actively traded U.S. Treasury
securities having a constant maturity equal to the Remaining Average Life
of such Called Principal as of such Settlement Date. Such implied yield
will be determined, if necessary, by (a) converting U.S. Treasury bill
quotations to bond-equivalent yields in accordance with accepted financial
practice and (b) interpolating linearly between (1) the actively traded
U.S. Treasury security with the maturity closest to and greater than the
Remaining
18
Average Life and (2) the actively traded U.S. Treasury security with the
maturity closest to and less than the Remaining Average Life.
"Remaining Average Life" means, with respect to any Called
Principal, the number of years (calculated to the nearest one-twelfth
year) obtained by dividing (i) such Called Principal into (ii) the sum of
the products obtained by multiplying (a) the principal component of each
Remaining Scheduled Payment with respect to such Called Principal by (b)
the number of years (calculated to the nearest one-twelfth year) that will
elapse between the Settlement Date with respect to such Called Principal
and the scheduled due date of such Remaining Scheduled Payment.
"Remaining Scheduled Payments" means, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon that would be due after the Settlement Date with respect to such
Called Principal if no payment of such Called Principal were made prior to
its scheduled due date, provided that if such Settlement Date is not a
date on which interest payments are due to be made under the terms of the
Notes, then the amount of the next succeeding scheduled interest payment
will be reduced by the amount of interest accrued to such Settlement Date
and required to be paid on such Settlement Date pursuant to Section 8.2 or
12.1.
"Settlement Date" means, with respect to the Called Principal of any
Note, the date on which such Called Principal is to be prepaid pursuant to
Section 8.2 or has become or is declared to be immediately due and payable
pursuant to Section 12.1, as the context requires.
9. AFFIRMATIVE COVENANTS.
The Company covenants that so long as any of the Notes are
outstanding:
9.1. Compliance with Law.
The Company will, and will cause each Subsidiary to, comply with all
laws, ordinances or governmental rules or regulations to which each of them is
subject, including, without limitation, Environmental Laws, and will obtain and
maintain in effect all licenses, certificates, permits, franchises and other
governmental authorizations necessary to the ownership of their respective
properties or to the conduct of their respective businesses, in each case to the
extent necessary to ensure that non-compliance with such laws, ordinances or
governmental rules or regulations or failures to obtain or maintain in effect
such licenses, certificates, permits, franchises and other governmental
authorizations would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
9.2. Insurance.
The Company will, and will cause each Restricted Subsidiary to,
maintain, with financially sound and reputable insurers, insurance with respect
to their respective properties and businesses against such casualties and
contingencies, of such types, on such terms and in such amounts (including
deductibles, co-insurance and self-insurance, if adequate reserves are
19
maintained with respect thereto) as is customary in the case of entities of
established reputations engaged in the same or a similar business and similarly
situated.
9.3. Maintenance of Properties.
The Company will and will cause each Restricted Subsidiary to
maintain and keep, or cause to be maintained and kept, their respective
properties in good repair, working order and condition (other than ordinary wear
and tear), so that the business carried on in connection therewith may be
properly conducted at all times, provided that this Section shall not prevent
the Company or any Restricted Subsidiary from discontinuing the operation and
the maintenance of any of its properties if such discontinuance is desirable in
the conduct of its business and the Company has concluded that such
discontinuance would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
9.4. Payment of Taxes and Claims.
The Company will, and will cause each Subsidiary to, file all income
tax or similar tax returns required to be filed in any jurisdiction and to pay
and discharge all taxes shown to be due and payable on such returns and all
other taxes, assessments, governmental charges, or levies imposed on them or any
of their properties, assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they have become delinquent
and all claims for which sums have become due and payable that have or might
become a Lien on properties or assets of the Company or any Subsidiary, provided
that neither the Company nor any Subsidiary need pay any such tax or assessment
or claims if (i) the amount, applicability or validity thereof is contested by
the Company or such Subsidiary on a timely basis in good faith and in
appropriate proceedings, and the Company or a Subsidiary has established
adequate reserves therefor in accordance with GAAP on the books of the Company
or such Subsidiary or (ii) the nonpayment of all such taxes and assessments in
the aggregate would not reasonably be expected to have a Material Adverse
Effect.
9.5. Corporate Existence, etc.
The Company will at all times preserve and keep in full force and
effect its corporate existence. Subject to Sections 10.4 and 10.5, the Company
will at all times preserve and keep in full force and effect the corporate
existence of each of its Restricted Subsidiaries (unless merged into the Company
or a Restricted Subsidiary) and all rights and franchises of the Company and its
Restricted Subsidiaries unless, in the good faith judgment of the Company, the
termination of or failure to preserve and keep in full force and effect such
corporate existence, right or franchise would not, individually or in the
aggregate, have a Material Adverse Effect.
10. NEGATIVE COVENANTS.
The Company covenants that so long as any of the Notes are
outstanding:
20
10.1. Fixed Charge Coverage Ratio.
The Company will not permit the ratio of Consolidated Income
Available for Fixed Charges to Consolidated Fixed Charges (in each case for the
Company's then most recently completed four fiscal quarters) to be less than
2.00 to 1.00 at any time.
10.2. Priority Debt.
The Company will not permit Priority Debt to exceed 5% of Adjusted
Consolidated Net Worth at any time.
10.3. Liens.
The Company will not, and will not permit any Restricted Subsidiary
to, permit to exist, create, assume or incur, directly or indirectly, any Lien
on its properties or assets, whether now owned or hereafter acquired (unless it
makes, or causes to be made, effective provision whereby the Notes will be
equally and ratably secured with any and all other obligations thereby secured,
such security to be pursuant to an agreement or agreements reasonably
satisfactory to the Required Holders), except:
(a) Liens for taxes, assessments or governmental charges not then
due and delinquent or the nonpayment of which is permitted by Section 9.4;
(b) Liens incidental to the conduct of business or the ownership of
properties and assets (including landlords', lessors', carriers',
warehousemen's, mechanics', materialmen's and other similar Liens) and
Liens to secure the performance of bids, tenders, leases or trade
contracts, or to secure statutory obligations (including obligations under
workers compensation, unemployment insurance and other social security
legislation), surety or appeal bonds or other Liens of like general nature
incurred in the ordinary course of business and not in connection with the
borrowing of money;
(c) any attachment or judgment Lien, unless the judgment it secures
has not, within 60 days after the entry thereof, been discharged or
execution thereof stayed pending appeal, or has not been discharged within
60 days after the expiration of any such stay;
(d) Liens securing Debt of a Restricted Subsidiary owed to the
Company or to another Restricted Subsidiary;
(e) Liens securing Debt existing on property or assets of the
Company or any Restricted Subsidiary as of the date of this Agreement that
are described in Schedule 10.3;
(f) encumbrances in the nature of leases, subleases, zoning
restrictions, easements, rights of way, minor survey exceptions and other
rights and restrictions of record on the use of real property and defects
in title arising or incurred in the ordinary course of business, which,
individually and in the aggregate, do not materially impair the use of the
property or assets subject thereto by the Company or such Restricted
21
Subsidiary in their business or which relate only to assets that in the
aggregate are not Material;
(g) Liens (i) existing on property at the time of its acquisition by
the Company or a Restricted Subsidiary and not created in contemplation
thereof, whether or not the Debt secured by such Lien is assumed by the
Company or a Restricted Subsidiary; or (ii) on property created
contemporaneously with its acquisition or within 365 days of the
acquisition or completion of construction or improvements thereof to
secure or provide for all or a portion of the purchase price or cost of
construction or improvements of such property after the date of Closing;
or (iii) existing on property of a Person at the time such Person is
merged or consolidated with, or becomes a Restricted Subsidiary of, or
substantially all of its assets are acquired by, the Company or a
Restricted Subsidiary and not created in contemplation thereof; provided
that such Liens do not extend to additional property of the Company or any
Restricted Subsidiary (other than property that is an improvement to or is
acquired for specific use in connection with the subject property) and
that the aggregate principal amount of Debt secured by each such Lien does
not exceed the lesser of cost of acquisition or construction or the fair
market value (determined in good faith by one or more officers of the
Company to whom authority to enter into the transaction has been delegated
by the board of directors of the Company) of the property subject thereto;
(h) Liens resulting from extensions, renewals or replacements of Liens
permitted by paragraphs (e) and (g), provided that (i) there is no
increase in the principal amount or decrease in maturity of the Debt
secured thereby at the time of such extension, renewal or replacement,
(ii) any new Lien attaches only to the same property theretofore subject
to such earlier Lien and (iii) immediately after such extension, renewal
or replacement no Default or Event of Default would exist; and
(i) Liens securing Debt not otherwise permitted by paragraphs (a) through (h)
above, provided that, after giving effect to the incurrence of the Debt so
secured, Priority Debt does not exceed 5% of Adjusted Consolidated Net
Worth.
10.4. Sale of Assets.
Except as permitted by Section 10.5, the Company will not, and will
not permit any Restricted Subsidiary to, sell, lease, transfer or otherwise
dispose of, including by way of merger (collectively a "Disposition"), any
assets, including capital stock of Restricted Subsidiaries, in one or a series
of transactions, to any Person, other than:
(a) Dispositions in the ordinary course of business;
(b) Dispositions by the Company to a Restricted Subsidiary or by a
Restricted Subsidiary to the Company or a Restricted Subsidiary; or
(c) Dispositions not otherwise permitted by Section 10.4(a) or (b),
provided that:
22
(i) each such Disposition is made in an arms length
transaction for a consideration at least equal to the fair market
value of the property subject thereto;
(ii) the aggregate net book value of all assets disposed of in
any period of 365 consecutive days pursuant to this Section 10.4(c)
does not exceed 10% of Consolidated Total Assets as of the end of
the immediately preceding fiscal year; and
(iii) at the time of such Disposition and after giving effect
thereto no Default or Event of Default shall have occurred and be
continuing.
Notwithstanding the foregoing, the Company may, or may permit any Restricted
Subsidiary to, make a Disposition and the assets subject to such Disposition
shall not be subject to or included in the foregoing limitation and computation
contained in Section 10.4(c)(ii) of the preceding sentence to the extent that
each such Disposition is for a consideration at least equal to the fair market
value of the property subject thereto, and
(A) such assets are leased back by the Company or any Restricted
Subsidiary, as lessee, within 365 days of the original acquisition or
construction thereof by the Company or such Restricted Subsidiary; or
(B) the net proceeds from such Disposition are within 365 days of
such Disposition:
(i) reinvested in productive assets used or useful in carrying
on the business of the Company and its Restricted Subsidiaries; or
(ii) applied to the payment or prepayment of any outstanding
Debt of the Company or any Restricted Subsidiary that is pari passu
with or senior to the Notes, including the Notes.
Any prepayment of Notes pursuant to this Section 10.4 shall be in accordance
with Sections 8.2 and 8.3, without regard to the minimum prepayment requirements
of Section 8.2 if such proceeds are less than such minimum.
10.5. Mergers, Consolidations, etc.
The Company will not, and will not permit any Restricted Subsidiary
to, consolidate with or merge with any other Person or convey, transfer, sell or
lease all or substantially all of its assets in a single transaction or series
of transactions to any Person except that:
(a) the Company may consolidate or merge with any other Person or
convey, transfer, sell or lease all or substantially all of its assets in
a single transaction or series of transactions to any Person, provided
that:
23
(i) the successor formed by such consolidation or the survivor
of such merger or the Person that acquires by conveyance, transfer,
sale or lease all or substantially all of the assets of the Company
as an entirety, as the case may be, is a solvent corporation
organized and existing under the laws of the United States or any
state thereof (including the District of Columbia), and, if the
Company is not such corporation, such corporation (y) shall have
executed and delivered to each holder of any Notes its assumption of
the due and punctual performance and observance of each covenant and
condition of this Agreement and the Notes and (z) shall have caused
to be delivered to each holder of any Notes an opinion of nationally
recognized independent counsel or other independent counsel
reasonably satisfactory to the Required Holders, to the effect that
all agreements or instruments effecting such assumption are
enforceable in accordance with their terms and comply with the terms
hereof; and
(ii) immediately before and after giving effect to such
transaction, no Default or Event of Default shall have occurred and
be continuing; and
(b) Any Restricted Subsidiary may (x) merge into the Company
(provided that the Company is the surviving corporation) or a Restricted
Subsidiary or (y) sell, transfer or lease all or any part of its assets to
the Company or a Restricted Subsidiary, or (z) merge or consolidate with,
or sell, transfer or lease all or substantially all of its assets to, any
Person in a transaction that is permitted by Section 10.4 or, as a result
of which, such Person becomes a Restricted Subsidiary; provided in each
instance set forth in clauses (x) through (z) that immediately before and
after giving effect thereto, there shall exist no Default or Event of
Default.
No such conveyance, transfer, sale or lease of all or substantially all of the
assets of the Company shall have the effect of releasing the Company or any
successor corporation that shall theretofore have become such in the manner
prescribed in this Section 10.5 from its liability under this Agreement or the
Notes.
10.6. Designation of Restricted and Unrestricted Subsidiaries.
The Company may designate any Restricted Subsidiary as an
Unrestricted Subsidiary and any Unrestricted Subsidiary as a Restricted
Subsidiary by notice in writing given to the holders of the Notes; provided
that,
(a) if such Subsidiary initially is designated a Restricted
Subsidiary, then such Restricted Subsidiary may be subsequently designated
as an Unrestricted Subsidiary and such Unrestricted Subsidiary may be
subsequently designated as a Restricted Subsidiary, but no further changes
in designation may be made;
(b) if such Subsidiary initially is designated an Unrestricted
Subsidiary, then such Unrestricted Subsidiary may be subsequently
designated as a Restricted Subsidiary and such Restricted Subsidiary may
be subsequently designated as an Unrestricted Subsidiary, but no further
changes in designation may be made; and
24
(c) the Company may not designate a Restricted Subsidiary as an
Unrestricted Subsidiary unless: (i) such Restricted Subsidiary does not
own, directly or indirectly, any Debt or capital stock of the Company or
any other Restricted Subsidiary, (ii) such designation, considered as a
sale of assets, is permitted under Section 10.4(c)(ii), and (iii)
immediately before and after such designation there exists no Default or
Event of Default.
10.7. Nature of Business.
The Company will not, and will not permit any Restricted Subsidiary
to, engage in any business if, as a result, the general nature of the business
in which the Company and its Restricted Subsidiaries, taken as a whole, would
then be engaged would be substantially changed from the general nature of the
business in which the Company and its Restricted Subsidiaries, taken as a whole,
are engaged on the date of this Agreement as described in the Memorandum.
10.8. Transactions with Affiliates.
The Company will not and will not permit any Restricted Subsidiary
to enter into directly or indirectly any Material transaction or Material group
of related transactions (including without limitation the purchase, lease, sale
or exchange of properties of any kind or the rendering of any service) with any
Affiliate (other than the Company or another Restricted Subsidiary), except in
the ordinary course of the Company's or such Restricted Subsidiary's business
and upon fair and reasonable terms no less favorable to the Company or such
Restricted Subsidiary than would be obtainable in a comparable arm's-length
transaction with a Person not an Affiliate.
11. EVENTS OF DEFAULT.
An "Event of Default" shall exist if any of the following conditions
or events shall occur and be continuing:
(a) the Company defaults in the payment of any principal or
Make-Whole Amount on any Note when the same becomes due and payable,
whether at maturity or at a date fixed for prepayment or by declaration or
otherwise; or
(b) the Company defaults in the payment of any interest on any Note
for more than five Business Days after the same becomes due and payable;
or
(c) the Company defaults in the performance of or compliance with
any term contained in Sections 10.1 through 10.8; or
(d) the Company defaults in the performance of or compliance with
any term contained herein (other than those referred to in paragraphs (a),
(b) and (c) of this Section 11) and such default is not remedied within 30
days after the earlier of (i) a Responsible Officer obtaining actual
knowledge of such default or (ii) the Company receiving written notice of
such default from any holder of a Note; or
25
(e) any representation or warranty made in writing by or on behalf
of the Company or by any officer of the Company in this Agreement, or (to
the extent a Subsidiary Guaranty is hereafter executed and delivered) by
any Subsidiary Guarantor or by any officer of any Subsidiary Guarantor in
the Subsidiary Guaranty or in any writing furnished in connection with the
transactions contemplated hereby or thereby proves to have been false or
incorrect in any material respect on the date as of which made; or
(f) (i) the Company or any Restricted Subsidiary is in default (as
principal or as guarantor or other surety) in the payment of any principal
of or premium or make-whole amount or interest on any Debt that is
outstanding in an aggregate principal amount greater than 5% of Adjusted
Consolidated Net Worth beyond any period of grace provided with respect
thereto, or (ii) the Company or any Restricted Subsidiary is in default in
the performance of or compliance with any term of any evidence of any Debt
that is outstanding in an aggregate principal amount greater than 5% of
Consolidated Net Worth or of any mortgage, indenture or other agreement
relating thereto or any other condition exists, and as a consequence of
such default or condition such Debt has become, or has been declared (or
one or more Persons are entitled to declare such Debt to be), due and
payable before its stated maturity or before its regularly scheduled dates
of payment, or (iii) as a consequence of the occurrence or continuation of
any event or condition (other than the passage of time or the right of the
holder of Debt to convert such Debt into equity interests), (x) the
Company or any Restricted Subsidiary has become obligated to purchase or
repay Debt before its regular maturity or before its regularly scheduled
dates of payment in an aggregate outstanding principal amount greater than
5% of Adjusted Consolidated Net Worth, or (y) one or more Persons have the
right to require the Company or any Restricted Subsidiary so to purchase
or repay such Debt; or
(g) the Company or any Material Restricted Subsidiary (i) is
generally not paying, or admits in writing its inability to pay, its debts
as they become due, (ii) files, or consents by answer or otherwise to the
filing against it of, a petition for relief or reorganization or
arrangement or any other petition in bankruptcy, for liquidation or to
take advantage of any bankruptcy, insolvency, reorganization, moratorium
or other similar law of any jurisdiction, (iii) makes an assignment for
the benefit of its creditors, (iv) consents to the appointment of a
custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its property, (v)
is adjudicated as insolvent or to be liquidated, or (vi) takes corporate
action for the purpose of any of the foregoing; or
(h) a court or governmental authority of competent jurisdiction
enters an order appointing, without consent by the Company or any Material
Restricted Subsidiary, a custodian, receiver, trustee or other officer
with similar powers with respect to it or with respect to any substantial
part of its property, or constituting an order for relief or approving a
petition for relief or reorganization or any other petition in bankruptcy
or for liquidation or to take advantage of any bankruptcy or insolvency
law of any jurisdiction, or ordering the dissolution, winding-up or
liquidation of the Company or any Material Restricted Subsidiary, or any
such petition shall be filed against the Company or any Material
Restricted Subsidiary and such petition shall not be dismissed within 60
days; or
26
(i) a final judgment or judgments for the payment of money
aggregating more than 5% of Adjusted Consolidated Net Worth are rendered
against one or more of the Company and its Restricted Subsidiaries, which
judgments are not, within 60 days after entry thereof, bonded, discharged
or stayed pending appeal, or are not discharged within 60 days after the
expiration of such stay; or
(j) if (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a
waiver of such standards or extension of any amortization period is sought
or granted under section 412 of the Code, (ii) a notice of intent to
terminate any Plan shall have been or is reasonably expected to be filed
with the PBGC or the PBGC shall have instituted proceedings under ERISA
section 4042 to terminate or appoint a trustee to administer any Plan or
the PBGC shall have notified the Company or any ERISA Affiliate that a
Plan may become a subject of any such proceedings, (iii) the aggregate
"amount of unfunded benefit liabilities" (within the meaning of section
4001(a)(18) of ERISA) under all Plans determined in accordance with Title
IV of ERISA, shall be greater than 5% of Adjusted Consolidated Net Worth,
(iv) the Company or any ERISA Affiliate shall have incurred or is
reasonably expected to incur any liability pursuant to Title I or IV of
ERISA or the penalty or excise tax provisions of the Code relating to
employee benefit plans, (v) the Company or any ERISA Affiliate withdraws
from any Multiemployer Plan, or (vi) the Company or any Restricted
Subsidiary establishes or amends any employee welfare benefit plan that
provides post-employment welfare benefits in a manner that would increase
the liability of the Company or any Restricted Subsidiary thereunder; and
any such event or events described in clauses (i) through (vi) above,
either individually or together with any other such event or events, would
reasonably be expected to have a Material Adverse Effect; or
(k) to the extent a Subsidiary Guaranty is hereafter executed and
delivered, any Subsidiary Guarantor defaults in the performance of or
compliance with any term or condition contained in the Subsidiary Guaranty
or the Subsidiary Guaranty ceases to be in full force and effect (except
upon the release by the holders of the Notes of a Subsidiary Guarantor
from the Subsidiary Guaranty) or is declared to be null and void in whole
or in material part by a court or other governmental or regulatory
authority having jurisdiction or the validity or enforceability thereof
shall be contested by the Company or any Subsidiary Guarantor or any of
them renounces any of the same or denies that it has any or further
liability thereunder.
As used in Section 11(j), the terms "employee benefit plan" and "employee
welfare benefit plan" shall have the respective meanings assigned to such terms
in Section 3 of ERISA.
12. REMEDIES ON DEFAULT, ETC.
12.1. Acceleration.
(a) If an Event of Default with respect to the Company described in paragraph
(g) or (h) of Section 11 (other than an Event of Default described in
clause (i) of paragraph (g) or described in clause (vi) of paragraph (g)
by virtue of the fact that such
27
clause encompasses clause (i) of paragraph (g)) has occurred, all the
Notes then outstanding shall automatically become immediately due and
payable.
(b) If any other Event of Default has occurred and is continuing,
holders of a majority in principal amount of the Notes at the time
outstanding may at any time at its or their option, by notice or notices
to the Company, declare all the Notes then outstanding to be immediately
due and payable.
(c) If any Event of Default described in paragraph (a) or (b) of
Section 11 has occurred and is continuing, any holder or holders of Notes
at the time outstanding affected by such Event of Default may at any time,
at its or their option, by notice or notices to the Company, declare all
the Notes held by it or them to be immediately due and payable.
Upon any Notes becoming due and payable under this Section 12.1,
whether automatically or by declaration, such Notes will forthwith mature and
the entire unpaid principal amount of such Notes, plus (x) all accrued and
unpaid interest thereon and (y) any applicable Make-Whole Amount determined in
respect of such principal amount (to the full extent permitted by applicable
law) , shall all be immediately due and payable, in each and every case without
presentment, demand, protest or further notice, all of which are hereby waived.
The Company acknowledges, and the parties hereto agree, that each holder of a
Note has the right to maintain its investment in the Notes free from repayment
by the Company (except as herein specifically provided for) and that the
provision for payment of a Make-Whole Amount by the Company in the event that
the Notes are prepaid or are accelerated as a result of an Event of Default is
intended to provide compensation for the deprivation of such right under such
circumstances.
12.2. Other Remedies.
If any Default or Event of Default has occurred and is continuing,
and irrespective of whether any Notes have become or have been declared
immediately due and payable under Section 12.1, the holder of any Note at the
time outstanding may proceed to protect and enforce the rights of such holder by
an action at law, suit in equity or other appropriate proceeding, whether for
the specific performance of any agreement contained herein or in any Note, or
for an injunction against a violation of any of the terms hereof or thereof, or
in aid of the exercise of any power granted hereby or thereby or by law or
otherwise.
12.3. Rescission.
At any time after any Notes have been declared due and payable
pursuant to clause (b) or (c) of Section 12.1, the holders of a majority in
principal amount of the Notes then outstanding, by written notice to the
Company, may rescind and annul any such declaration and its consequences if (a)
the Company has paid all overdue interest on the Notes, all principal of and any
Make-Whole Amount on any Notes that are due and payable and are unpaid other
than by reason of such declaration, and all interest on such overdue principal
and any Make-Whole Amount and (to the extent permitted by applicable law) any
overdue interest in respect of the Notes, at the Default Rate, (b) all Events of
Default and Defaults, other than non-payment of
28
amounts that have become due solely by reason of such declaration, have been
cured or have been waived pursuant to Section 17, and (c) no judgment or decree
has been entered for the payment of any monies due pursuant hereto or to the
Notes. No rescission and annulment under this Section 12.3 will extend to or
affect any subsequent Event of Default or Default or impair any right consequent
thereon.
12.4. No Waivers or Election of Remedies, Expenses, etc.
No course of dealing and no delay on the part of any holder of any
Note in exercising any right, power or remedy shall operate as a waiver thereof
or otherwise prejudice such holder's rights, powers or remedies. No right, power
or remedy conferred by this Agreement or by any Note upon any holder thereof
shall be exclusive of any other right, power or remedy referred to herein or
therein or now or hereafter available at law, in equity, by statute or
otherwise. Without limiting the obligations of the Company under Section 15, the
Company will pay to the holder of each Note on demand such further amount as
shall be sufficient to cover all costs and expenses of such holder incurred in
any enforcement or collection under this Section 12, including, without
limitation, reasonable attorneys' fees, expenses and disbursements.
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
13.1. Registration of Notes.
The Company shall keep at its principal executive office a register
for the registration and registration of transfers of Notes. The name and
address of each holder of one or more Notes, each transfer thereof and the name
and address of each transferee of one or more Notes shall be registered in such
register. Prior to due presentment for registration of transfer, the Person in
whose name any Note shall be 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. The Company shall give to
any holder of a Note that is an Institutional Investor, promptly upon request
therefor, a complete and correct copy of the names and addresses of all
registered holders of Notes.
13.2. Transfer and Exchange of Notes.
Upon surrender of any Note at the principal executive office of the
Company for registration of transfer or exchange (and in the case of a surrender
for registration of transfer, duly endorsed or accompanied by a written
instrument of transfer duly executed by the registered holder of such Note or
his attorney duly authorized in writing and accompanied by the address for
notices of each transferee of such Note or part thereof), the Company shall
execute and deliver, at the Company's expense (except as provided below), one or
more new Notes (as requested by the holder thereof) of the same series in
exchange therefor, in an aggregate principal amount equal to the unpaid
principal amount of the surrendered Note. Each such new Note shall be payable to
such Person as such holder may request and shall be substantially in the form of
Exhibit 1(a) or 1(b), as appropriate. Each such new Note shall be dated and bear
interest from the date to which interest shall have been paid on the surrendered
Note or dated the date of the surrendered Note if no interest shall have been
paid thereon. The Company may require
29
payment of a sum sufficient to cover any stamp tax or governmental charge
imposed in respect of any such transfer of Notes. Notes shall not be transferred
in denominations of less than $100,000, provided that if necessary to enable the
registration of transfer by a holder of its entire holding of Notes, one Note
may be in a denomination of less than $100,000. Any transferee, by its
acceptance of a Note registered in its name (or the name of its nominee), shall
be deemed to have made the representation set forth in Section 6.2.
13.3. Replacement of Notes.
Upon receipt by the Company of evidence reasonably satisfactory to
it of the ownership of and the loss, theft, destruction or mutilation of any
Note (which evidence shall be, in the case of an Institutional Investor, notice
from such Institutional Investor of such ownership and such loss, theft,
destruction or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (provided that if the holder of such Note
is, or is a nominee for, an original Purchaser or another Institutional
Investor holder of a Note with a minimum net worth of at least
$50,000,000, such Person's own unsecured agreement of indemnity shall be
deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation
thereof,
the Company at its own expense shall execute and deliver, in lieu thereof, a new
Note of the same series, dated and bearing interest from the date to which
interest shall have been paid on such lost, stolen, destroyed or mutilated Note
or dated the date of such lost, stolen, destroyed or mutilated Note if no
interest shall have been paid thereon.
14. PAYMENTS ON NOTES.
14.1. Place of Payment.
Subject to Section 14.2, payments of principal, Make-Whole Amount,
if any, and interest becoming due and payable on the Notes shall be made in
Chicago, Illinois at the principal office of Bank of America in such
jurisdiction. The Company may at any time, by notice to each holder of a Note,
change the place of payment of the Notes so long as such place of payment shall
be either the principal office of the Company in such jurisdiction or the
principal office of a bank or trust company in such jurisdiction.
14.2. Home Office Payment.
So long as you or your nominee shall be the holder of any Note, and
notwithstanding anything contained in Section 14.1 or in such Note to the
contrary, the Company will pay all sums becoming due on such Note for principal,
Make-Whole Amount, if any, and interest by the method and at the address
specified for such purpose below your name in Schedule A, or by such other
method or at such other address as you shall have from time to time specified to
the Company in writing for such purpose, without the presentation or surrender
of such Note or the making of any notation thereon, except that upon written
request of the
30
Company made concurrently with or reasonably promptly after payment or
prepayment in full of any Note, you shall surrender such Note for cancellation,
reasonably promptly after any such request, to the Company at its principal
executive office or at the place of payment most recently designated by the
Company pursuant to Section 14.1. Prior to any sale or other disposition of any
Note held by you or your nominee you will, at your election, either endorse
thereon the amount of principal paid thereon and the last date to which interest
has been paid thereon or surrender such Note to the Company in exchange for a
new Note or Notes pursuant to Section 13.2. The Company will afford the benefits
of this Section 14.2 to any Institutional Investor that is the direct or
indirect transferee of any Note purchased by you under this Agreement and that
has made the same agreement relating to such Note as you have made in this
Section 14.2.
15. EXPENSES, ETC.
15.1. Transaction Expenses.
Whether or not the transactions contemplated hereby are consummated,
the Company will pay all costs and expenses (including reasonable attorneys'
fees of a special counsel and, if reasonably required, local or other counsel)
incurred by you and each Other Purchaser or holder of a Note in connection with
such transactions and in connection with any amendments, waivers or consents
under or in respect of this Agreement or the Notes (whether or not such
amendment, waiver or consent becomes effective), including: (a) the costs and
expenses incurred in enforcing or defending (or determining whether or how to
enforce or defend) any rights under this Agreement or the Notes or in responding
to any subpoena or other legal process or informal investigative demand issued
in connection with this Agreement or the Notes, or by reason of being a holder
of any Note, and (b) the costs and expenses, including financial advisors' fees,
incurred in connection with the insolvency or bankruptcy of the Company or any
Subsidiary or in connection with any work-out or restructuring of the
transactions contemplated hereby and by the Notes. The Company will pay, and
will save you and each other holder of a Note harmless from, all claims in
respect of any fees, costs or expenses if any, of brokers and finders (other
than those retained by you).
15.2. Survival.
The obligations of the Company under this Section 15 will survive
the payment or transfer of any Note, the enforcement, amendment or waiver of any
provision of this Agreement or the Notes, and the termination of this Agreement.
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein shall survive
the execution and delivery of this Agreement and the Notes, the purchase or
transfer by you of any Note or portion thereof or interest therein and the
payment of any Note, and may be relied upon by any subsequent holder of a Note,
regardless of any investigation made at any time by or on behalf of you or any
other holder of a Note. All statements contained in any certificate or other
instrument delivered by or on behalf of the Company pursuant to this Agreement
shall be deemed representations and warranties of the Company under this
Agreement. Subject to the preceding
31
sentence, this Agreement and the Notes embody the entire agreement and
understanding between you and the Company and supersede all prior agreements and
understandings relating to the subject matter hereof.
17. AMENDMENT AND WAIVER.
17.1. Requirements.
This Agreement, the Notes and (to the extent one is executed and
delivered) the Subsidiary Guaranty may be amended, and the observance of any
term hereof or of the Notes or such Subsidiary Guaranty may be waived (either
retroactively or prospectively), with (and only with) the written consent of the
Company and the Required Holders, except that (a) no amendment or waiver of any
of the provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any defined term
(as it is used therein), will be effective as to you unless consented to by you
in writing, and (b) no such amendment or waiver may, without the written consent
of the holder of each Note at the time outstanding affected thereby, (i) subject
to the provisions of Section 12 relating to acceleration or rescission, change
the amount or time of any prepayment or payment of principal of, or reduce the
rate or change the time of payment or method of computation of interest or of
the Make-Whole Amount on, the Notes, (ii) change the percentage of the principal
amount of the Notes the holders of which are required to consent to any such
amendment or waiver, or (iii) amend any of Sections 8, 11(a), 11(b), 12, 17 or
20.
17.2. Solicitation of Holders of Notes.
(a) Solicitation. The Company will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is
required, to enable such holder to make an informed and considered
decision with respect to any proposed amendment, waiver or consent in
respect of any of the provisions hereof or of the Notes. The Company will
deliver executed or true and correct copies of each amendment, waiver or
consent effected pursuant to the provisions of this Section 17 to each
holder of outstanding Notes promptly following the date on which it is
executed and delivered by, or receives the consent or approval of, the
requisite holders of Notes.
(b) Payment. The Company will not directly or indirectly pay or
cause to be paid any remuneration, whether by way of supplemental or
additional interest, fee or otherwise, or grant any security, to any
holder of Notes as consideration for or as an inducement to the entering
into by any holder of Notes or any waiver or amendment of any of the terms
and provisions hereof unless such remuneration is concurrently paid, or
security is concurrently granted, on the same terms, ratably to each
holder of Notes then outstanding even if such holder did not consent to
such waiver or amendment.
17.3. Binding Effect, etc.
Any amendment or waiver consented to as provided in this Section 17
applies equally to all holders of Notes and is binding upon them and upon each
future holder of any Note and upon the Company without regard to whether such
Note has been marked to indicate such
32
amendment or waiver. No such amendment or waiver will extend to or affect any
obligation, covenant, agreement, Default or Event of Default not expressly
amended or waived or impair any right consequent thereon. No course of dealing
between the Company and the holder of any Note nor any delay in exercising any
rights hereunder or under any Note shall operate as a waiver of any rights of
any holder of such Note. As used herein, the term "this Agreement" or "the
Agreement" and references thereto shall mean this Agreement as it may from time
to time be amended or supplemented.
17.4. Notes held by Company, etc.
Solely for the purpose of determining whether the holders of the
requisite percentage of the aggregate principal amount of Notes then outstanding
approved or consented to any amendment, waiver or consent to be given under this
Agreement or the Notes, or have directed the taking of any action provided
herein or in the Notes to be taken upon the direction of the holders of a
specified percentage of the aggregate principal amount of Notes then
outstanding, Notes directly or indirectly owned by the Company or any of its
Affiliates shall be deemed not to be outstanding.
18. NOTICES.
All notices and communications provided for hereunder shall be in
writing and sent (a) by facsimile if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by registered or certified mail with return receipt
requested (postage prepaid), or (c) by a recognized overnight delivery service
(with charges prepaid). Any such notice must be sent:
(i) if to you or your nominee, to you or it at the address
specified for such communications in Schedule A, or at such other
address as you or it shall have specified to the Company in writing,
(ii) if to any other holder of any Note, to such holder at
such address as such other holder shall have specified to the
Company in writing, or
(iii) if to the Company, to the Company at its address set
forth at the beginning hereof to the attention of the Chief
Executive Officer, or at such other address as the Company shall
have specified to the holder of each Note in writing.
Notices under this Section 18 will be deemed given only when actually received.
19. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including,
without limitation, (a) consents, waivers and modifications that may hereafter
be executed, (b) documents received by you at the Closing (except the Notes
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished to you, may be reproduced by you by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and you may destroy any original document so reproduced. The
Company agrees and stipulates
33
that, to the extent permitted by applicable law, any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made by you in the regular course of business) and any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence. This Section 19 shall not prohibit the
Company or any other holder of Notes from contesting any such reproduction to
the same extent that it could contest the original, or from introducing evidence
to demonstrate the inaccuracy of any such reproduction.
20. CONFIDENTIAL INFORMATION.
For the purposes of this Section 20, "Confidential Information"
means information delivered to you by or on behalf of the Company or any
Subsidiary in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in nature and that was clearly
marked or labeled or otherwise adequately identified when received by you as
being confidential information of the Company or such Subsidiary, provided that
such term does not include information that (a) was publicly known or otherwise
known to you prior to the time of such disclosure, (b) subsequently becomes
publicly known through no act or omission by you or any person acting on your
behalf, (c) otherwise becomes known to you other than through disclosure by the
Company or any Subsidiary or (d) constitutes financial statements delivered to
you under Section 7.1 that are otherwise publicly available. You will maintain
the confidentiality of such Confidential Information in accordance with
procedures adopted by you in good faith to protect confidential information of
third parties delivered to you, provided that you may deliver or disclose
Confidential Information to (i) your directors, trustees, officers, employees,
agents, attorneys and affiliates (to the extent such disclosure reasonably
relates to the administration of the investment represented by your Notes), (ii)
your financial advisors and other professional advisors who agree to hold
confidential the Confidential Information substantially in accordance with the
terms of this Section 20, (iii) any other holder of any Note, (iv) any
Institutional Investor to which you sell or offer to sell such Note or any part
thereof or any participation therein (if such Person has agreed in writing prior
to its receipt of such Confidential Information to be bound by the provisions of
this Section 20), (v) any Person from which you offer to purchase any security
of the Company (if such Person has agreed in writing prior to its receipt of
such Confidential Information to be bound by the provisions of this Section 20),
(vi) any federal or state regulatory authority having jurisdiction over you,
(vii) the National Association of Insurance Commissioners or any similar
organization, or any nationally recognized rating agency that requires access to
information about your investment portfolio or (viii) any other Person to which
such delivery or disclosure may be necessary or appropriate (w) to effect
compliance with any law, rule, regulation or order applicable to you, (x) in
response to any subpoena or other legal process, (y) in connection with any
litigation to which you are a party or (z) if an Event of Default has occurred
and is continuing, to the extent you may reasonably determine such delivery and
disclosure to be necessary or appropriate in the enforcement or for the
protection of the rights and remedies under your Notes and this Agreement. Each
holder of a Note, by its acceptance of a Note, will be deemed to have agreed to
be bound by and to be entitled to the benefits of this Section 20 as though it
were a party to this Agreement. On reasonable request by the Company in
connection with the delivery to any holder of a Note of information required to
be delivered to such holder under this Agreement or requested by such holder
(other than a holder that is a party to this Agreement or its nominee),
34
such holder will enter into an agreement with the Company embodying the
provisions of this Section 20.
21. SUBSTITUTION OF PURCHASER.
You shall have the right to substitute any one of your Affiliates as
the purchaser of the Notes that you have agreed to purchase hereunder, by
written notice to the Company, which notice shall be signed by both you and such
Affiliate, shall contain such Affiliate's agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in Section 6. Upon receipt
of such notice, wherever the word "you" is used in this Agreement (other than in
this Section 21), such word shall be deemed to refer to such Affiliate in lieu
of you. In the event that such Affiliate is so substituted as a purchaser
hereunder and such Affiliate thereafter transfers to you all of the Notes then
held by such Affiliate, upon receipt by the Company of notice of such transfer,
wherever the word "you" is used in this Agreement (other than in this Section
21), such word shall no longer be deemed to refer to such Affiliate, but shall
refer to you, and you shall have all the rights of an original holder of the
Notes under this Agreement.
22. MISCELLANEOUS.
22.1. Successors and Assigns.
All covenants and other agreements contained in this Agreement by or
on behalf of any of the parties hereto bind and inure to the benefit of their
respective successors and assigns (including, without limitation, any subsequent
holder of a Note) whether so expressed or not.
22.2. Payments Due on Non-Business Days.
Anything in this Agreement or the Notes to the contrary
notwithstanding, any payment of principal of or Make-Whole Amount or interest on
any Note that is due on a date other than a Business Day shall be made on the
next succeeding Business Day without including the additional days elapsed in
the computation of the interest payable on such next succeeding Business Day.
22.3. Severability.
Any provision of this Agreement that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.
22.4. Construction.
Each covenant contained herein shall be construed (absent express
provision to the contrary) as being independent of each other covenant contained
herein, so that compliance
35
with any one covenant shall not (absent such an express contrary provision) be
deemed to excuse compliance with any other covenant. Where any provision herein
refers to action to be taken by any Person, or which such Person is prohibited
from taking, such provision shall be applicable whether such action is taken
directly or indirectly by such Person.
22.5. Counterparts.
This Agreement may be executed in any number of counterparts, each
of which shall be an original but all of which together shall constitute one
instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.
22.6. Governing Law.
This Agreement shall be construed and enforced in accordance with,
and the rights of the parties shall be governed by, the law of the Commonwealth
of Massachusetts excluding choice-of-law principles of the law of such
Commonwealth that would require the application of the laws of a jurisdiction
other than such Commonwealth.
36
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to the
Company, whereupon the foregoing shall become a binding agreement between you
and the Company.
Very truly yours,
WATTS INDUSTRIES, INC.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
S-1
The foregoing is agreed to as of the date thereof.
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
By: CIGNA Investments, Inc. (authorized agent)
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
LIFE INSURANCE COMPANY OF NORTH AMERICA
By: CIGNA Investments, Inc. (authorized agent)
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
S-2
HARTFORD FIRE INSURANCE COMPANY
By: HARTFORD INVESTMENT SERVICES, INC.
Its Agent and Attorney in Fact
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
S-3
NATIONWIDE LIFE INSURANCE COMPANY
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
NATIONWIDE MUTUAL INSURANCE COMPANY
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
NATIONWIDE INDEMNITY COMPANY
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
SCOTTSDALE INSURANCE COMPANY
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
NATIONWIDE LIFE INSURANCE COMPANY OF AMERICA
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
S-4
THE TRAVELERS INSURANCE COMPANY
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
NATIONAL BENEFIT LIFE INSURANCE COMPANY
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
PRIMERICA LIFE INSURANCE COMPANY
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
S-5
SWISS RE LIFE & HEALTH AMERICA, INC.
By: Swiss Re Asset Management (Americas) Inc.
By:
-------------------------------
Name: John H. DeMallie
Title: Vice President
FORT WAYNE HEALTH & CASUALTY INSURANCE COMPANY
By: Swiss Re Asset Management (Americas) Inc.
By:
-------------------------------
Name: John H. DeMallie
Title: Vice President
SOUTHWESTERN LIFE INSURANCE COMPANY
By: Swiss Re Asset Management (Americas) Inc.
By:
-------------------------------
Name: John H. DeMallie
Title: Vice President
S-6
AMERICAN INVESTORS LIFE INSURANCE COMPANY
By: AmerUs Capital Management Group, Inc., its
authorized attorney-in-fact
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
BANKERS LIFE INSURANCE COMPANY OF NEW YORK
By: AmerUs Capital Management Group, Inc., its
authorized attorney-in-fact
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
INDIANAPOLIS LIFE INSURANCE COMPANY
By: AmerUs Capital Management Group, Inc., its
authorized attorney-in-fact
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
S-7
AMERICAN UNITED LIFE INSURANCE COMPANY
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
PIONEER MUTUAL LIFE INSURANCE COMPANY
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
THE STATE LIFE INSURANCE COMPANY
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
S-8
ASSURITY LIFE INSURANCE COMPANY
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
WOODMEN ACCIDENT AND LIFE COMPANY
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
S-9
SECURITY FINANCIAL LIFE INSURANCE CO.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
S-10
SCHEDULE B
DEFINED TERMS
As used herein, the following terms have the respective meanings set
forth below or set forth in the Section hereof following such term:
"Adjusted Consolidated Net Worth" means, as of any date,
consolidated stockholders' equity of the Company and its Restricted Subsidiaries
on such date, determined in accordance with GAAP less the amount by which
outstanding Restricted Investments on such date exceed 10% of consolidated
stockholders' equity of the Company and its Restricted Subsidiaries on such
date.
"Affiliate" means, at any time, and with respect to any Person, (a)
any other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person, and (b) any Person beneficially owning or holding, directly
or indirectly, 10% or more of any class of voting or equity interests of the
Company or any Subsidiary or any corporation of which the Company and its
Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly,
10% or more of any class of voting or equity interests. As used in this
definition, "Control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
Unless the context otherwise clearly requires, any reference to an "Affiliate"
is a reference to an Affiliate of the Company. Notwithstanding anything in the
foregoing to the contrary, a Person that (i) would be an Affiliate of the
Company solely by virtue of its ownership of voting or equity interests of the
Company and (ii) is eligible pursuant to Rule 13d-1(b) under the Exchange Act to
file a statement with the Securities and Exchange Commission on Schedule 13G,
shall not be deemed to be an Affiliate.
"Anti-Terrorism Order" means Executive Order 13224 of September 23,
2001 Blocking Property and Prohibiting Transactions With Persons Who Commit,
Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001).
"Business Day" means (a) for the purposes of Section 8.6 only, any
day other than a Saturday, a Sunday or a day on which commercial banks in New
York City are required or authorized to be closed, and (b) for the purposes of
any other provision of this Agreement, any day other than a Saturday, a Sunday
or a day on which commercial banks in Chicago, Illinois, Boston, Massachusetts
or New York City are required or authorized to be closed.
"Capital Lease" means, at any time, a lease with respect to which
the lessee is required concurrently to recognize the acquisition of an asset and
the incurrence of a liability in accordance with GAAP.
"Closing" is defined in Section 3.
1
Schedule B
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and the rules and regulations promulgated thereunder from time to time.
"Company" means Watts Industries, Inc., a Delaware corporation.
"Confidential Information" is defined in Section 20.
"Consolidated EBITDA" means, for any period, the sum of Consolidated
Net Income for such period, plus, to the extent deducted in determining such
Consolidated Net Income, (i) Consolidated Interest Expense, (ii) federal, state,
local and foreign income, franchise, value added and similar taxes, and (iii)
depreciation and amortization expense.
"Consolidated Fixed Charges" means, for any period, the sum of (i)
Consolidated Interest Expense for such period and (ii) Consolidated Rentals for
such period under all leases other than Capital Leases.
"Consolidated Income Available for Fixed Charges" means, for any
period, the sum of (i) Consolidated EBITDA for such period and (ii) Consolidated
Rentals for such period under all leases other than Capital Leases.
"Consolidated Interest Expense" means, for any period, the
consolidated interest expense of the Company and its Restricted Subsidiaries for
such period determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, for any period, the net income or
loss of the Company and its Restricted Subsidiaries for such period (including,
without duplication, income attributed to minority interests) determined on a
consolidated basis in accordance with GAAP, but in any event excluding
extraordinary or nonrecurring gains or losses.
"Consolidated Rentals" means, for any period, the rental expense of
the Company and its Restricted Subsidiaries for such period under all leases,
determined on a consolidated basis in accordance with GAAP.
"Consolidated Total Assets" means, as of any date, the total assets
of the Company and its Restricted Subsidiaries as of such date, determined on a
consolidated basis in accordance with GAAP.
"Debt" with respect to any Person means, at any time, without
duplication,
(a) its liabilities for borrowed money;
(b) its liabilities for the deferred purchase price of property
acquired by such Person (excluding accounts payable and other accrued
liabilities arising in the ordinary course of business but including all
liabilities created or arising under any conditional sale or other title
retention agreement with respect to any such property);
2
Schedule B
(c) all liabilities appearing on its balance sheet in accordance
with GAAP in respect of Capital Leases;
(d) all liabilities for borrowed money secured by any Lien with
respect to any property owned by such Person (whether or not it has
assumed or otherwise become liable for such liabilities); and
(e) any Guaranty of such Person with respect to liabilities of a
type described in any of clauses (a) through (d) hereof.
"Default" means an event or condition the occurrence or existence of
which would, with the lapse of time or the giving of notice or both, become an
Event of Default.
"Default Rate" means that rate of interest that is the greater of
(i) 2% per annum above the rate of interest stated in clause (a) of the first
paragraph of the Notes or (ii) 2% over the rate of interest publicly announced
by Bank of America in Chicago, Illinois as its "base" or "prime" rate.
"Disposition" is defined in Section 10.4.
"Environmental Laws" means any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the rules and regulations promulgated
thereunder from time to time in effect.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Company
under section 414 of the Code.
"Event of Default" is defined in Section 11.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Form 10-K" is defined in Section 5.3.
"Form 10-Q" is defined in Section 5.3.
"GAAP" means generally accepted accounting principles as in effect
from time to time in the United States of America.
3
Schedule B
"Governmental Authority" means
(a) the government of
(i) the United States of America or any State or other
political subdivision thereof, or
(ii) any jurisdiction in which the Company or any Subsidiary
conducts all or any part of its business, or which asserts
jurisdiction over any properties of the Company or any Subsidiary,
or
(b) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.
"Guaranty" means, with respect to any Person, any obligation (except
the endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person:
(a) to purchase such indebtedness or obligation or any property
constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment of
such indebtedness or obligation, or (ii) to maintain any working capital
or other balance sheet condition or any income statement condition of any
other Person or otherwise to advance or make available funds for the
purchase or payment of such indebtedness or obligation;
(c) to lease properties or to purchase properties or services
primarily for the purpose of assuring the owner of such indebtedness or
obligation of the ability of any other Person to make payment of the
indebtedness or obligation; or
(d) otherwise to assure the owner of such indebtedness or obligation
against loss in respect thereof.
In any computation of the indebtedness or other liabilities of the obligor under
any Guaranty, the indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.
"Hazardous Material" means any and all pollutants, toxic or
hazardous wastes or any other substances that might pose a hazard to health or
safety, the removal of which may be required or the generation, manufacture,
refining, production, processing, treatment, storage, handling, transportation,
transfer, use, disposal, release, discharge, spillage, seepage, or filtration of
which is or shall be restricted, prohibited or penalized by any applicable law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polycholorinated biphenyls).
4
Schedule B
"holder" means, with respect to any Note, the Person in whose name
such Note is registered in the register maintained by the Company pursuant to
Section 13.1.
"INHAM Exemption" is defined in Section 6.2(e).
"Institutional Investor" means (a) any original purchaser of a Note,
(b) any holder of more than $2,000,000 in aggregate principal amount of the
Notes at the time outstanding, and (c) any bank, trust company, savings and loan
association or other financial institution, any pension plan, any investment
company, any insurance company, any broker or dealer, or any other similar
financial institution or entity, regardless of legal form.
"Investment" means any investment, made in cash or by delivery of
property, by the Company or any of its Restricted Subsidiaries (i) in any
Person, whether by acquisition of shares of capital stock, indebtedness or other
obligations or securities, or by loan, Guaranty, advance, capital contribution
or otherwise, or (ii) in any property.
"Lien" means, with respect to any Person, any mortgage, lien,
pledge, charge, security interest or other encumbrance, or any interest or title
of any vendor, lessor, lender or other secured party to or of such Person under
any conditional sale or other title retention agreement or Capital Lease, upon
or with respect to any property or asset of such Person (including in the case
of stock, stockholder agreements, voting trust agreements and all similar
arrangements).
"Make-Whole Amount" is defined in Section 8.6.
"Material" means material in relation to the business, operations,
affairs, financial condition, assets or properties of the Company and its
Restricted Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of the
Company and its Restricted Subsidiaries taken as a whole, or (b) the ability of
the Company to perform its obligations under this Agreement and the Notes, or
(c) the ability of any Subsidiary Guarantor to perform its obligations under the
Subsidiary Guaranty, if applicable, or (d) the validity or enforceability of
this Agreement, the Notes or the Subsidiary Guaranty, if applicable.
"Material Restricted Subsidiary" means, at any time, any Subsidiary
Guarantor or any Restricted Subsidiary that would at such time account for more
than 5% of (i) Consolidated Total Assets as of the end of the most recently
completed fiscal quarter or (ii) consolidated revenue of the Company and its
Restricted Subsidiaries for the four fiscal quarters ending as of the end of the
most recently completed fiscal quarter.
"Memorandum" is defined in Section 5.3.
5
Schedule B
"Multiemployer Plan" means any Plan that is a "multiemployer plan"
(as such term is defined in section 4001(a)(3) of ERISA).
"Notes" is defined in Section 1.
"Officer's Certificate" means a certificate of a Senior Financial
Officer or of any other officer of the Company whose responsibilities extend to
the subject matter of such certificate.
"Other Purchasers" is defined in Section 2.
"PBGC" means the Pension Benefit Guaranty Corporation referred to
and defined in ERISA or any successor thereto.
"Person" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
"Plan" means an "employee benefit plan" (as defined in section 3(3)
of ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by the Company or any ERISA Affiliate or
with respect to which the Company or any ERISA Affiliate may have any liability.
"Priority Debt" means, as of any date, the sum (without duplication)
of (a) outstanding unsecured Debt of Restricted Subsidiaries that are not
Subsidiary Guarantors other than (i) Debt owed to the Company or another
Restricted Subsidiary, (ii) unsecured Debt of a Person outstanding at the time
it becomes a Restricted Subsidiary, provided that (A) such Person is not an
Unrestricted Subsidiary and (B) such Debt was not incurred in contemplation of
such Person becoming a Restricted Subsidiary and (iii) other unsecured Debt
provided that the aggregate principal amount of such Debt does not at any time
exceed $150,000,000, and (b) Debt of the Company and its Restricted Subsidiaries
secured by Liens not otherwise permitted by the introductory clause of Section
10.3 and Sections 10.3 (a) through (h).
"property" or "properties" means, unless otherwise specifically
limited, real or personal property of any kind, tangible or intangible, choate
or inchoate.
"Purchaser" means each purchaser listed in Schedule A.
"QPAM Exemption" is defined in Section 6.2(d).
"Required Holders" means, at any time, the holders of at least a
majority in principal amount of the Notes at the time outstanding (exclusive of
Notes then owned by the Company or any of its Affiliates).
6
Schedule B
"Responsible Officer" means any Senior Financial Officer and any
other officer of the Company with responsibility for the administration of the
relevant portion of this Agreement.
"Restricted Investments" means all Investments of the Company and
its Restricted Subsidiaries, other than:
(a) property or assets to be used or consumed in the ordinary course
of business;
(b) current assets arising from the sale of goods or services in the
ordinary course of business;
(c) Investments in Restricted Subsidiaries or in any Person that, as
a result thereof, becomes a Restricted Subsidiary;
(d) Investments existing as of the date of this Agreement that are
listed in the attached Schedule B-1; and
(e) Investments in common stock of the Company held in its treasury;
(f) Investments in:
(i) obligations, maturing within one year from the date of
acquisition, of or fully guaranteed by the United States of America,
or an agency thereof, or Canada, or any province thereof;
(ii) state, or municipal securities having an effective
maturity within one year from the date of acquisition that are rated
in one of the top two rating classifications by at least one
nationally recognized rating agency;
(iii) certificates of deposit or banker's acceptances maturing
within one year from the date of acquisition of or issued by
commercial banks whose long-term unsecured debt obligations (or the
long-term unsecured debt obligations of the bank holding company
owning all of the capital stock of such bank) are rated in one of
the top two rating classifications by at least one nationally
recognized rating agency;
(iv) commercial paper maturing within 270 days from the date
of issuance that, at the time of acquisition, is rated in one of the
top two rating classifications by at least one credit rating agency
of recognized national standing;
(v) repurchase agreements; and
(vi) money market instrument programs that are properly
classified as current assets in accordance with GAAP.
7
Schedule B
"Restricted Subsidiary" means any Subsidiary (a) of which at least a
majority of the voting securities are owned by the Company and/or one or more
Restricted Subsidiaries and (b) that the Company has not designated an
Unrestricted Subsidiary by notice in writing given to the holders of the Notes
pursuant to Section 10.6.
"Securities Act" means the Securities Act of 1933, as amended from
time to time.
"Senior Financial Officer" means the chief financial officer,
principal accounting officer, treasurer or comptroller of the Company.
"Source" is defined in Section 6.2.
"Subsidiary" means, as to any Person, any corporation, association
or other business entity in which such Person or one or more of its Subsidiaries
or such Person and one or more of its Subsidiaries owns sufficient equity or
voting interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership, limited liability
company or joint venture if more than a 50% interest in the profits or capital
thereof is owned by such Person or one or more of its Subsidiaries or such
Person and one or more of its Subsidiaries (unless such partnership, limited
liability company or joint venture can and does ordinarily take major business
actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to a
"Subsidiary" is a reference to a Subsidiary of the Company.
"Subsidiary Guarantor" means any Subsidiary of the Company that
executes and delivers to each holder of the Notes a Subsidiary Guaranty.
"Subsidiary Guaranty" means a Guaranty in substantially the form of
the attached Exhibit B-1.
"this Agreement" or "the Agreement" is defined in Section 17.3.
"Unrestricted Subsidiary" means any Subsidiary of the Company that
has been so designated by notice in writing given to the holders of the Notes.
"USA Patriot Act" means Public Law 107-56 of the United States of
America, United and Strengthening America by Providing Tools Required to
Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001.
8
Schedule B