RAYOVAC CORPORATION AND SUBSIDIARIES
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
For the Transition Period Ended September 30, 1996
and the years ended June 30, 1994, 1995 and 1996
(in thousands)
Column A Column B Column C Column D Column E
-------------------------------- --------------- --------------- --------------- ----------------
Additions
Balance at Charged to
Beginning Costs and Balance at
Descriptions of Period Expenses Deductions End of Period
-------------------------------- --------------- --------------- --------------- ----------------
Transition Period Ended
September 30, 1996:
Allowance for doubtful accounts $786 $147 $211 $722
==== ==== ==== ====
June 30, 1996:
Allowance for doubtful accounts $702 $545 $461 $786
==== ==== ==== ====
June 30, 1995:
Allowance for doubtful accounts $831 $714 $843 $702
==== ==== ==== ====
June 30, 1994:
Allowance for doubtful accounts $829 $404 $402 $831
==== ==== ==== ====
S-1
EXHIBIT 2.1
===============================================================================
STOCK PURCHASE AND REDEMPTION AGREEMENT
among
RAYOVAC CORPORATION
(Company),
CERTAIN AFFILIATES OF
THOMAS H. LEE COMPANY,
(Purchasers)
and
ALL THE SHAREHOLDERS
OF COMPANY
(Redemption Shareholders)
Dated as of September 12, 1996
===============================================================================
TABLE OF CONTENTS
1. PURCHASE, SALE AND REDEMPTION OF SHARES............................... 2
1.1. Purchase and Sale of Investment Shares........................... 2
1.2. Redemption by the Company........................................ 2
1.3. Closing.......................................................... 3
1.4. Determination of Purchase Price.................................. 3
2. REPRESENTATIONS AND WARRANTIES OF
REDEMPTION SHAREHOLDERS............................................... 4
2.1. Representations and Warranties by Redemption Shareholders........ 4
2.2. Representations and Warranties by the Company.................... 6
3. REPRESENTATIONS AND WARRANTIES OF PURCHASERS.......................... 23
3.1. Organization and Good Standing................................... 23
3.2. Power............................................................ 23
3.3. Authorization.................................................... 23
3.4. No Conflict...................................................... 23
3.5. No Consent....................................................... 24
3.6. Litigation....................................................... 24
3.7. Brokers, Finders, etc............................................ 24
3.8. Purchase for Investment.......................................... 24
4. MUTUAL COVENANTS...................................................... 24
4.1. Capitalization................................................... 24
4.2. Transaction and Closing Fees..................................... 25
4.3. RABBI Trusts..................................................... 25
4.4. Records.......................................................... 25
4.5. Further Actions.................................................. 25
5. CLOSING............................................................... 26
5.1. Deliveries by Redemption Shareholders............................ 26
5.2. Deliveries by Purchasers......................................... 29
5.3. Deliveries by Company............................................ 29
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6. INDEMNIFICATION....................................................... 29
6.1. By Redemption Shareholders....................................... 29
6.2. By Purchasers.................................................... 30
6.3. By Company....................................................... 30
6.4. Indemnification of Third-Party Claims............................ 30
6.5. Payment.......................................................... 32
6.6. Limitations on Indemnification................................... 32
6.7. Certain Tax Matters.............................................. 34
6.8. Reporting Indemnity Payments..................................... 40
7. MISCELLANEOUS......................................................... 41
7.1. Expenses......................................................... 41
7.2. Assignment; Successors........................................... 41
7.3. Amendment and Modification....................................... 41
7.4. Entire Agreement................................................. 41
7.5. Severability..................................................... 41
7.6. Notices.......................................................... 42
7.7. No Third Party Beneficiaries..................................... 43
7.8. Headings......................................................... 43
7.9. Governing Law.................................................... 43
7.10. Counterparts.................................................... 43
7.11. Knowledge....................................................... 44
7.12. Remedies........................................................ 44
ii
SCHEDULES
Schedule 2.1(d) No Conflict (Redemption Shareholders)
Schedule 2.2(c) Qualification
Schedule 2.2(d) Subsidiaries
Schedule 2.2(e) Outstanding Rights
Schedule 2.2(f) No Conflict, etc. (Company)
Schedule 2.2(h) Insurance
Schedule 2.2(i) Litigation
Schedule 2.2(k) Taxes
Schedule 2.2(m) Absence of Certain Changes
Schedule 2.2(n)(i) Owned Real Property
Schedule 2.2(n)(ii) Leased Real Property
Schedule 2.2(n)(iii) Liens
Schedule 2.2(o) Material Contracts
Schedule 2.2(p) Employee Benefit Plans
Schedule 2.2(q) Intellectual Property
Schedule 2.2(r) Labor Relations
Schedule 2.2(s) Undisclosed Liabilities
Schedule 2.2(u) Environmental Matters
Schedule 2.2(v) Product Liability
Schedule 2.2(w) Triggering Events
Schedule 2.2(aa) DISC Agreements
Schedule 5.1(d) Required Consents
EXHIBITS
Exhibit A Purchasers
Exhibit B Redemption Shareholders
Exhibit C Shareholder Appointment of Agent and Power of
Attorney
Exhibit D Form of New Shareholders Agreement
Exhibit E Form of Foley & Lardner Opinion
Exhibit F Form of Confidentiality, Non-Competition, No-
Solicitation and No-Hire Agreement
Exhibit G Form of Non-Competition Agreement
Exhibit H Form of Skadden, Arps, Slate, Meagher & Flom
Opinion
Exhibit I Purchaser Appointment of Agent and Power of
Attorney
Exhibit J Form of Accountant's Letter
Exhibit K Form of Intellectual Property Opinion
Exhibit L Form of Consulting Agreement
iii
STOCK PURCHASE AND REDEMPTION AGREEMENT
Stock Purchase and Redemption Agreement (this "Agreement") dated as of
September 12, 1996, by and among Rayovac Corporation, a Wisconsin corporation
(the "Company"), certain affiliates of Thomas H. Lee Company listed on Exhibit A
(individually a "Purchaser" and together the "Purchasers") and the existing
shareholders of the Company, all of whom are listed on Exhibit B (individually a
"Redemption Shareholder" and together the "Redemption Shareholders").
W I T N E S S E T H :
---------------------
WHEREAS, the Company has 18,000,000 shares of capital stock, par value $.01
per share (the "Shares"), authorized for issuance (all of which are designated
common stock), 9,902,000 shares of which are issued and outstanding (the
"Outstanding Shares"); and
WHEREAS, Redemption Shareholders own all of the Outstanding Shares; and
WHEREAS, Purchasers wish to purchase certain Outstanding Shares, on the
terms and conditions and for the consideration described in this Agreement; and
WHEREAS, Redemption Shareholders wish to have a portion of their
Outstanding Shares either redeemed by the Company or sold to certain Purchasers,
on the terms and conditions and for the consideration described in this
Agreement, such that the Redemption Shareholders would retain 20% of the common
equity interest in the Company after the transactions described in this
Agreement; and
WHEREAS, Redemption Shareholders, other than the Thomas and Judith Pyle
Charitable Remainder Trust created September 10, 1996, have designated Thomas F.
Pyle, Jr. and Marvin G. Siegert (the "Redemption Shareholders' Agents") as their
agents and attorneys-in-fact with the authority to act on their behalf,
individually or collectively, in connection with the transactions contemplated
hereby, pursuant to Shareholder Appointment of Agents and Power of Attorneys, a
copy of which is attached hereto as Exhibit C (the "Powers of Attorney"); and
WHEREAS, a Purchaser has designated Warren C. Smith, Jr. and Scott A.
Schoen (the "Purchaser's Agent") as its agent and attorney-in-fact with the
authority to act on its behalf, individually or collectively, in connection with
the transactions contemplated hereby, pursuant to Purchaser Appointment of Agent
and Power of Attorney, a copy of which is attached hereto as Exhibit I; and
WHEREAS, immediately after the transactions contemplated by this Agreement,
the Company is amending its Restated Articles of Incorporation to effect, among
other things, a 5 for 1 stock split (the "Stock Split").
NOW, THEREFORE, in consideration of the mutual promises, covenants,
representations and warranties made herein and of the mutual benefits to be
derived herefrom, the parties hereto agree as follows:
1. PURCHASE, SALE AND REDEMPTION OF SHARES
1.1. Purchase and Sale of Investment Shares. In reliance upon the
representations, warranties and covenants contained herein, at the Closing (as
hereinafter defined), the Redemption Shareholders will sell an aggregate of
9,089,581 Outstanding Shares ("Investment Shares") to Purchasers, and Purchasers
will purchase the Investment Shares from the Redemption Shareholders, for an
aggregate purchase price of Seventy-Two Million Dollars ($72,000,000) (the
"Investment Price"). The number of Investment Shares being purchased by each
Purchaser and who the Purchaser is buying the Investment Shares from is set
forth opposite such Purchaser's name on Exhibit A.
1.2. Redemption by the Company. In reliance upon the representations,
warranties and covenants contained herein, the Company agrees to redeem from
Redemption Shareholders, and Redemption Shareholders agree to deliver and sell
5,807,904 Outstanding Shares ("Redemption Shares"), for the per share purchase
price described in Section 1.4 below (the "Purchase Price"), in an amount such
that together with the sale of Investment Shares by the Redemption Shareholders
to certain Purchasers, the Redemption Shareholders as a group will retain 20% of
the outstanding Shares. The number of Redemption Shares being redeemed by the
Company from each Redemption Shareholder and the number of Shares being sold to
the Purchasers (and which Purchasers such Shares are being sold to) is set forth
opposite such Redemption Shareholder's name on Exhibit B.
2
1.3. Closing. The closing (the "Closing") of the transactions
described herein shall take place immediately upon execution hereof at the
office of Mayer, Brown & Platt, Chicago, Illinois, at 9:00 a.m., local time. For
all accounting, tax and other purposes, the Closing shall be effective as of the
close of business on the date hereof and is referred to herein as the "Closing
Date". At the Closing, the following will simultaneously occur:
(a) The Redemption Shareholders will deliver to Purchasers the
Investment Shares duly endorsed in blank or accompanied by a stock power or
other proper instrument of assignment duly executed in blank and having all
requisite stock transfer stamps attached.
(b) Purchasers will deliver or cause to be delivered the Investment
Price to Redemption Shareholders' Agents through a wire transfer of immediately
available funds to the account or accounts designated by Redemption
Shareholders' Agents.
(c) The Company will repay all of its outstanding long-term debt as of
the Closing Date, which outstanding debt is described in Schedule
2.2(o)(vi)(b)-(f) (the "Long-Term Debt").
(d) Redemption Shareholders will deliver to Company the Redemption
Shares, duly endorsed in blank or accompanied by a stock power or other proper
instrument of assignment duly executed in blank and having all requisite stock
transfer stamps attached.
(e) The Company will deliver its portion of the Purchase Price to
Redemption Shareholders' Agents through a wire transfer of immediately available
funds to the account or accounts designated by Redemption Shareholders' Agents.
(f) The parties will deliver any other document or take any other
action set forth in Article 5.
1.4. Determination of Purchase Price. The Purchase Price shall equal
$217,425,400. The per share Purchase Price is approximately $21.94.
3
2. REPRESENTATIONS AND WARRANTIES OF REDEMPTION SHAREHOLDERS
2.1. Representations and Warranties by Redemption Shareholders.
Redemption Shareholders make the following representations and warranties to
Company and Purchasers:
(a) Power. Each Redemption Shareholder has full power, legal right and
authority to enter into, execute and deliver this Agreement and the other
agreements, instruments and documents contemplated hereby (such other documents
sometimes referred to herein as "Ancillary Instruments"), to perform such
Redemption Shareholder's obligations hereunder and thereunder, and to carry out
the transactions contemplated hereby and thereby. Pursuant to the Powers of
Attorney, each of the Redemption Shareholders has designated Thomas F. Pyle, Jr.
and Marvin G. Siegert as their agents and attorneys-in-fact with the authority
to act on their behalf, individually or collectively, with respect to the
matters referred to herein. The Powers of Attorney are sufficient to authorize
the Redemption Shareholders' Agents to act on behalf of the Redemption
Shareholders with respect to the execution, delivery and performance of this
Agreement and the Ancillary Instruments and the consummation of the transactions
contemplated hereby and thereby.
(b) Authorization, etc. The execution and delivery of this Agreement
and the Ancillary Instruments and the consummation of the transactions
contemplated herein and therein have been duly authorized by each Redemption
Shareholder. Upon execution by the parties hereto, this Agreement and the
Ancillary Instruments to which such Redemption Shareholder is a party will
constitute the legal, valid and binding obligations of such Redemption
Shareholder enforceable against him/her in accordance with their respective
terms, except to the extent enforceability may be limited by (i) the effect of
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting the rights and remedies of
creditors generally, (ii) general principles of equity, whether such
enforceability is considered in a proceeding in equity or at law, and the
discretion of the court before which any proceeding therefor may be brought, and
(iii) the unenforceability under certain circumstances under law or court
decisions of provisions providing for the indemnification of a party with
respect to a liability where such indemnification is contrary to public policy.
4
(c) Title to Stock, etc. Each Redemption Shareholder is the record and
beneficial owner of and has good, valid and marketable title to its Outstanding
Shares, free and clear of any lien, pledge, security interest, encumbrance,
title retention agreement, adverse claim, option or other encumbrance of any
nature whatsoever ("Lien"), and upon the delivery of and payment for the
Redemption Shares and Investment Shares being sold by Redemption Shareholders to
Purchasers at the Closing as provided for in this Agreement, each Redemption
Shareholder will transfer good, valid and marketable title thereto, free and
clear of any Lien (other than a Lien created by the Purchasers). Exhibit B sets
forth the names and record owners of all Outstanding Shares.
(d) No Conflict. Except as set forth in Schedule 2.1(d), the execution
and delivery of this Agreement by each Redemption Shareholder and the
consummation of the transactions contemplated hereby do not and will not
conflict in any material respect with (i) any note, bond, mortgage, indenture,
license agreement, lease or other agreement, instrument or obligation to which
such Redemption Shareholder is a party or to which any of such Redemption
Shareholder's properties or assets may be bound or (ii) any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to such
Redemption Shareholder, except for conflicts, violations or defaults that would
not reasonably be expected to impair in any material respect the performance by
such Redemption Shareholder of such Redemption Shareholder's obligations
hereunder.
(e) No Consent. No Consent (hereinafter defined) is required
to be obtained by the Redemption Shareholders in connection with the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby, except for Consents which, if not obtained, would not in
the aggregate reasonably be expected to impair in any material respect the
Redemption Shareholders' performance of their obligations hereunder.
5
2.2. Representations and Warranties by the Company.
The Schedules to this Section 2.2 are arranged in subsections
corresponding to the numbered and lettered subsections contained in this Section
2.2 and the disclosure in any subsection shall qualify only the corresponding
subsection in this Section 2.2. The Company makes the following representations
and warranties to Purchasers:
(a) Organization. Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Wisconsin.
(b) Corporate Power and Authorization.
(i) Company has all requisite corporate power and authority to
own, operate and lease its properties and to carry on its business as
and where such is now being conducted. Company has the requisite
corporate power and authority to enter into, execute and deliver this
Agreement and each Ancillary Instrument to which it is a party, to
perform its obligations hereunder and thereunder, and to carry out the
transactions contemplated hereby and thereby.
(ii) The execution and delivery of this Agreement and the
Ancillary Instruments and the consummation of the transactions
contemplated herein and therein have been duly authorized by the
Company. Upon execution by the parties hereto, this Agreement and the
Ancillary Instruments to which the Company is a party constitute the
legal, valid and binding obligations of the Company, enforceable
against it in accordance with their respective terms, except to the
extent enforceability may be limited by (i) the effect of bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting the rights and remedies
of creditors generally, (ii) general principles of equity, whether
such enforceability is considered in a proceeding in equity or at law,
and the discretion of the court before which any proceeding therefor
may be brought, and (iii) the unenforceability under certain
circumstances under law or court decisions of provisions providing for
the indemnification of a party with respect to a liability where such
indemnification is contrary to public policy.
6
(c) Qualification. Company is duly licensed or qualified to do
business as a foreign corporation, and is in good standing, in each jurisdiction
wherein the character of the properties owned or leased by it, or the nature of
its business, makes such licensing or qualification necessary. The states in
which Company is licensed or qualified to do business are listed in Schedule
2.2(c).
(d) Subsidiaries. Schedule 2.2(d) sets forth the name, jurisdiction of
incorporation, capitalization, ownership and officers and directors of each
corporation in which the Company has a direct or indirect equity interest
("Subsidiaries"). Each Subsidiary is in good standing in its jurisdiction of
incorporation and is duly licensed or qualified to do business as a foreign
corporation, and is in good standing, in each jurisdiction wherein the character
of the properties owned or leased by it, or the nature of its business, makes
such licensing or qualification necessary. Except as listed in Schedule 2.2(d),
the Company does not own, directly or indirectly, any capital stock or other
equity securities of any corporation or have any direct or indirect equity or
other ownership interest in any entity or business. Except as listed on Schedule
2.2(d), all of the outstanding shares of capital stock of each Subsidiary are
owned directly by the Company or a Subsidiary. All outstanding shares of capital
stock of each Subsidiary are free and clear of any Liens and are validly issued,
fully paid, nonassessable and free of preemptive rights with no personal
liability attaching to the ownership thereof. There are no (a) securities
convertible into or exchangeable for the capital stock or other securities of
any Subsidiary, (b) options, warrants or other rights to purchase or subscribe
to capital stock or other securities of any Subsidiary or securities which are
convertible into or exchangeable for capital stock or other securities of any
Subsidiary or, (c) contracts, commitments, agreements, understandings or
arrangements of any kind relating to the issuance, sale or transfer of any
capital stock or other equity securities of any Subsidiary, any such convertible
or exchangeable securities or any such options, warrants or other rights. Each
Subsidiary (i) is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation, (ii) has full corporate
power and authority to carry on its business as it is now being conducted and to
own and lease the properties and assets it now owns and leases, and (iii) is in
good standing and is duly qualified or licensed to do business as a foreign
corporation in each of the jurisdictions listed opposite the name of such
Subsidiary in Schedule 2.2(d), which are the only jurisdictions in which such
Subsidiary is required to be so qualified or licensed. The term "Company" as
used hereinafter
7
means the Company and its Subsidiaries, except where the context or specific
provision provide otherwise.
(e) Capitalization of Company. The authorized capital stock of the
Company (not including Subsidiaries) consists of $18,000,000 shares of capital
stock, par value $.01 per share, all of which are designated common stock, of
which 9,902,000 shares are issued and outstanding and owned beneficially and of
record by Redemption Shareholders. The Outstanding Shares have been duly
authorized and validly issued and are fully paid, nonassessable and free of
preemptive rights with no personal liability attaching to the ownership thereof
except to the extent provided by Section 180.0622(2)(b) of the Wisconsin
Business Corporation Law. There are 100,000 Shares held in the Company's
treasury. Except as set forth in Schedule 2.2(e), there are no outstanding
options, warrants, conversion or other rights, and there are no agreements or
commitments of any kind (other than this Agreement) obligating Redemption
Shareholders, or the Company, as the case may be, contingently or otherwise, to
issue or sell any shares, options, warrants or conversion or other rights. The
Investment Shares have been duly authorized and reserved for issuance and, when
issued pursuant to the terms of this Agreement, will be duly authorized, validly
issued, fully paid and nonassessable (except as provided by Section
180.0622(2)(b) of the Wisconsin Business Corporation Law).
(f) No Conflict, etc. Except as set forth in Schedule 2.2(f), the
execution and delivery of this Agreement and the Ancillary Instruments to which
the Company is a party, the performance by the Company of its obligations
hereunder and thereunder, and the consummation of the transactions contemplated
hereby and thereby do not and will not conflict in any respect with, or result
in any violation of or default (or give rise to any right of termination,
cancellation or acceleration) under (i) any provision of the charter documents
or by-laws of the Company, (ii) any note, bond, mortgage, indenture, lease or
other agreement of the Company or (iii) any judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to the Company, except (in the
case of clauses (ii) and (iii)) for conflicts, violations and defaults that,
individually and in the aggregate, would not reasonably be expected to have a
Material Adverse Effect. The term "Material Adverse Effect" shall mean any
event, occurrence, fact, condition, change or effect that is materially adverse
to the business, assets, liabilities, results of operations, or financial
condition of the Company and Subsidiaries, taken as a whole. No consent,
approval, authorization, order, filing, registration or
8
qualification with or to any person including, but not limited to, any
governmental authority ("Consent") is required to be obtained by the Company in
connection with the execution and delivery of this Agreement and the Ancillary
Instruments to which the Company is a party, the performance by the Company of
its obligations hereunder and thereunder or the consummation of the transactions
contemplated hereby and thereby other than any Consent in respect of which the
failure to obtain such Consent, either individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect or materially
impair the ability of the Company to perform its obligations hereunder.
(g) Financial Statements. Redemption Shareholders' Agents have
delivered to Purchasers complete and correct copies of the audited combined
consolidated financial statements of the Company for the years ended June 30,
1994, 1995 and 1996 (collectively, the "Financial Statements" and for the year
ended June 30, 1996, the "1996 Consolidated Financial Statements"), in each
case, audited by Coopers & Lybrand L.L.P., independent certified public
accountants, whose audit reports thereon are included therein consisting of
combined consolidated balance sheets as of such respective dates and the related
combined consolidated statements of income and retained earnings, and cash flows
for each of the fiscal years then ended. The Financial Statements have been
prepared in accordance with generally accepted accounting principles ("GAAP")
throughout the periods involved, and present fairly, in all material respects,
the consolidated financial position, consolidated results of operations and cash
flows of the Company, as at and for the periods indicated.
(h) Insurance. Schedule 2.2(h) contains a complete and correct list
and summary description of all insurance policies maintained at present by or on
behalf of the Company. The Company has made available to Purchasers complete and
correct copies of all such policies together with all riders and amendments
thereto. Such policies are in full force and effect, and all premiums due
thereon have been paid. The Company has complied in all material respects with
the terms and provisions of such policies, and no notice of cancellation or
termination has been received with respect to any such policy. Such policies are
sufficient for compliance with all requirements of law and of all agreements to
which the Company is a party; are valid, outstanding and enforceable policies.
The Company has not been refused any insurance with respect to its assets or
operations, nor has its coverage been limited, by any insurance carrier to which
9
it has applied for any such insurance or with which it has carried insurance
during the past two (2) years.
(i) Litigation. Except as set forth in Schedule 2.2(i) or Schedule
2.2(u), there are no judicial or administrative actions, suits, proceedings,
claims, arbitrations or investigations pending or, to the Knowledge (hereinafter
defined) of the Company, threatened against the Company or any Redemption
Shareholder (i) which, either individually or in the aggregate, would reasonably
be expected to have a Material Adverse Effect, (ii) which question the validity
of this Agreement, or (iii) which seek to enjoin any action taken or to be taken
in connection herewith or the consummation of the transactions contemplated
hereby.
(j) Compliance with Laws. Except as set forth in Section 2.2(u), (i)
to the Knowledge of the Company, it is not in violation of or in default under
any judgment, order, writ, injunction or decree of any court or administrative
agency or any statute, law, ordinance, rule or regulation, and (ii) the Company
has not received any written notice alleging any such violation or default.
(k) Tax Matters.
(i) The term "Tax" shall mean any federal, state, local or
foreign income, alternative, minimum, accumulated earnings, personal
holding company, franchise, capital stock, profits, windfall profits,
gross receipts, sales, use, value added, transfer, registration,
stamp, premium, excise, customs duties, severance, environmental
(including taxes under section 59A of the Internal Revenue Code of
1986, as amended ("Code")), real property, personal property, ad
valorem, occupancy, license, occupation, employment, payroll, social
security, disability, unemployment, workers' compensation,
withholding, estimated or other similar tax, duty, fee, assessment or
other governmental charge or deficiencies thereof (including all
interest and penalties thereon and additions thereto). The term "Tax
Return" shall mean any tax return, report, information, return,
schedule or other document (including any related or supporting
information) filed or required to be filed with respect to Taxes.
10
(ii) Except as set forth on Schedule 2.2(k):
(A) (1) all Tax Returns relating to the Company and the business
or assets thereof that were required to be filed on or before the
Closing Date have been duly and timely filed, (2) the Company has paid
or made adequate provision for all Taxes that are due or claimed to be
due by any taxing authority and (3) the Company is not currently the
beneficiary of any extension of time within which to file any Tax
Return;
(B) there has been no claim or issue (other than a claim or issue
that has been finally settled) concerning any material liability for
Taxes of the Company asserted, raised or threatened by any taxing
authority;
(C) the Company has not (1) waived any statute of limitations or
(2) agreed to any extension of the period for assessment or
collection;
(D) there are no liens for Taxes upon any assets of the Company
except for statutory liens for current Taxes not yet due;
(E) the statutes of limitations for all Tax Returns of the
Company have expired for all federal, state, local and foreign Tax
purposes, or Tax Returns of the Company have been examined by the
appropriate taxing authorities for all periods;
(F) no power of attorney has been executed by the Company with
respect to any matter relating to Taxes that is currently in force;
(G) the Company is not a party to any agreement, contract, or
other arrangement that would result, separately or in the aggregate,
in the requirement to pay any "excess parachute payment" within the
meaning of Section 280G of the Code; and
(H) all Taxes that the Company is required by law to withhold or
to collect for payment have been duly withheld and
11
collected, and have been paid or accrued, reserved against and
entered on the books of the Company.
(l) Brokers, Finders, etc. All negotiations relating to this
Agreement and the transactions contemplated hereby have been carried out without
the intervention of any person acting on behalf of Redemption Shareholders or
the Company in such manner as to give rise to any valid claim against
Purchasers, Redemption Shareholders or the Company for any brokerage or finder's
commission, fee or similar compensation, except for Merrill Lynch & Co.
(m) Absence of Certain Changes. Except as set forth on Schedule
2.2(m) or as otherwise contemplated by this Agreement, since the 1996
Consolidated Financial Statements (i) there has been no change that has had or
would reasonably be expected to have a Material Adverse Effect, except for any
change resulting from general and publicly known economic, financial or market
conditions, (ii) there has been no physical damage, destruction or loss that,
after taking into account any insurance recoveries payable in respect thereof,
has had or would reasonably be expected to have, a Material Adverse Effect,
(iii) there has been no sale, assignment or transfer of any material assets of
the Company except in the ordinary course of business, (iv) except as required
by GAAP, the Company has not changed any of its accounting principles or the
methods by which such principles are applied for tax or financial reporting
purposes, and (v) the Company has not entered into any agreement to do any of
the things described in this Section 2.2(m).
(n) Title to Properties, etc. Schedule 2.2(n)(i) contains a
complete and correct list of all real property currently owned by the Company,
and Schedule 2.2(n)(ii) sets forth a complete and correct list of any lease
pursuant to which the Company currently leases real property (collectively, the
"Real Property"). The Company has:
(i) good, valid and marketable title to all of its respective
owned real property listed on Schedule 2.2(n)(i);
(ii) valid leasehold interests in all real properties listed on
Schedule 2.2(n)(ii); and
12
(iii) legal and beneficial ownership of its personal properties,
including, without limitation, all those reflected in the combined
consolidated balance sheet of the Company contained in the 1996
Consolidated Financial Statement ("Balance Sheet") or acquired after
such date (except for inventories and other assets sold or otherwise
disposed of in the ordinary course of business since the 1996
Consolidated Financial Statements),
in each case free and clear of all Liens (and, in the case of Real Property, not
subject to any rights of way, building use restrictions, reservations or
encumbrances of any nature) other than (u) with respect to leasehold interests,
all matters and encumbrances affecting landlord's fee interest in the real
properties, which to the Knowledge of the Company are not in violation of the
applicable lease; (v) Liens shown on the Balance Sheet as securing specified
liabilities or obligations, and Liens incurred in connection with the purchase
of property and/or assets, if such purchase was effected after the date of the
Balance Sheet, in either case with respect to which no default exists; (w) Liens
for taxes and assessments not yet due and payable or which are being contested
in good faith and by appropriate proceedings; (x) Liens that are set forth in
Schedule 2.2(n)(iii); (y) Liens and imperfections in title which individually or
in the aggregate do not materially detract from the value, or impair in any
significant manner the use, of the property subject thereto or the operations of
the Company; and (z) statutory Liens incurred in the ordinary course of
business, none of which is substantial in amount and which individually or in
the aggregate do not materially detract from the value, or impair in any
significant manner the use, of the property subject thereto or the operations of
the Company. All leases with respect to the leasehold interests listed on
Schedule 2.2(n)(ii) are valid, binding and enforceable in accordance with their
terms, and are in full force and effect; there are no existing defaults by the
Company thereunder; no event of default has occurred which (whether with or
without notice, lapse of time or the happening or occurrence of any other event)
would constitute a default thereunder by the Company, except such defaults as
would not reasonably be expected, either individually or in the aggregate, to
have a Material Adverse Effect on the business of the Company.
13
(o) Material Contracts. Schedule 2.2(o) contains a list of:
(i) all contracts and agreements with current officers, other
employees, consultants, agents, contractors, advisors, sales
representatives, distributors, or dealers of the Company other than
(x) contracts which by their terms are cancelable by the Company with
notice of not more than 60 days and (y) contracts which provide for
payments based solely on products sold and require no minimum
payments;
(ii) all collective bargaining agreements with any labor union
currently representing employees of the Company;
(iii) all mortgages, indentures, pledges or security agreements,
notes, loan agreements or guarantees of the obligations of third
parties binding upon the Company or similar documents relating to
borrowed money (including without limitation interest rate or currency
swaps, hedges or straddles or similar transactions) to which the
Company is a party or by which any of its assets are bound, restricted
or encumbered in excess of $100,000;
(iv) joint venture and limited partnership agreements of the
Company;
(v) distribution and marketing agreements of the Company
involving in excess of $500,000 worth of product per year;
(vi) license or other agreements of the Company providing in
whole or in part for the use of any patents, trademarks, trade names,
service marks, copyrights, inventions, trade secrets or other
proprietary know-how or other intellectual property, whether the
Company is the licensor or the licensee thereunder, and all
settlements, consents or forbearance to sue agreements relating
thereto; and
(vii) any contract or agreement entered into involving an
estimated total future payment or payments to or from the Company in
excess of $500,000.
14
The contracts set forth on Schedule 2.2(o) are collectively
referred to as the "Material Contracts." The Company has made available to Buyer
true and correct copies of all Material Contracts. To the Knowledge of the
Company, neither the Company nor any other person is in default under any
Material Contract, except for such defaults as would not reasonably be expected,
either individually or in the aggregate, to have a Material Adverse Effect on
the business of the Company.
(p) Compliance with ERISA.
(i) Schedule 2.2(p)(i) contains a complete list of each pension,
retirement, profit-sharing, deferred compensation, bonus or other
incentive, medical, health, life insurance, disability or other
welfare or severance plan, agreement or arrangement sponsored or
contributed to by the Company or by any trade or business, whether or
not incorporated (an "ERISA Affiliate"), that together with the
Company would be deemed a "single employer" within the meaning of
section 4001 of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), for the benefit of any employee or terminated
employee of the Company or any ERISA Affiliate (individually a "Plan"
and collectively, the "Plans"). All Plans comply with the applicable
requirements of law, including but not limited to ERISA and the Code,
except for failures to comply that, either individually or in the
aggregate, would not reasonably be expected to have a Material Adverse
Effect. No Plan which is subject to Part 3 of Subtitle B of Title I of
ERISA has incurred any "accumulated funding deficiency," whether or
not waived, within the meaning of section 302 of ERISA or section 412
of the Code and all contributions required to be made with respect
thereto on or prior to the Closing Date have been timely made. Neither
the Company nor any ERISA Affiliate has incurred any material
liability pursuant to Title IV of ERISA with respect to any Plan and
no condition exists that presents a material risk to the Company or
any ERISA Affiliate of incurring liability under such Title. Neither
the Company nor any ERISA Affiliate, nor any Plan, trust created
thereunder or trustee or administrator thereof has engaged in a
transaction in connection with which the Company or any ERISA
Affiliate, any Plan, any such trust, or any trustee or administrator
thereof, or any party dealing with any
15
Plan or any such trust could be subject to either a material civil
penalty assessed pursuant to section 409 or 502(i) or ERISA or a
material tax imposed pursuant to section 4975 or 4976 of the Code.
(ii) Except as provided on Schedule 2.2(p)(ii), no plan is a
"multiemployer pension plan," as defined in section 3(37) of ERISA,
nor is any Plan a plan described in section 4063(a) of ERISA. With
respect to any ERISA Plan that is a "multiemployer pension plan," as
such term is defined in section 3(37) of ERISA, covering employees of
the Company or any ERISA Affiliate, (i) neither the Company nor any
ERISA Affiliate has, since September 26, 1980, made or suffered a
"complete withdrawal" or a "partial withdrawal," as such terms are
respectively defined in sections 4203 and 4205 of ERISA, (ii) no event
has occurred that presents a material risk of a partial withdrawal,
(iii) neither the Company nor any ERISA Affiliate has any contingent
liability under section 4204 of ERISA, and (iv) the aggregate
withdrawal liability of the Company and the ERISA Affiliates, computed
as if a complete withdrawal by the Company and the ERISA Affiliates
had occurred under each such Plan on the date hereof, would not exceed
$25,000. Each Plan intended to be "qualified" within the meaning of
section 401(a) of the Code is so qualified and the trusts maintained
thereunder are exempt from taxation under section 501(a) of the Code.
No amounts payable under the Plans or under any employment, severance
or other agreements or arrangements maintained by the Company will
fail to be deductible for federal income tax purposes by virtue of
section 280G of the Code.
(iii) Except as provided on Schedule 2.2(p)(iii), no plan
provides benefits, including without limitation death or medical
benefits (whether or not insured), with respect to current or former
employees of the Company or any ERISA Affiliate beyond their
retirement or other termination of service (other than (i) coverage
mandated by applicable law or (ii) death benefits or retirement
benefits under any "employee pension plan," as that term is defined in
section 3(2) of ERISA). To the Knowledge of the Company, there are no
pending, threatened or anticipated claims by or on behalf of any Plan,
by any employee or beneficiary covered under any such
16
Plan, or otherwise involving any such Plan (other than routine claims
for benefits).
(iv) Schedule 2.2(p)(iv) sets forth the life insurance policies
to be transferred to the Rabbi Trust (defined in Section 4.3) and
remaining premiums to be paid under such policies by the Company.
(q) Intellectual Property.
(i) Schedule 2.2(q)(i) sets forth a list of all (A) registered
and applied for trademarks, trade names, service marks and (B)
registered and applied for copyrights, including registrations and
applications to register or renew the registration of any of the
foregoing, (C) patents and patent applications, and (D) inventions,
trademarks, trade names, and service marks, trade secrets, copyrights
(whether registered or unregistered), know-how and any other
intellectual property ("Intellectual Property") owned by the Company
and used in or material to the conduct of the Company's business as
currently conducted (collectively, the "Owned Intellectual Property").
Owned Intellectual Property shall include, but Schedule 2.2(q) need
not disclose, inventions, trade secrets and know-how and nonmaterial
unregistered copyrights.
(ii) Except as set forth on Schedule 2.2(q)(ii), (A) the Company
is the sole and exclusive and record and beneficial owner of the Owned
Intellectual Property, free and clear of all Liens, subject only to
such third party rights as are set forth in the Material Contracts
listed in Schedule 2.2(o), and, to the Knowledge of the Company, the
Company's use of the Owned Intellectual Property does not infringe on
the rights of any third party; (B) there is no claim or demand of any
person or entity pertaining to, or any proceeding which is pending or,
to the Knowledge of the Company, threatened that challenges the rights
of the Company with respect to any Owned Intellectual Property, other
than infringements, claims, demands, or defaults that, either
individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect; (C) there are no royalties, honoraria,
fees or other payments payable by the Company to any person by reason
of ownership, use, licensure or sale
17
of any product embodying any Owned Intellectual Property or the
conduct of the business as currently conducted except as set forth in
the Material Contracts listed in Schedule 2.2(o); (D) the Company has
not entered into and is not otherwise bound by any consent,
forbearance to sue or settlement agreement which limits the Company's
rights to use, sell or license any Owned Intellectual Property, except
as set forth in the Material Contracts listed in schedule 2.2(o); (E)
the patents, registrations and applications set forth on Schedule
2.2(q) are not subject to any pending or, to the Knowledge of the
Company, threatened opposition, cancellation or similar proceeding
before any court or registration authority; (F) to the Knowledge of
the Company, no person has infringed, misappropriated or misused any
of the Owned Intellectual Property and the Company has not asserted
any claim of infringement, misappropriation or misuse against any
person within the past three (3) years which remains unresolved; and
(G) to the Knowledge of the Company, all issued patents and
registrations set forth on Schedule 2.2(q) are valid and enforceable.
(iii) Schedule 2.2(q)(iii) sets forth a list of all written
licenses (x) material to the conduct of the Company's business as
presently conducted, (y) pursuant to which the use by any person or
entity of Owned Intellectual Property is permitted by the Company, or
(z) pursuant to which the use by the Company of Intellectual Property
is permitted by any person. All such licenses are in full force and
effect. To the Knowledge of Company, the Company is not in default
under any such license.
(r) Labor Relations and Employment. Except to the extent set
forth in Schedule 2.2(r), (i) there is no labor strike, dispute, slowdown,
stoppage or lockout pending or, to the Knowledge of the Company, threatened
against or affecting the Company; (ii) to the Knowledge of the Company, no union
claims to represent the employees of the Company; (iii) the Company is not a
party to or bound by any collective bargaining or similar agreement with any
labor organization, or work rules or practices agreed to with any labor
organization or employee association applicable to employees of the Company;
(iv) none of the employees of the Company is represented by any labor
organization and to the Knowledge of the Company, there is not any current union
organizing activities
18
among the employees of the Company nor does any question concerning
representation exist concerning such employees; (v) there is no unfair labor
practice charge or complaint against the Company or, to the Knowledge of the
Company, threatened before the National Labor Relations Board or any similar
state or foreign agency; (vi) there is no grievance arising out of any
collective bargaining agreement or other grievance procedure which, if adversely
determined, would have a Material Adverse Effect; (vii) no charges with respect
to or relating to the Company are pending before the Equal Employment
Opportunity Commission or any other agency responsible for the prevention of
unlawful employment practices which, if adversely determined, would have a
Material Adverse Effect; (viii) the Company has not received written notice of
the intent of any federal, state, local or foreign agency responsible for the
enforcement of labor or employment laws to conduct an investigation of the
Company nor is such an investigation in progress; (ix) there are no complaints,
lawsuits or other proceedings pending or, to the Knowledge of the Company,
threatened in any forum by or on behalf of any present or former employee of the
Company which, if adversely determined or resolved would individually or in the
aggregate, would have a Material Adverse Effect; and (x) no employee of the
Company has suffered an "employment loss" (as defined in the Worker Adjustment
and Restraining Notification Act) during the ninety (90) days prior to the date
hereof.
(s) Absence of Undisclosed Liabilities. Except (i) as disclosed
in Schedule 2.2(s), (ii) as and to the extent disclosed or reserved against in
the 1996 Consolidated Financial Statements, or (iii) liabilities incurred after
the date of the 1996 Consolidated Financial Statements in the ordinary course of
the Company's business consistent with past practice the Company does not have
any liabilities or obligations of any nature which, individually or in the
aggregate, have had and would not reasonably be expected to have a Material
Adverse Effect.
(t) Assets of the Company. The Company owns, or otherwise has
legally enforceable rights to use, all of the properties and assets material to
the conduct of the business of the Company as it is currently conducted.
(u) Environmental Matters.
(i) Except as set forth in Schedule 2.2(u), to the Knowledge of
the Company, (A) the Company is in substantial compliance with all
provisions of all statutes, laws, rules, regulations,
19
ordinances, codes or orders of any recognized governmental authority
that are applicable to the business of the Company or the Real
Property owned or leased by the Company relating to pollution or the
protection of human health or the environment, or to any generation,
processing, storage, holding, abatement, existence, release,
threatened release or transportation of any Hazardous Substances
(hereinafter defined), as in effect on the date hereof ("Environmental
Laws"), except for such violations and defaults that, either
individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect (B) there are no circumstances that may
prevent or interfere with such continued compliance in the future and
(C) the Company has not received any written notice or other
communication that alleges that the Company is not in such compliance,
except for allegations that have been finally resolved without any
material obligation on the part of the Company;
(ii) Schedule 2.2(u) sets forth all material Consents necessary
for the conduct of the business of the Company as currently conducted
pursuant to Environmental Laws (the "Environmental Permits"). The
Company has duly obtained all such Environmental Permits, and all such
Environmental Permits are in full force and effect. To the Knowledge
of the Company, the Company is in substantial compliance with all
Environmental Permits held by it, except for such failures to so
possess or comply that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect;
(iii) Except as set forth on Schedule 2.2(u), to the Knowledge of
Company, the Company has not received any written notification
pursuant to any Environmental Law that the Company, any operations of
the business of the Company, or its Real Property, is or may be the
subject of any proceeding, investigation, claim, lawsuit or order by
any governmental authority or other Person as to whether (x) any
remedial action is or may be needed to respond to a release or (y) the
Company is or may be a "potentially responsible party" pursuant to any
Environmental Law;
(iv) Except as set forth on Schedule 2.2(u), to the Knowledge of
the Company, the Company has not entered into any
20
written agreement with, or been issued any order by, any governmental
authority by which the Company has assumed responsibility, either
directly or as a guarantor or surety, for the remediation of any
condition arising from or relating to a release or threatened release
on or with respect to its Real Property or any other location; and
(v) Except as set forth on Schedule 2.2(u), to the Knowledge of
the Company there is not now and has not been at any time in the past
a release in connection with the conduct of the business of the
Company of Hazardous Substances (x) for which the Company may be
responsible and (y) which would reasonably be expected to have a
Material Adverse Effect. The term "Hazardous Substances" shall mean
any substance that requires investigation, removal or remediation
under any Environmental Law, or is defined, listed or identified as a
"hazardous waste" or "hazardous substance" or otherwise regulated
thereunder.
(v) Product Liability. Except as set forth in Schedule 2.2(v), there
is no action, suit, inquiry, proceeding or investigation by or before any court
or governmental or other regulatory or administrative agency or commission
pending or, to the Knowledge of the Company, threatened against or involving the
Company relating to any product alleged to have been manufactured or sold by the
Company and alleged to have been defective or improperly designed or
manufactured.
(w) No Triggering Events. Except under the agreements set forth on
Schedule 2.2(o)(i)(a) and (c) and any split dollar insurance agreements listed
on Schedule 2.2(w) with the Company's executives, the execution and delivery by
the Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby will not constitute a triggering event
(including a "first trigger") under any employment, bonus, deferred
compensation, incentive compensation, stock purchase, stock option, stock
appreciation right, restricted stock, performance unit, severance or termination
pay, hospitalization or other medical, life or other insurance, supplemental
unemployment benefit, flexible benefit, profit-sharing, pension, employee stock
ownership or retirement plan, program, fund, trust, agreement or arrangement
sponsored, maintained, contributed to, required to be contributed to or entered
into by the Company (or any trade or business, whether or not incorporated, that
together with the Company
21
would be deemed a "single employer" within the meaning of section 4001(b)(1) of
ERISA, and the rules and regulations promulgated thereunder) that will, or upon
the occurrence of subsequent events would, accelerate the time of payment or
vesting or increase the amount of compensation or benefits due to any director,
officer, employee or former employee (or any dependent of a former employee) of
the Company.
(x) Relationship with ROV Ltd. The agreements listed on Schedule
2.2(o)(ix)(g)-(j) are the only agreements between the Company and ROV Ltd., true
and complete copies of which have been delivered to Purchasers.
(y) Consolidated Net Worth. The Consolidated Net Worth as of June 30,
1996 and as of the Closing Date is a minimum of $59,000,000. The term
Consolidated Net Worth shall mean the consolidated net worth of the Company and
its Subsidiaries on a GAAP basis and consistent with the Company's past
practices, adding back, to the extent charged to income and not capitalized on
or prior to the date hereof, the following amounts: (i) $2,253,980 representing
any debt prepayment penalties for retiring the long-term debt (ii) $3,750,000
representing the fees and expenses for the purchase of bridge securities and not
syndicating the senior bank debt; and (iii) $170,000 representing ordinary
losses of the Company between June 30 and August 30, 1996 due to annual plant
closing.
(z) Plant and Equipment. The plants, structures and equipment of the
Company are structurally sound with no known defects and are in good operating
condition and repair (except for ordinary wear and tear, and except for assets
which do not materially impair the business of the Company) and are adequate for
the uses to which they are being put; and none of such plants, structures or
equipment are in need of maintenance or repairs except for ordinary, routine
maintenance and repairs. To the Knowledge of the Company, the Company has not
received notification that it is in violation of any applicable building, zoning
or similar ordinance or regulation in respect of its plants or structures or
their operations and no such violation exists.
(aa) Relationship with Rayovac International Corp. The agreements
listed on Schedule 2.2(aa) are the only agreements between the Company and
Rayovac International Corp., copies of which have been delivered to Purchasers.
22
3. REPRESENTATIONS AND WARRANTIES OF PURCHASERS
Purchasers represent and warrant to the Redemption Shareholders and
Company as of the date hereof as follows:
3.1. Organization and Good Standing. Such Purchaser purporting to be a
partnership is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization.
3.2. Power. Each Purchaser has full power, legal right and authority
to enter into, execute and deliver this Agreement and the Ancillary Instruments,
to perform such Purchaser's obligations hereunder and thereunder, and to carry
out the transactions contemplated hereby and thereby.
3.3. Authorization. The execution and delivery of this Agreement and
the Ancillary Instruments and the consummation of the transactions contemplated
herein and therein have been duly authorized by each Purchaser. Upon execution
by the parties hereto, this Agreement and the Ancillary Instruments will
constitute the legal, valid and binding obligation of each Purchaser,
enforceable against each Purchaser in accordance with its terms, except to the
extent enforceability may be limited by (a) the effect of bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to or affecting the rights and remedies of creditors generally,
(b) general principles of equity, whether such enforceability is considered in a
proceeding in equity or at law, and the discretion of the court before which any
proceeding thereof or may be brought, and (c) the unenforceability under certain
circumstances under law or court decisions of provisions providing for the
indemnification of a party with respect to a liability where such
indemnification is contrary to public policy.
3.4. No Conflict. The execution and delivery of this Agreement by each
Purchaser and the consummation of the transactions contemplated hereby do not
and will not conflict in any respect with or result in any violation of or
default under (a) any note, bond, mortgage, indenture, license agreement, lease
or other agreement, instrument or obligation to which Purchaser is a party or
(c) any judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to such Purchaser, except in the case of clauses (b) and (c) for
conflicts, violations or defaults that would not materially impair Purchaser's
ability to perform his/her/its obligations hereunder.
23
3.5. No Consent. No Consent is required to be obtained by any
Purchaser in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby except for Consents which,
if not obtained, would not impair any Purchaser's ability to perform his/her/its
obligations hereunder.
3.6. Litigation. There are no judicial or administrative actions,
suits, proceedings or investigations pending, or to the knowledge of such
Purchaser, threatened (a) which question the validity of this Agreement or (b)
which prevent such Purchaser from consummating the transactions contemplated
hereby.
3.7. Brokers, Finders, etc. All negotiations relating to this
Agreement and the transactions contemplated hereby have been carried out without
the intervention of any person acting on behalf of Purchasers in such manner as
to give rise to any valid claim against Purchasers, Redemption Shareholders or
the Company for any brokerage or finder's commission, fee or similar
compensation.
3.8. Purchase for Investment. The Investments Shares purchased by
Purchasers pursuant to this Agreement are being acquired for investment only and
not with a view to any public distribution thereof in violation of any of the
requirements of the Securities Act of 1933, as amended, and the rules and
regulations of the Securities and Exchange Commission thereunder.
4. MUTUAL COVENANTS. Each of the Company, Purchasers and Redemption
Shareholders covenants and agrees as follows:
4.1. Capitalization. After giving effect to the transactions
contemplated by this Agreement and the Stock Split, the authorized capital stock
of the Company shall consist of 27,000,000 shares of Common Stock, par value
$.01 per share, 20,510,480 shares of which shall be issued and outstanding.
Exhibits A and B describe the record and beneficial owners of such shares. The
parties acknowledge the cancellation prior to Closing by Richard Thornley and
Arthur Homa of options to purchase 10,000 and 8,000 Shares, respectively, in
consideration for the payment of a bonus to Mr. Thornley and the Company's
agreement to grant an option for 40,000 shares of Common Stock to Mr. Homa (such
number adjusted to reflect the Stock Split).
24
4.2. Transaction and Closing Fees. The Company shall pay all
transaction fees, including those set forth in Section 1.4. It shall also pay to
the Thomas H. Lee Company ("THL") and its affiliates, pursuant to a Management
Agreement between the Company and THL, a closing fee not to exceed $3.25 Million
Dollars.
4.3. RABBI Trusts. The Company has established a rabbi trust ("Rabbi
Trust") pursuant to that certain Rayovac Corporation Irrevocable Trust Under
Supplemental Retirement and Survivor Income Plan, dated September 12, 1996, as
an unfunded plan maintained for the purpose of providing benefits to the
participants in the Rayovac Corporation Supplemental Retirement and Survivor
Income Plan (the "SRSIP"). Pursuant to the Rabbi Trust, the Company shall
contribute to the Rabbi Trust the life insurance policies listed on Schedule
2.2(p)(iv) hereto ("Policies"). The Company shall, thereafter, pay the remaining
premiums with respect to the Policies, also set forth on Schedule 2.2(p)(iv)
hereto as they come due. The Company shall make no further contributions to the
Rabbi Trust.
4.4. Records. After the Closing, upon reasonable written notice,
Purchasers and Company shall furnish or cause to be furnished to Redemption
Shareholders' Agents and their representatives, employees, counsel and
accountants access to, during normal business hours, such assistance and
information, including all original agreements, documents, books, records and
files relating to the business of the Company in the possession of Purchasers or
Company, as the case may be (collectively, "Records"), as is reasonably
necessary for financial reporting and accounting matters, the preparation and
filing of any tax returns, reports or forms or the defense of any tax claim or
assessment controlled by the Company or Redemption Shareholders; provided,
however, that such access does not unreasonably disrupt the normal operations of
Purchasers or the Company and provided further that Redemption Shareholders'
Agents shall have entered into a reasonable confidentiality agreement with the
Company concerning the Records made available to them.
4.5. Further Actions. Each of the parties agrees to use all reasonable
efforts to take or cause to be taken all actions, and to do or cause to be done
all other things, necessary, proper or advisable to consummate and make
effective the transactions contemplated hereby including, without limitation,
obtaining all Consents from third parties required to be obtained by such party
for the consummation of the transactions contemplated hereby, other than, in the
case
25
of Purchasers, any Consents, the failure of which to be obtained, either
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect or materially impair the ability of Purchasers to
perform their obligations hereunder.
5. CLOSING
5.1. Deliveries by Redemption Shareholders. Redemption Shareholders
are herewith delivering to Purchasers or the Company or otherwise causing the
Company to take the actions indicated below.
(a) Investment Shares. The issuance by the Company or delivery by
Redemption Shareholders (and subsequent issuance by the Company) of certificates
representing the Investment Shares to Purchasers as provided in Section 1.1
hereto.
(b) Redemption Shares. All of the certificates for the Redemption
Shares as provided in Section 1.2 hereto.
(c) Resignation of Directors. The resignations of all directors and
officers of the Company whose resignations have been requested by Purchasers not
less than five (5) days prior to the Closing Date.
(d) Consents. Originally executed instruments evidencing the consents
required by Purchasers to consummate the transactions contemplated hereby and
listed on Schedule 5.1(d).
(e) Repayment of Indebtedness. All indebtedness and other amounts
outstanding as of the Closing Date of the Company listed in Schedule
2.2(o)(vi)(b)-(f) or required to be so listed shall have been paid in full.
(f) Old Shareholders Agreement. Copies of instruments terminating each
Amended and Restated Shareholders Agreement between the Company, Pyle and each
Redemption Shareholder.
(g) New Shareholders Agreement. The Shareholders' Agreement by and
between the Company, the Purchasers and each Redemption Shareholder who will be
a shareholder of the Company immediately after the Closing, dated as of the
Closing Date, in substantially the form of Exhibit D attached hereto.
26
(h) Opinions. The opinion of Foley & Lardner, dated the Closing Date
and addressed to Purchasers, in substantially the form of Exhibit E attached
hereto, along with the opinion of James A. Broderick, General Counsel of the
Company, and addressed to Purchasers, in substantially the form of Exhibit K,
relating to intellectual property matters.
(i) Recapitalization Accounting. A letter of Coopers & Lybrand L.L.P.,
the Company's independent auditors, dated the Closing Date and addressed to
Purchasers, stating that the transactions contemplated by this Agreement will
qualify for recapitalization accounting.
(j) Options. Appropriate instruments evidencing no outstanding
options, warrants or other rights to purchase or subscribe to capital stock or
other securities of the Company or securities which are convertible or
exchangeable for capital stock or other securities of the Company.
(k) Resolutions. Copies of the resolutions of the Company's Board
of Directors, authorizing and approving the execution of, delivery and
performance under this Agreement and Ancillary Instruments, the issuance of
Investment Shares, redemption of Redemption Shares and the consummation of the
transactions contemplated hereby and thereby, certified as true and correct by
its Secretary or any Assistant Secretary.
(l) Articles; Good Standing Certificate. A certificate from the State
of Wisconsin certifying the valid organization and existence of the Company and
Articles of Incorporation of Company certified by an appropriate government
official as of a recent date.
(m) By-Laws. Company's Bylaws, certified by the Secretary or any
Assistant Secretary of Company as of the date hereof.
(n) Consulting and Non-Competition Agreement. An executed Consulting
Agreement in the form of Exhibit L and Confidentiality, Non-Competition,
No-Solicitation, and No-Hire Agreement, each by and between Company and Thomas
F. Pyle, Jr., dated the Closing Date, in substantially the form of Exhibit F
attached hereto and a Confidentiality, Non-Competition, No-Hire and
No-Solicitation Agreement by and between the Company and Judith Pyle, dated the
Closing Date in substantially the form of Exhibit F attached hereto.
27
(o) Non-Competition Agreements. Executed Non-Competition Agreements by
and between the Company and Marvin Siegert and Glynn Rossa, dated the Closing
Date, in substantially the form of Exhibit G, attached hereto.
(p) Certain Assets. Originally executed instruments evidencing the
Company's sale, distribution or assignment of (i) that certain Aircraft Lease
dated May 30, 1996 between Fleet National Bank and the Company; (ii) that
certain sublease for airport facilities and land between Big Sky Partners and
the Company dated March 19, 1993; (iii) membership at La Quinta Country Club;
(iv) the Company's rights to the luxury box at Camp Randall Stadium, floor seats
at the Kohl Center, and Chicago Bulls season tickets; (v) condominium in the
Dominican Republic; and (vi) the office furniture of Thomas and Judith Pyle, to
certain executives of the Company or entities controlled by the Pyle Group.
(q) FIRPTA Certificate. Each Redemption Shareholder shall have
delivered to Purchasers a certificate, as contemplated under and meeting the
requirements of Section 1.1445-2(b)(2)(i) of the Treasury Regulations, to the
effect that such Redemption Shareholder is not a "foreign person" within the
meaning of the Code and applicable Treasury Regulations.
(r) Accountant's Letter. An accountant's letter of Coopers & Lybrand
L.L.P., dated within five days of the Closing Date and addressed to Purchasers,
in substantially the form of Exhibit J hereto.
(s) Releases. Such documents, instruments or writings in the form
satisfactory to Purchasers' counsel evidencing the release of the Company from
any indemnity or other obligations with respect to any assets transferred
pursuant to Section 5.1(p).
(t) Officer's Certificates. An officer's certificate of the Chief
Financial Officer of the Company certifying that the estimated Closing Date
balance sheet of the Company, attached thereto, is true and correct in all
material respects (such balance sheet indicating that the Company's Consolidated
Net Worth is an amount in excess of $59,000,000) as well as an officer's
certificate of the Chief Financial Officer of the Company with respect to the
solvency of the Company.
28
5.2. Deliveries by Purchasers. Purchasers are hereby delivering to
Redemption Shareholders or the Company the following:
(a) Investment Price. The Investment Price by wire transfer to the
Company and Shareholders' Agent.
(b) Opinion. The opinion of Skadden, Arps, Slate, Meagher & Flom,
dated the Closing Date and addressed to Redemption Shareholders, in
substantially the form of Exhibit H attached hereto.
(c) New Shareholders Agreement. The executed Shareholders' Agreement
between the Company, Redemption Shareholders who will be a shareholder of the
Company immediately after the Closing and each Purchaser, dated the Closing
Date, in substantially the form of Exhibit D attached hereto.
5.3. Deliveries by Company. The Company is hereby delivering to
Redemption Shareholders or Purchasers the following:
(a) Investment Shares. To the Purchasers, stock certificates (in such
denominations as described on Exhibit A) representing the Investment Shares. All
stock certificates representing the Investment Shares delivered to Purchasers
shall reflect the Stock Split and shall bear an appropriate legend as set forth
in the Shareholders Agreement. In addition, the Company shall deliver to all
Redemption Shareholders who will remain shareholders of the Company after the
date hereof, new stock certificates which shall reflect the Stock Split and
shall bear an appropriate legend as set forth in the Shareholders Agreement.
(b) Purchase Price. The Purchase Price by wire transfer to the
Redemption Shareholders' Agent in accordance with Section 1.2 hereof.
6. INDEMNIFICATION
6.1. By Redemption Shareholders. Subject to the terms and conditions
of this Article 6, each Redemption Shareholder severally but not jointly hereby
agrees to indemnify, defend and hold harmless each Purchaser and the Company
from and against all Claims asserted against, resulting to, imposed upon, or
incurred by each Purchaser or the Company, directly or indirectly, by reason of,
arising out of or resulting from (a) the inaccuracy or breach of any
representation or warranty (including the Schedules to this Agreement) of any
29
Redemption Shareholder or Company contained in or made pursuant to this
Agreement or (b) the breach of any covenant or other agreement of any Redemption
Shareholder contained in this Agreement. Regardless of the foregoing, however,
breaches of representations and warranties contained in Section 2.1 hereof shall
be subject only to several indemnification by the respective Redemption
Shareholders who shall have made and breached such representations and
warranties. As used in this Article 6, the term "Claim" shall include (i) all
debts, liabilities and obligations; (ii) all losses, damages (including, without
limitation, consequential damages), judgments, awards, settlements, costs and
expenses (including, without limitation, interest (including prejudgment
interest in any litigated matter), penalties, court costs and attorneys fees and
expenses); and (iii) all demands, claims, suits, actions, costs of
investigation, causes of action, proceedings and assessments, whether or not
ultimately determined to be valid. In this Article 6, for purposes of
determining the existence of the inaccuracy or breach of any representation or
warranty of any Redemption Shareholder or the Company, any requirement in any
representation or warranty that an event or fact be material, meet a certain
minimum dollar threshold or have a Material Adverse Effect in order for such
event or fact to constitute breach of a representation or warranty shall be
disregarded.
6.2. By Purchasers. Subject to the terms and conditions of this
Article 6, Purchasers, severally hereby agree to indemnify, defend and hold
harmless each Redemption Shareholder from and against all Claims asserted
against, resulting to, imposed upon or incurred by any such person, directly or
indirectly, by reason of or resulting from (a) the inaccuracy or breach of any
representation or warranty of any Purchaser contained in or made pursuant to
this Agreement or (b) the breach of any covenant or other agreement of any
Purchaser contained in this Agreement.
6.3. By Company. Subject to the terms and conditions of this Article
6, Company hereby agrees to indemnify, defend and hold harmless each Redemption
Shareholder from and against all Claims asserted against, resulting to, imposed
upon or incurred by any such person, directly or indirectly, by reason of or
resulting from the breach of any post-closing covenant or other agreement of the
Company contained in this Agreement.
6.4. Indemnification of Third-Party Claims. The obligations and
liabilities of any party to indemnify any other under this Article 6 with
respect to
30
Claims relating to third parties shall be subject to the following terms and
conditions:
(a) Notice and Defense. The party or parties to be indemnified
(whether one or more, the "Indemnified Party") will give the party or
parties from whom indemnification is sought (whether one or more, the
"Indemnifying Party") prompt written notice of any such Claim
providing reasonable specificity of the nature of the Claim, the
parties involved and the facts giving rise to Claim, and the
Indemnifying Party will undertake the defense thereof by
representatives chosen by it and reasonably acceptable to the
Indemnified Party. The Indemnified Party shall have the right to
employ one counsel of its choice to represent such Indemnified Party
if it reasonably believes a conflict of interest between such
Indemnified Party and such Indemnifying Party exists in respect of a
Claim or if the amount of such Claim, after taking into account other
Claims, may exceed the maximum amount set forth in Section 6.5(c) and
in that event the reasonable fees and expenses of such separate
counsel shall be paid by such Indemnifying Party for representation
with respect to such Claim. In any event, the Indemnified Party shall
have the right to participate at its own expense in the defense of
such Claim. In all matters concerning the Redemption Shareholders, the
Redemption Shareholders' Agent shall give and receive notice and
otherwise act in all respects on their behalf. Failure to give such
notice shall not affect the Indemnifying Party's duty or obligations
under this Article 6, except to the extent the Indemnifying Party is
prejudiced thereby. So long as the Indemnifying Party is defending any
such Claim actively and in good faith, the Indemnified Party shall not
settle such Claim. The Indemnifying Party may not settle a Claim
without the written consent of the Indemnified Party unless such
settlement provides solely for money damages or other money payments
for which such Indemnified Party is entitled to indemnification
hereunder and includes as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party of a release from
all liability in respect of such Claim. The Indemnified Party shall
make available to the Indemnifying Party or its representatives all
records and other materials reasonably required by them and in the
possession or under the control of the Indemnified Party, for the use
of the Indemnifying Party and its representatives in
31
defending any such Claim and shall in other respects give reasonable
cooperation in such defense. The Indemnifying Party shall make
available to the Indemnified Party or its representatives, all records
and other materials reasonably required by them and in the possession
or under the control of the Indemnifying Party, for the use of the
Indemnified Party and its representatives in defending any such Claim
and shall in other respects give reasonable cooperation in such
defense.
(b) Failure to Defend. If the Indemnifying Party, within a
reasonable time after notice of any such Claim, fails to defend such
Claim actively and in good faith, the Indemnified Party will (upon
further notice) have the right to undertake the defense, compromise or
settlement of such Claim or consent to the entry of a judgment with
respect to such Claim, on behalf of and for the account and risk of
the Indemnifying Party, and the Indemnifying Party shall thereafter
have no right to challenge the Indemnified Party's defense,
compromise, settlement or consent to judgment therein.
6.5. Payment. The Indemnifying Party shall pay the Indemnified Party
any amount due under this Article 6. Upon judgment, determination, settlement or
compromise of any third party Claim, the Indemnifying Party shall pay promptly
on behalf of the Indemnified Party, and/or to the Indemnified Party in
reimbursement of any amount theretofore required to be paid by it, the amount so
determined by judgment, determination, settlement or compromise and all other
Claims of the Indemnified Party with respect thereto, unless in the case of a
judgment an appeal is made from the judgment. If the Indemnifying Party desires
to appeal from an adverse judgment, then the Indemnifying Party shall post and
pay the cost of the security or bond to stay execution of the judgment pending
appeal. Upon the payment in full by the Indemnifying Party of such amounts, the
Indemnifying Party shall succeed to the rights of such Indemnified Party for
such Claim, to the extent not waived in settlement, against the third party who
made such third party Claim.
6.6. Limitations on Indemnification.
(a) Time Limitation. No notice of a Claim for breach of a
representation or warranty shall be made under this Article 6 after
the lapse of the earlier of (i) the completion of the audit covering
32
fiscal 1997, or (ii) September 30, 1997. Regardless of the foregoing,
however, or any other provision of this Agreement:
(i) There shall be no time limitation on claims on actions
brought for breach of any representation or warranty made by
Redemption Shareholders pursuant to Section 2.1(c) and 2.2(e).
(ii) Except as provided below, any claim or action brought
for breach of any representation or warranty made by Shareholders
in Section 2.2(k) may be brought at any time until the underlying
tax obligation is barred by the applicable period of limitation
under applicable law.
(b) Amount Limitation. Except with respect to claims for breaches
of representations or warranties contained in Section 2.2(y), an
Indemnified Party shall only be entitled to indemnification under this
Article 6 for inaccuracy or breach of a representation or warranty if
the amount for a particular inaccuracy or breach of a representation
or warranty exceeds Fifty Thousand Dollars ($50,000), and then only if
and to the extent that the aggregate amount of the Indemnifying
Party's indemnification obligations to the Indemnified Party pursuant
to this Article 6 is in excess of Five Hundred Thousand Dollars
($500,000).
(c) Maximum Liability. Shareholders' collective indemnification
obligations to the Purchasers pursuant to this Article 6 (other than
pursuant to Section 2.1(c)) shall not exceed in the aggregate Twenty
Million Dollars ($20,000,000).
(d) Tax and Benefits. The indemnification obligation of an
Indemnifying Party shall be reduced by any insurance recovery received
by the Indemnified Party for the Claim and by a tax benefit the
satisfaction of the Claim provides the Indemnified Party at the
maximum applicable rate whether or not the Indemnified Party is in a
tax paying position.
33
(e) Several Liability. Subject to the limitations in Section
6.6(c), the liability of an Indemnifying Party with respect to any
individual Claim shall in no event exceed an amount equal to the
product of the amount of such Claim and the percentage set forth
opposite such Purchaser's name on Exhibit A under the heading
"Percentage of Investment" or opposite such Redemption Shareholder's
name on Exhibit B under the heading "Pre-Sale Ownership; %age of
Total."
6.7. Certain Tax Matters.
(a) Indemnification.
(i) Subject to Section 6.6(c), each Redemption
Shareholder severally hereby agrees to indemnify, defend and
hold the Company, each Purchaser and its affiliates harmless
from and against any and all Taxes with respect to the
Company that are imposed upon such Indemnified Party, to the
extent the aggregate amount of such Taxes exceeds $1.025
million, with respect to (1) any taxable period ending on or
before June 30, 1996 (such Taxes are hereinafter referred to
as "Pre-Closing Taxes" and such periods as "Pre-Closing
Periods") and (2) one half of the aggregate amount of any
real property transfer or gains, sales, use, transfer,
value-added, stock transfer and stamp Taxes, any transfer,
recording, registration and other fees, and any similar
Taxes that are required to be paid in connection with the
transactions contemplated herein (collectively, "Transfer
Taxes"), in each case, together with all reasonable legal
fees, costs and expenses incurred by the Company, Purchasers
or their affiliates, as the case may be, in connection
therewith.
(ii) Purchasers severally hereby agree to indemnify,
defend and hold each Redemption Shareholder harmless from
and against any and all Taxes (other than Transfer Taxes)
with respect to the Company that are imposed upon such
Redemption Shareholder with respect to (1) any taxable
period beginning after June 30, 1996, and (2) one half of
the aggregate amount of any Transfer Taxes, in each case,
34
together with all reasonable legal fees, costs and expenses
incurred by each Redemption Shareholder and its affiliates
in connection therewith.
(iii) The indemnity provided for in this Section 6.6
shall be independent of any other indemnity provision in the
Agreement and, anything in the Agreement to the contrary
notwithstanding, shall survive until the expiration of the
applicable statutes of limitation for the Taxes referred to
herein (giving effect to any extensions or waivers thereto).
(b) Control of Contests.
(i) If a notice of deficiency, proposed adjustment,
adjustment, assessment, audit, examination, suit, dispute or
other claim (a "Tax Claim") shall be delivered, sent,
commenced, or initiated to or against Company or Purchasers
or any of their affiliates by any taxing authority (whether
foreign or domestic) with respect to Taxes for which Company
or Purchasers or their affiliates are entitled to
indemnification under this Section 6.6, Purchasers shall
promptly notify Redemption Shareholders' Agents in writing
of the Tax Claim. If a Tax Claim shall be delivered, sent,
commenced or initiated to or against any of the Redemption
Shareholders by any taxing authority (whether foreign or
domestic) with respect to Taxes for which one party to this
Agreement is entitled to indemnification under this Section
6.6, such Redemption Shareholders shall promptly notify
Purchasers in writing of such Tax Claim.
(ii) If Redemption Shareholders' Agents notify
Purchasers in writing within 20 days of receiving notice of
a Tax Claim involving solely Pre-Closing Taxes (the "Control
Notice"), Redemption Shareholders' Agents shall be entitled
to control, at their sole cost and expense, the defense of
any such Tax Claim, provided, however, that (1) Redemption
Shareholders' Agents shall keep Purchasers informed about,
and shall allow them to participate in (but not control), at
their sole expense, the defense of any such
35
Tax Claim; (2) Redemption Shareholders' Agents shall
not pay, discharge, settle, compromise, litigate or
otherwise dispose (collectively, "dispose") of any such Tax
Claim without obtaining the prior written consent of
Purchasers, which shall not be unreasonably withheld or
delayed; and (3) if Purchasers disagree with any proposed
disposition of any such Tax Claim, Purchasers shall have the
right, at their sole expense, to litigate such Tax Claim;
provided, however, that Purchasers shall not settle such Tax
Claim without the prior written consent of Redemption
Shareholders' Agents, which shall not be unreasonably
withheld or delayed; provided, further, that (A) Redemption
Shareholders' indemnification obligation with respect to
such Tax Claim shall be no greater than such obligation
would have been had such Tax Claim been disposed of in the
manner originally contemplated by Redemption Shareholders'
Agents and (B) Purchasers severally shall indemnify, defend
and hold harmless Redemption Shareholders from and against
any liability for Taxes with respect to the Company that are
imposed upon such Indemnified Party in excess of the
liability for Taxes, if any, that otherwise would have
resulted had such Tax Claim been disposed of in the manner
originally contemplated by Redemption Shareholders' Agents.
(iii) If Redemption Shareholders' Agents do not provide
Purchasers with the Control Notice within the 20-day period
prescribed in subparagraph (b)(ii) above, Purchasers shall
control the defense of any Tax Claim involving solely
Pre-Closing Taxes and (1) shall consult with Redemption
Shareholders' Agents and keep Redemption Shareholders'
Agents informed of all material developments and events
relating to such Tax Claim and (2) shall not dispose of such
Tax Claim without the written consent of Redemption
Shareholders' Agents, which shall not be unreasonably
withheld or delayed.
(iv) If the Company, Purchasers or Redemption
Shareholders receive notice of a Tax Claim involving an
adjustment of any item in both a Pre-Closing Period and any
36
taxable period beginning after June 30, 1996, Purchasers
shall be entitled to control the defense of any such Tax
Claim, provided however, that (1) Purchasers shall keep
Redemption Shareholders' Agents informed about, and shall
allow them to participate in (but not control) at their sole
expense, the defense of any such Tax Claim; (2) Purchasers
shall not dispose of any such Tax Claim without obtaining
the prior written consent of the Redemption Shareholders'
Agents, which consent shall not be unreasonably withheld or
delayed; and (3) if Redemption Shareholders' Agents disagree
with any proposed disposition of any such Tax Claim,
Redemption Shareholders' Agents shall have the right, at
their sole expense, to litigate such Tax Claim provided,
however, that Redemption Shareholders' Agents shall not
settle such Tax Claim without the prior written consent of
Purchasers, which consent shall not be unreasonably withheld
or delayed; provided, further, that (A) Purchaser's
indemnification obligation with respect to such Tax Claim
shall be no greater than such obligation would have been had
such Tax Claim been disposed of in the manner originally
contemplated by Purchasers and (B) each Redemption
Shareholder severally shall indemnify, defend and hold
harmless the Company, each Purchaser and its affiliates from
and against any liability for Taxes with respect to the
Company that are imposed upon such Indemnified Party in
excess of the liability for Taxes, if any, that otherwise
would have resulted had such Tax Claim been disposed of in
the manner originally contemplated by Purchasers.
(v) Purchasers, in their sole discretion, shall be
entitled to control the defense and disposition of all other
Tax Claims.
(vi) Indemnifying Party shall pay to the Indemnified
Party all indemnity amounts in respect of any Tax Claim
within ten (10) business days after such Tax Claim is
disposed of or a Final Determination has been made with
respect thereto. "Final Determination" shall mean (1) the
37
entry of a decision of a court of competent jurisdiction at
such time as an appeal may no longer be taken from such
decision or (2) the execution of a closing agreement or its
equivalent between the particular taxpayer and the
particular relevant taxing authority.
(c) Preparation and Filing of Tax Returns; Payment of Taxes.
(i) On or prior to the Closing Date, (1) Redemption
Shareholders' Agents shall prepare or cause to be prepared
and file or cause to be filed on a timely basis and in a
manner consistent with past practice all Tax Returns of the
Company for all Pre-Closing Periods, which Tax Returns are
due (giving effect to any extensions thereto) on or before
the Closing Date (excluding state and federal income Tax
Returns for the taxable year ended June 30, 1996) and (2)
Redemption Shareholders' Agents or the Company shall be
responsible for and shall timely pay all Taxes shown to be
due thereon prior to the Closing Date.
(ii) After the Closing Date, Purchasers shall prepare
or cause to be prepared and shall file or cause to be filed
on a timely basis all other Tax Returns with respect to the
Company and shall pay or cause to be paid the Taxes shown
due thereon; provided, however, that Purchasers shall allow
Redemption Shareholders' Agents to review any Tax Return for
a Pre-Closing Period and shall not file any such Tax Return
without first obtaining the prior written consent of
Redemption Shareholders' Agents, which consent shall not be
unreasonably withheld or delayed, provided, however, that if
Redemption Shareholders' Agents do not consent to the filing
of any such Tax Return, Purchasers shall be entitled to file
such Tax Return, and any disputed items relating to such Tax
Return shall be subject to the dispute resolution procedures
set forth in subparagraph (f).
(iii) The party responsible for filing any Tax Return
with respect to Transfer Taxes shall prepare or cause to be
38
prepared and shall file or cause to be filed on a timely
basis such Tax Return and shall pay or cause to be paid the
Transfer Taxes shown due thereon. The filing party shall
provide the other party with a schedule calculating in
reasonable detail such other party's indemnification
obligation pursuant to subsection (a) hereof, which amounts
shall be paid to the filing party within five days of
receiving such schedule.
(d) Termination of Tax Sharing Agreements. Redemption
Shareholders hereby agree and covenant that any obligation under
any tax sharing agreement or arrangement of the Company shall be
terminated on or before the Closing Date, and no payments
pursuant to any such tax sharing agreement or arrangement shall
be made after such termination.
(e) Mutual Cooperation. Each of Purchasers and Redemption
Shareholders' Agents shall provide the other, and, after the
Closing Date, Purchasers shall cause the Company to provide
Redemption Shareholders' Agents, with such assistance as may
reasonably be requested by either of them in connection with the
preparation of any Tax Return, any audit or other examination by
any taxing authority, any judicial or administrative proceedings
relating to liability for Taxes, or any Tax Claim, and each will
retain and provide the other with any records or information that
may be relevant to such Tax Return, audit or examination,
proceedings or determination. Such assistance shall include
making employees available on a mutually convenient basis to
provide additional information and explanation of any material
provided hereunder and shall include providing copies of any
relevant Tax Returns and supporting work schedules.
(f) Dispute Resolution. If Purchasers and Redemption
Shareholders' Agents cannot agree as to the amount of any party's
indemnification obligation under subsection (a) hereof or the
interpretation of any provision of this Section 6.6, Purchasers
and Redemption Shareholders' Agents shall choose an independent,
"Big Six" accounting firm, acceptable to each of them (the
"Selected Accounting Firm"), and the decision of the Selected
Accounting Firm
39
as to the amount of such party's indemnification obligation, if
any, or the interpretation of any such provision shall be
conclusive and binding. Any indemnification payment required
under subsection (a) hereof by one party to the other shall be
made within ten (10) days of the agreement by the parties or the
decision by the Selected Accounting Firm, as the case may be,
with interest at the applicable Base Rate as announced from time
to time by Bank of America National Trust and Savings Association
(the "Base Rate") from the date on which the disputed amount was
required to be paid to the relevant taxing authority to the date
of payment. The foregoing shall not limit or relieve each
Redemption Shareholder's obligation to indemnify the Company,
each Purchaser and its affiliates pursuant to subsection (a)
hereof with respect to any Tax Claim.
(h) Miscellaneous.
(i) Any payment required by this Section 6.6 which is
not made on or before the date provided shall bear interest
after such date at the Base Rate plus three (3) percent.
(ii) Any and all costs and expenses of the Selected
Accounting Firm shall be borne by Purchasers and Redemption
Shareholders in proportion to the amount of each party's
liability for the amount in dispute pursuant to subsection
(a) hereof.
6.8. Reporting Indemnity Payments. Any payment made by the Redemption
Shareholders to the Purchasers pursuant to this Section 6 shall be treated as if
it reduced each of the Investment Price and the Purchase Price by the amount of
the payment, and any payment made by the Purchasers to the Redemption
Shareholders pursuant to this Section 6 shall be treated as if it increased each
of the Purchase Price and the Investment Price by the amount of the payment.
Each of Purchasers and Redemption Shareholders agree to report all such payments
for all foreign, federal, state and local income tax purposes in a manner
consistent with the treatment described above and to notify each other promptly
in the event that any taxing authority proposes to disallow such treatment.
40
7. MISCELLANEOUS
7.1. Expenses. Except as otherwise provided in this Agreement, the
Company and Redemption Shareholders on the one hand, and Purchasers on the other
hand, will each bear its own expenses, costs and fees (including attorneys' and
auditors' fees) in connection with the transactions contemplated hereby,
including the preparation and execution of this Agreement.
7.2. Assignment; Successors. This Agreement shall not be assigned by
any party without the prior written consent of the other party, and any
purported assignment or other transfer without such consent shall be void and
unenforceable, except by operation of law. In the case of such consent, this
Agreement shall inure to the benefit of, and be binding on and enforceable
against, the successors and assigns of the respective parties hereto.
7.3. Amendment and Modification. Neither this Agreement nor any term
hereof may be changed, waived, discharged or terminated orally, other than by an
agreement in writing signed by the parties hereto (in the case of the Redemption
Shareholders, by one of the Redemption Shareholders' Agents acting in such).
7.4. Entire Agreement. This Agreement, including the Schedules and
Exhibits to this Agreement (which are hereby incorporated by reference and made
a part of this Agreement) sets forth the entire agreement and understanding of
the parties hereto with respect to the subject matter hereof, supersedes all
other prior agreements, understandings, representations and warranties, oral or
written, between the parties in respect of the subject matter hereof (including
without limitation the letter of intent dated July 26, 1996), except that this
Agreement does not supersede the Confidentiality Agreement, the terms and
conditions of which are the parties expressly reaffirm.
7.5. Severability. If any provision of this Agreement is inoperative
or unenforceable for any reason, such circumstances shall not have the effect of
rendering the provision in question inoperative or unenforceable in any other
case or circumstance, or of rendering any other provision or provisions herein
contained invalid, inoperative, or unenforceable to any extent whatsoever. The
invalidity of any one or more phrases, sentences, clauses, Sections or
subsections of this Agreement shall not affect the remaining portions of this
Agreement.
41
7.6. Notices. Any notice or other communication required or permitted
to be given hereunder or for the purposes hereof to any party shall be in
writing and shall be sufficiently given if (a) delivered personally, (b) mailed
certified or registered mail, postage prepaid, (c) transmitted by facsimile with
"answer-back" confirmation (and confirmed by mail) or (d) sent by next-day or
overnight mail or delivery to:
(a) Redemption Shareholders: Pyle Group
3500 Corben Court
Madison, Wisconsin 53704
Attention: Thomas F. Pyle, Jr.
Telephone: (608) 241-5814
Facsimile: (608) 241-2696
With a copy to: Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, WI 53202-5367
Attention: Benjamin F. Garmer, III
Telephone: (414) 297-5675
Facsimile: (414) 297-4900
(b) Purchasers: Thomas H. Lee Company
75 State Street,
26th Floor
Boston, MA 02109
Attention: Warren C. Smith, Jr.
Telephone: (617) 227-1050
Facsimile: (617) 227-3514
42
With a copy to: Skadden, Arps, Slate,
Meagher & Flom
One Beacon Street
Boston, MA 02108
Attention: Louis A. Goodman
Kent A. Coit
Telephone: (617) 573-4800
Facsimile: (617) 573-4822
or at such other address or to such other person's attention as the party to
whom such notice is to be given shall have last notified to the party giving the
same in the manner provided in this Section. Any notice so delivered to the
party to whom it is addressed shall be deemed to have been given and received
(i) if by personal delivery, on the day of such delivery, (ii) if by certified
or registered mail, on the seventh day after mailing thereof, (iii) if by
facsimile, the day on which such facsimile was sent or (iv) if by next-day or
overnight mail delivery, on the day delivered, provided that if any such day is
not a business day then the notice shall be deemed to have been given and
received on the business day next following such day.
7.7. No Third Party Beneficiaries. Nothing in this Agreement shall
confer any rights upon any person or entity which is not a party or a successor
or permitted assignee of a party to this Agreement.
7.8. Headings. The section headings in this Agreement are for
convenience of reference only and shall not be deemed to alter or affect the
meaning or interpretation of any provision of this Agreement.
7.9. Governing Law. This Agreement shall be governed by, construed and
performed in accordance with the internal laws of the State of Wisconsin
applicable to agreements made and to be performed entirely within such state,
without regard to the conflicts of law principles of such state.
7.10. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, and all of which shall
constitute one and the same instrument.
43
7.11. Knowledge. With respect to any matter herein, the term
"Knowledge" shall mean the actual knowledge after due inquiry of any of Thomas
F. Pyle, Jr., Marvin G. Siegert, Glynn M. Rossa, Roger F. Warren, Trygve
Lonnebotn, Robert W. Zimmermann, Timothy Anderson and Kenneth V. Biller.
7.12. Remedies. Each party shall be entitled to obtain specific
performance of the obligations of another party hereunder and immediate
injunctive relief, and in the event any action or proceeding is brought in
equity to enforce this Agreement, no party will urge as a defense, that there is
an adequate remedy of law. Such remedies shall be cumulative and not exclusive
and shall be in addition to any other remedies which any party may have under
this Agreement or otherwise.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
RAYOVAC CORPORATION
By: /s/ Thomas F. Pyle, Jr.
------------------------------------
Thomas F. Pyle, Jr.
Chairman of the Board, President and
Chief Executive Officer
REDEMPTION SHAREHOLDERS:
/s/ Thomas F. Pyle, Jr.
-------------------------------------------
Thomas F. Pyle, Jr., as agent and attorney-
in-fact under Shareholder Appointment of
Agents and Power of Attorneys dated
March 1, 1996 executed by each of the
Redemption Shareholders, and not in his
individual capacity
44
THE THOMAS AND JUDITH PYLE
CHARITABLE REMAINDER TRUST
CREATED SEPTEMBER 10, 1996
/s/ Thomas F. Pyle, Jr.
--------------------------------
Thomas F. Pyle, Jr., Trustee
/s/ Judith D. Pyle
--------------------------------
Judith D. Pyle, Trustee
/s/ Glynn M. Rossa
--------------------------------
Glynn M. Rossa, Trustee
/s/ Benjamin F. Garmer, III
--------------------------------
Benjamin F. Garmer, III, Trustee
THOMAS H. LEE EQUITY FUND III,
L.P.
By: THL EQUITY ADVISORS III
LIMITED PARTNERSHIP,
as General Partner
By: THL EQUITY TRUST III,
as General Partner
By: /s/ W.C. Smith, Jr.
----------------------------
Name: Warren C. Smith, Jr.
Title: Trustee
45
THOMAS H. LEE FOREIGN FUND III, L.P.
By: THL EQUITY ADVISORS III
LIMITED PARTNERSHIP,
as General Partner
By: THL EQUITY TRUST III,
as General Partner
By: /s/ W.C. Smith, Jr.
--------------------------------
Name: Warren C. Smith, Jr.
Title: Trustee
/s/ David A. Jones
--------------------------------
David A. Jones
THL-CCI LIMITED PARTNERSHIP
/s/ Warren C. Smith, Jr.
Warren C. Smith, Jr., as agent and attorney-
in-fact under Purchaser Appointment of
Agent and Power of Attorney dated
September 3, 1996 executed by THL-CCI
Limited Partnership, and not in his
individual capacity
46
EXHIBIT A
==============================================================================
Number of Investment Shares Being Purchased
- - ------------------------------------------------------------------------------
Percentage of Adjusted For
Name of Purchaser At Closing Investment Stock Split*
- - -------------------------------------------------------------------------------
Thomas H. Lee Equity Fund III, L.P. 2,772,827 84.46% 13,864,135
- - -------------------------------------------------------------------------------
Thomas H. Lee Foreign Fund III, L.P. 171,790 5.24% 858,950
- - -------------------------------------------------------------------------------
THL-CCI Limited Partnership 291,481 8.90% 1,457,405
- - -------------------------------------------------------------------------------
David A. Jones 45,579 1.39% 227,895
- - -------------------------------------------------------------------------------
Total 3,281,677 100% 16,408,385
===============================================================================
- - -------------------
* A 5 for 1 stock split shall occur immediately after the Closing.
47
Exhibit B
======================================================================================================================
Pre-Sale Sold in Transaction Post- Adjusted For
Ownership Closing Stock Split
- - ----------------------------------------------------------------------------------------------------------------------
Shareholders Shares % of Total # Shares Purchaser of Shares # Shares # Shares
- - ----------------------------------------------------------------------------------------------------------------------
x5
- - ----------------------------------------------------------------------------------------------------------------------
Roger F. Warren 175,000 1.77% 61,053 Fund 113,947 569,735
- - ----------------------------------------------------------------------------------------------------------------------
Marvin G. Siegert 175,000 1.77% 133,979 Fund 41,021 205,105
- - ----------------------------------------------------------------------------------------------------------------------
Trygve Lonnebotn 100,000 1.01% 17,958 Fund 82,042 410,210
- - ----------------------------------------------------------------------------------------------------------------------
James A. Broderick 50,000 0.50% 8,979 Fund 41,021 205,105
- - ----------------------------------------------------------------------------------------------------------------------
Gary E. Wilson 50,000 0.50% 27,211 Fund 22,789 113,945
- - ----------------------------------------------------------------------------------------------------------------------
Virgil L. Broering 50,000 0.50% 50,000 Fund 0 0
- - ----------------------------------------------------------------------------------------------------------------------
Robert W. Zimmermann 25,000 0.25% 15,884 Fund 9,116 45,580
- - ----------------------------------------------------------------------------------------------------------------------
Kenneth V. Biller 25,000 0.25% 6,768 Fund 18,232 91,160
- - ----------------------------------------------------------------------------------------------------------------------
Glynn M. Rossa 100,000 1.01% 100,000 Fund 0 0
- - ----------------------------------------------------------------------------------------------------------------------
Dale R. Tetzlaff 25,000 0.25% 4,490 Fund 20,510 102,550
- - ----------------------------------------------------------------------------------------------------------------------
Russell E. Lefevre 40,000 0.40% 5,816 Fund 34,184 170,920
- - ----------------------------------------------------------------------------------------------------------------------
Raymond L. Balfour 25,000 0.25% 0 Fund 25,000 125,000
- - ----------------------------------------------------------------------------------------------------------------------
Arthur Homa 10,000** 0.02% 2,000 Fund 8,000 40,000
- - ----------------------------------------------------------------------------------------------------------------------
Thomas Pyle 7,071,845 71.42% 6,667,288 Company 5,807,904 404,557 2,022,785
Fund 813,805
Jones 45,579
---------
6,667,288
- - ----------------------------------------------------------------------------------------------------------------------
Benjamin F. Garmer, III 165,000 1.67% 165,000 Fund 0 0
- - ----------------------------------------------------------------------------------------------------------------------
Pyle Charitable Trust 1,823,155 18.40% 1,823,155 Fund 0 0
- - ----------------------------------------------------------------------------------------------------------------------
9,910,000 100.00% 9,089,581 820,419 4,102,095
======================================================================================================================
Fund = Thomas H. Lee Equity Fund III, L.P., Thomas H. Lee Foreign Fund III, L.P.
and THL-CCI Limited Partnership
Company = Rayovac Corporation
Jones = David A. Jones
- - --------------------------------
* A 5 for 1 stock split shall occur immediately after the Closing.
** Includes 2,000 shares and 8,000 shares of underlying options (pre-split).
48
EXHIBIT 3.1
RESTATED ARTICLES OF INCORPORATION
OF
RAYOVAC CORPORATION
----------------------------------
The following Restated Articles of Incorporation ("Restated Articles") of
Rayovac Corporation, a Wisconsin corporation (the "Corporation"), were duly
adopted in accordance with and pursuant to Section 180.1003 of the Wisconsin
Business Corporation Law, Chapter 180 of the Wisconsin Statutes ("Chapter 180")
and amend, supersede and restate the Corporation's existing Restated Articles of
Incorporation and any amendments thereto.
ARTICLE I
---------
The name of the Corporation is RAYOVAC CORPORATION.
ARTICLE II
----------
The period of existence of the Corporation shall be perpetual.
ARTICLE III
-----------
The purpose or purposes for which the Corporation is organized is to carry
on and engage in any lawful activity within the purposes for which corporations
may be organized under Chapter 180.
ARTICLE IV
----------
The aggregate number of shares of capital stock which the Corporation shall
have the authority to issue is twenty-seven million (27,000,000), consisting of
one class only and designated "Common Stock", with a par value of one cent
($.01) per share. Each stock certificate representing issued and outstanding
shares of Class A Common Stock (including those owned by the Corporation and
held in the treasury thereof) shall be deemed for all corporate purposes to
evidence the ownership of an equal number of shares of Common Stock and the
holders of such certificates shall not be required to physically surrender such
certificates in exchange for certificates with a designation of Common Stock.
Effective at the time of filing in the Office of Financial Institutions of
the State of Wisconsin of this Restated Articles of Incorporation (the
"Effective Time"), each share of Common Stock, $.01 par value per share, of the
Corporation issued and outstanding immediately prior to the Effective Time
shall, automatically and without need for any further action on the part of any
shareholder, be converted into five (5) shares of validly issued and fully paid
Common Stock, $.01 par value per share (the "Stock Split"). No script or
fractional shares will be issued as a result of the Stock Split. In lieu
thereof, fractional shares shall be converted into the right to receive a cash
amount obtained by multiplying $21.94 by the fractional share, if any, due each
shareholder as a result of this Stock Split.
ARTICLE V
---------
(a) Preemptive Rights. The holder of any issued and outstanding shares of
Common Stock shall, as such holder, have the right to purchase up to a pro rata
portion of New Securities (as defined in paragraph (b) below) which the
Corporation, from time to time, proposes to sell or issue following the date
hereof. A shareholder's pro rata portion shall be the product of (i) a fraction,
the numerator of which is the number of outstanding shares of Common Stock which
such shareholder then owns and the denominator of which is the total number of
shares of Common Stock then actually outstanding on a fully diluted basis after
giving effect to the exercise of all options, warrants and the like and the
conversion of all securities convertible into or exchangeable for Common Stock,
multiplied by (ii) the number of New Securities the Corporation proposes to sell
or issue.
(b) Definition of New Securities. "New Securities" shall mean any Common
Stock of the Corporation, whether now authorized or not, any rights, options or
warrants to purchase Common Stock and any indebtedness or preferred stock of the
Corporation which is convertible into Common Stock (or which is convertible into
a security which is, in turn, convertible into Common Stock); provided that the
term "New Securities" does not include (i) indebtedness of the Corporation; (ii)
Common Stock issued as a stock dividend to all holders of Common Stock pro rata
or upon any subdivision or combination of shares of Common Stock; (iii) the
issuance and sale of securities of the Corporation pursuant to a public offering
or merger, consolidation or similar share exchange; (iv) any director, officer,
employee or consultant stock options approved by the Board of Directors of the
Corporation; (v) the issuance of any Common Stock upon the exercise or
conversion of any rights, options or warrants to purchase Common Stock; (vi) the
issuance and sale of up to an aggregate of 227,791 shares of Common Stock (as
equitably adjusted for stock dividends, stock splits, reverse stock splits and
other similar reclassifications) on or prior to September 12, 1997 to newly
hired officers (but not the chief executive officer) or employees of the
Corporation for a per share price no less than $4.39; provided that such
officers or employees shall execute a counterpart of the Shareholders Agreement,
entered into as of the 12th day of September, 1996 (the "Shareholders
Agreement"), by and among the Corporation and the signatories thereto, as
Management Shareholders (as defined in the Shareholders Agreement); or (vii) the
issuance of any equity security issued to non-affiliates of the Corporation as
part of a bona fide debt offering of investment units comprised of such equity
security and a debt security of the Corporation or the issuance of Common Stock
upon the conversion of such equity security pursuant to its terms.
(c) Notice from the Corporation. In the event the Corporation proposes to
issue New Securities, the Corporation shall give each shareholder who has a
preemptive right under these Restated Articles of Incorporation written notice
of such proposal, describing the type of New Securities and the price and the
terms upon which the Corporation proposes to issue the same. For a period of
five (5) days following the delivery of such notice by the Corporation, the
Corporation shall be deemed to have irrevocably offered to sell to each
shareholder its pro rata share of such New Securities for the price and upon the
terms specified in the notice. Each shareholder may exercise its preemptive
rights hereunder by giving written notice to the Corporation and stating therein
the quantity of New Securities to be purchased.
-2-
(d) Sale by the Corporation. In the event any shareholder who has a
preemptive right under these Restated Articles of Incorporation fails to
exercise in full its preemptive right within said five (5) day period, the
Corporation shall have one (1) year thereafter to sell the New Securities with
respect to which the preemptive right was not exercised, at a price and upon
terms no more favorable to the purchasers thereof than specified in the
Corporation's notice given pursuant to these Restated Articles of Incorporation.
(e) Closing. The closing for any such issuance shall take place as proposed
by the Corporation with respect to the shares to be issued, at which closing the
Corporation shall deliver certificates for the shares in the respective names of
the purchasing shareholders against receipt of payment therefor.
ARTICLE VI
----------
The number of directors constituting the Board of Directors of the
Corporation shall be such number (one or more) as is fixed from time to time by
the Bylaws of the Corporation.
ARTICLE VII
-----------
The address of the registered office of the Corporation is 601 Rayovac
Drive, P.O. Box 4960, Madison, Wisconsin 53711-0960, in Dane County and the name
of the Corporation's registered agent at such address is David A. Jones.
ARTICLE VIII
------------
These Restated Articles of Incorporation may be amended pursuant to the
Bylaws of the Corporation and in the manner authorized by law at the time of
amendment. Any action required or permitted by this Restated Articles of
Incorporation or Bylaws or any provision of law to be taken at a meeting of the
shareholders, may be taken without a meeting if a consent or consents in
writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking of
the corporate action without a meeting by less than unanimous written consent
shall be given to those shareholders who have not consented in writing in
accordance with Section 180.0704 of the Wisconsin Business Corporation Law.
ARTICLE IX
----------
If any of the Corporation's shareholders enter into one or more agreements
with the Corporation that impose limitations on the transfer of shares of the
Corporation's Common Stock or that otherwise provide for the purchase and sale
of outstanding shares upon the happening of certain events and contingencies,
each such agreement shall be binding on the parties to the agreement in all
respects, and any attempted transfer of shares in violation of the agreement's
terms and provisions shall be void and ineffective in all respects. If any such
agreement so provides, all persons who subsequently acquire shares shall be
bound by the agreement's terms and provisions as if they were signatories to the
agreement.
-3-
* * * *
The undersigned officers of Rayovac Corporation, a Wisconsin corporation,
with its registered office in Dane County, Wisconsin, CERTIFY:
1. The foregoing Restated Articles of Incorporation were adopted by the
shareholders of the Corporation as of the 10th day of September, 1996 by the
following vote:
Number of
Shares Number of Number of Number of Number of
Common SHARES affirmative affirmative negative
Stock entitled votes votes votes
Outstanding to vote REQUIRED CAST CAST
9,902,000 9,902,000 9,902,000 9,902,000 None
2. The Restated Articles of Incorporation shall be effective upon filing
with the Office of Financial Institutions of the State of Wisconsin.
Executed in duplicate and corporate seal affixed this 10th day of
September, 1996.
/s/ Thomas F. Pyle
------------------------------
Thomas F. Pyle, Jr., President
[CORPORATE SEAL]
/s/ James A. Broderick
-------------------------------
James A. Broderick, Secretary
This document should be recorded in the office of the Register of Deeds of
Dane County.
This document was drafted by, and should be returned to, Benjamin F.
Garmer, III, of the law firm of Foley & Lardner, 777 East Wisconsin Avenue,
Milwaukee, Wisconsin.
-4-
EXHIBIT 3.2
RESTATED BY-LAWS
OF
RAYOVAC CORPORATION
(a Wisconsin corporation)
-INTRODUCTION-
VARIABLE REFERENCES
0.01. Date of annual shareholders' meeting (see Section 2.01): To be
determined annually by the Chairman of the Board or by a majority vote of the
Board of Directors, the Board's vote controlling, on a date following the
completion of the audited financial statements for the preceding fiscal year and
not later than the last day of the current fiscal year.
* 0.02. Required notice of shareholders' meeting (see Section 2.04): not less
than two (2) days.
* 0.03. Authorized number of directors (see Section 3.01): Eight (8).
* 0.04. Required notice of directors' meetings (see Section 3.05):
(a) not less than 48 hours if by mail, and
* (b) not less than 24 hours if by telegram or personal delivery.
* 0.05. Authorized number of Vice Presidents (see Section 4.01): Fifteen
(15).
*
* These spaces are reserved for official notation of future amendments to
these sections.
ARTICLE I
OFFICERS
1.01. Principal and Business Offices. The corporation may have such
principal an other business offices, either within or without the State of
Wisconsin, as the Board of Directors may designate or as the business of the
corporation may require from time to time.
1.02. Registered Office. The registered office of the corporation
required by the Wisconsin Business Corporation Law to be maintained in the State
of Wisconsin may be, but need not be, identical with the principal office in the
State of Wisconsin, and the address of the registered office may be changed from
time to time by the Board of Directors or by the registered agent. The business
office of the registered agent of the corporation shall be identical to such
registered office.
ARTICLE II
SHAREHOLDERS
2.01. Annual Meeting. The annual meeting of the shareholders shall be
held at the date and hour in each year set forth in Section 0.01, or at such
other time and date within thirty days before or after said date as may be fixed
by or under the authority of the Board of Directors, for the purpose of electing
directors and for the transaction of such other business as may come before the
meeting. If the day fixed for the annual meeting shall be a legal holiday in the
State of Wisconsin, such meeting shall be held on the next succeeding business
day. If the election of directors shall not be held on the day designated
herein, or fixed as herein provided, for any annual meeting of the shareholders,
or at any adjournment thereof, the Board of Directors shall cause the election
to be held at a special meeting of the shareholders as soon thereafter as
conveniently may be.
2.02. Special Meeting. Special meetings of the shareholders, for any
purpose or purposes, unless otherwise prescribed by statute or the Articles of
Incorporation, may be called by the Chairman of the Board or the Board of
Directors or by the person designated in the written request of the holders of
not less than one-tenth of all shares of the corporation entitled to vote at the
meeting.
2.03. Place of Meeting. The Board of Directors may designate any
place, either within or without the State of Wisconsin, as the place of meeting
for any annual meeting or for any special meeting called by the Board of
Directors. A waiver of notice signed by all shareholders entitled to vote at a
meeting may designate any place, either within or without the
-2-
State of Wisconsin, as the place for the holding of such meeting. If no
designation is made, or if a special meeting be otherwise called, the place of
meeting shall be the principal business office of the corporation in the State
of Wisconsin or such other suitable place in the county of such principal office
as may be designated by the person calling such meeting, but any meeting may be
adjourned to reconvene at any place designated by the holders of a majority of
the votes represented thereat.
2.04. Notice of Meeting. Written notice stating the place, day and
hour of the meeting and, in case of a special meeting, the purpose or purposes
for which the meeting is called, shall be delivered not less than the number of
days set forth in Section 0.02 (unless a longer period is required by law or the
Articles of Incorporation) nor more than fifty days before the date of the
meeting, either personally or by mail, by or at the direction of the Chairman of
the Board, or the Secretary, or other officer or persons calling the meeting, to
each shareholder of record entitled to vote at such meeting. If mailed, such
notice shall be deemed to be delivered when deposited in the United States mail,
addressed to the shareholder at his address as it appears on the stock record
books of the corporation, with postage thereon prepaid.
2.05. Closing of Transfer Books or Fixing of Record Date. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or shareholders entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the Board of Directors may provide
that the stock transfer books shall be closed for a stated period but not to
exceed, in any case, fifty days. If the stock transfer books shall be closed for
the purpose of determining shareholders entitled to notice of or to vote at a
meeting of shareholders, such books shall be closed for at least ten days
immediately preceding such meeting. In lieu of closing the stock transfer books,
the Board of Directors may fix in advance a date as the record date for any such
determination of shareholders, such date in any case to be not more than fifty
days and, in case of a meeting of shareholders, not less than ten days prior to
the date on which the particular action, requiring such determination of
shareholders, is to be taken. If the stock transfer books are not closed and no
record date is fixed for the determination of shareholders entitled to notice of
or to vote at a meeting of shareholders, or shareholders entitled to receive
payment of a dividend, the close of business on the date on which notice of the
meeting is mailed or on the date on which the resolution of the Board of
Directors declaring such dividend is adopted, as the case may be, shall be the
record date for such determination of shareholders. When a determination of
shareholders entitled to vote at any meeting of shareholders has been made as
provided in this section, such determination shall be applied to any adjourn-
-3-
ment thereof except where the determination has been made through the closing of
the stock transfer books and the stated period of closing has expired.
2.06. Voting Records. The officer or agent having charge of the stock
transfer books for shares of the corporation shall, before each meeting of
shareholders, make a complete record of the shareholders entitled to vote at
such meeting, or any adjournment thereof, arranged in alphabetical order, and
indicating the address of each shareholder, the number of shares of each class
of capital stock of the corporation entitled to vote registered in the name of
such shareholder and the total number of votes to which each shareholder is
entitled. Such record shall be produced and kept open at the time and place of
the meeting and shall be subject to the inspection of any shareholder during the
whole time of the meeting for the purposes of the meeting. The original stock
transfer books shall be prima facie evidence as to who are the shareholders
entitled to examine such record or transfer books or to vote at any meeting of
shareholders. Failure to comply with the requirements of this section shall not
affect the validity of any action taken at such meeting.
2.07. Quorum. Except as otherwise provided in the Articles of
Incorporation, a quorum shall exist at a meeting of shareholders if shares of
the corporation holding a majority of the votes entitled to be cast at such
meeting are represented in person or by proxy at such meeting of shareholders,
but in no event shall a quorum consist of less than one-third of the shares
entitled to vote at the meeting. If a quorum is present, the affirmative vote of
the holders of a majority of the votes represented at the meeting in person or
by proxy voting together as a single class shall be the act of the shareholders,
unless the vote of a greater number or voting by classes is required by law or
the Articles of Incorporation. Though less than a quorum is represented at a
meeting, a majority of the votes so represented may adjourn the meeting from
time to time without further notice. At such adjourned meeting at which a quorum
shall be present or represented, any business may be transacted which might have
been transacted at the meeting as originally notified.
2.08. Conduct of Meeting. The Chairman of the Board, and in his
absence, the Vice Chairman of the Board, and in their absence, any person chosen
by the shareholders present shall call the meeting of the shareholders to order
and shall act as chairman of the meeting, and the Secretary of the corporation
shall act as secretary of all meetings of the shareholders, but, in the absence
of the Secretary, the presiding officer may appoint any other person to act as
secretary of the meeting.
2.09. Proxies. At all meetings of shareholders, a shareholder entitled
to vote may vote in person or by proxy
-4-
appointed in writing by the shareholder or by his duly authorized attorney in
fact. Such proxy shall be filed with the Secretary of the corporation before or
at the time of the meeting. Unless otherwise provided in the proxy, a proxy may
be revoked at any time before it is voted, either by written notice filed with
the Secretary or the acting secretary of the meeting or by oral notice given by
the shareholder to the presiding officer during the meeting. The presence of a
shareholder who has filed his proxy shall not of itself constitute a revocation.
No proxy shall be valid after eleven months from the date of its execution,
unless otherwise provided in the proxy. The Board of Directors shall have the
power and authority to make rules establishing presumptions as to the validity
and sufficiency of proxies.
2.10. Voting of Shares. Each outstanding share shall be entitled to
one vote upon each matter submitted to a vote at a meeting of shareholders,
except to the extent that voting rights of the shares of any class or classes
are enlarged, limited or denied by the Articles of Incorporation.
2.11. Voting of Shares by Certain Holders.
(a) Other Corporations. Shares standing in the name of another
corporation may be voted either in person or by proxy, by the president of such
corporation or any other officer appointed by such president. A proxy executed
by any principal officer of such other corporation or assistant thereto shall be
conclusive evidence of the signer's authority to act, in the absence of express
notice to this corporation, given in writing to the Secretary of this
corporation, of the designation of some other person by the board of directors
or the bylaws of such other corporation.
(b) Legal Representatives and Fiduciaries. Shares held by any
administrator, executor, guardian, conservator, trustee in bankruptcy, receiver,
or assignee for creditors may be voted by him, either in person or by proxy,
without a transfer of such shares into his name provided that there is filed
with the Secretary before or at the time of meeting proper evidence of his
incumbency and the number of shares held. Shares standing in the name of a
fiduciary may be voted by him, either in person or by proxy. A proxy executed by
a fiduciary, shall be conclusive evidence of the signer's authority to act, in
the absence of express notice to this corporation, given in writing to the
Secretary of this corporation, that such manner of voting is expressly
prohibited or otherwise directed by the document creating the fiduciary
relationship.
-5-
(c) Pledgees. A shareholder whose shares are pledged shall be entitled
to vote such shares until the shares have been transferred into the name of the
pledgee, and thereafter the pledgee shall be entitled to vote the shares so
transferred.
(d) Treasury Stock and Subsidiaries. Neither treasury shares, nor
shares held by another corporation if a majority of the shares entitled to vote
for the election of directors of such other corporation is held by this
corporation, shall be voted at any meeting or counted in determining the total
number of votes represented at such a meeting, but shares of its own issue held
by this corporation in a fiduciary capacity, or held by such other corporation
in a fiduciary capacity, may be voted and shall be counted in determining the
total number of votes represented at such a meeting.
(e) Minors. Shares held by a minor may be voted by such minor in
person or by proxy and no such vote shall be subject to disaffirmance or
avoidance, unless prior to such vote the Secretary of the corporation has
received written notice or has actual knowledge that such shareholder is a
minor.
(f) Incompetents and Spendthrifts. Shares held by an incompetent or
spendthrift may be voted by such incompetent or spendthrift in person or by
proxy and no such vote shall be subject to disaffirmance or avoidance, unless
prior to such vote the Secretary of the corporation has actual knowledge that
such shareholder has been adjudicated an incompetent or spendthrift or actual
knowledge of filing of judicial proceedings for appointment of a guardian.
(g) Joint Tenants. Shares registered in the names of two or more
individuals who are named in the registration as joint tenants may be voted in
person or by proxy signed by any one or more of such individuals if either (i)
no other such individual or his legal representative is present and claims the
right to participate in the voting of such shares or prior to the vote files
with the Secretary of the corporation a contrary written voting authorization or
direction or written denial of authority of the individual present or signing
the proxy proposed to be voted or (ii) all such other individuals are deceased
and the Secretary of the corporation has no actual knowledge that the survivor
has been adjudicated not to be the successor to the interests of those deceased.
2.12. Waiver of Notice by Shareholders. Whenever any notice whatsoever
is required to be given to any shareholder of the corporation under the Articles
of Incorporation or Bylaws or any provision of law, a waiver thereof in writing,
signed at any time, whether before or after the time of the meeting, by the
shareholder entitled to such notice, shall be deemed equivalent
-6-
to the giving of such notice; provided that such waiver in respect to any matter
of which notice is required under any provision of the Wisconsin Business
Corporation Law, shall contain the same information as would have been required
to be included in such notice, except the time and place of meeting.
2.13. Unanimous Consent Without Meeting. Any action required or
permitted by the Articles of Incorporation or Bylaws or any provision of law to
be taken at a meeting of the shareholders, may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be signed by all of
the shareholders entitled to vote with respect to the subject matter thereof.
ARTICLE III
BOARD OF DIRECTORS
3.01. General Powers and Number. The business and affairs of the
corporation shall be managed by its Board of Directors. The number of directors
of the corporation shall be as provided in Section 0.03.
3.02. Tenure and Qualifications. Each director shall hold office until
the next annual meeting of the shareholders and until his successor shall have
been elected, or until his prior death, resignation or removal. A director may
be removed from office by affirmative vote of a majority of the votes entitled
to be cast for the election of such director, taken at a meeting of shareholders
called for that purpose. A director may resign at any time by filing his written
resignation with the Secretary of the corporation. Directors need not be
residents of the State of Wisconsin or shareholders of the corporation. A
director, other than the Chairman of the Board or Vice Chairman of the Board,
who is an officer of the corporation and who shall retire or otherwise terminate
employment as such officer shall automatically be retired as a director of the
corporation and thereafter shall not be eligible for re-election as a director.
3.03. Regular Meetings. A regular meeting of the Board of Directors
shall be held without other notice than this Bylaw immediately after the annual
meeting of shareholders, and each adjourned session thereof. The place of such
regular meeting shall be the same as the place of the meeting of shareholders
which precedes it, or such other suitable place as may be announced at such
meeting of shareholders. The Board of Directors may provide, by resolution, the
time and place, either within or without the State of Wisconsin, for the holding
of additional regular meetings without other notice than such resolution.
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3.04. Special Meetings. Special meetings of the Board of Directors may
be called by or at the request of the Chairman of the Board, Vice Chairman of
the Board or any two directors. The Chairman of the Board or Vice Chairman of
the Board calling any special meeting of the Board of Directors may fix any
place, either within or without the State of Wisconsin, as the place for holding
any special meeting of the Board of Directors called by them, and if no other
place is fixed the place of the meeting shall be the principal business office
of the corporation in the State of Wisconsin.
3.05. Notice; Waiver. Notice of each meeting of the Board of Directors
(unless otherwise provided in or pursuant to Section 3.03) shall be given by
written notice delivered personally or mailed or given by telegram to each
director at his business address or at such other address as such director shall
have designated in writing filed with the Secretary, in each case not less than
that number of hours prior thereto as set forth in Section 0.04. If mailed, such
notice shall be deemed to be delivered when deposited in the United States mail
so addressed, with postage thereon prepaid. If notice be given by telegram, such
notice shall be deemed to be delivered when the telegram is delivered to the
telegraph company. Whenever any notice whatsoever is required to be given to any
director of the corporation under the Articles of Incorporation or Bylaws or any
provision of law, a waiver thereof in writing, signed at any time, whether
before or after the time of meeting, by the director entitled to such notice,
shall be deemed equivalent to the giving of such notice. The attendance of a
director at a meeting shall constitute a waiver of notice of such meeting,
except where a director attends a meeting and objects thereat to the transaction
of any business because the meeting is not lawfully called or convened. Neither
the business to be transacted at, nor the purpose of, any regular or special
meeting of the Board of Directors need be specified in the notice or waiver of
notice of such meeting.
3.06. Quorum. Except as otherwise provided by law or by the Articles
of Incorporation or these Bylaws, a majority of the directors shall constitute a
quorum for the transaction of business at any meeting of the Board of Directors,
but a majority of the directors present (though less than such quorum) may
adjourn the meeting from time to time without further notice.
3.07. Manner of Acting. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors, unless the act of a greater number is required by law or by the
Articles of Incorporation or these Bylaws.
3.08. Conduct of Meetings. The Chairman of the Board, and in his
absence, the Vice Chairman of the Board, and in their absence, any director
chosen by the directors present, shall call
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meetings of the Board of Directors to order and shall act as chairman of the
meeting. The Secretary of the corporation shall act as secretary of all meetings
of the Board of Directors but in the absence of the Secretary, the presiding
officer may appoint any Assistant Secretary or any director or other persons
present to act as secretary of the meeting.
3.09. Vacancies. Except as otherwise provided in the Articles of
Incorporation, any vacancy occurring in the Board of Directors, including a
vacancy created by an increase in the number of directors, may be filled until
the next succeeding annual election by the affirmative vote of a majority of the
directors then in office, though less than a quorum of the Board of Directors;
provided, that in case of a vacancy created by the removal of a director by vote
of the shareholders, the shareholders shall have the right to fill such vacancy
at the same meeting or any adjournment thereof in accordance with the Articles
of Incorporation.
3.10. Compensation. The Board of Directors, by affirmative vote of a
majority of the directors then in office, and irrespective of any personal
interest of any of its members, may establish reasonable compensation of all
directors for services to the corporation as directors, officers or otherwise,
or may delegate such authority to an appropriate committee. The Board of
Directors also shall have authority to provide for or delegate authority to an
appropriate committee to provide for reasonable pensions, disability or death
benefits, and other benefits or payments, to directors, officers and employees
and to their estates, families, dependents or beneficiaries on account of prior
services rendered by such directors, officers and employees to the corporation.
3.11. Presumption of Assent. A director of the corporation who is
present at a meeting of the Board of Directors or a committee thereof of which
he is a member at which action on any corporate matter is taken shall be
presumed to have assented to the action taken unless his dissent shall be
entered in the minutes of the meeting or unless he shall file his written
dissent to such action with the person acting as the secretary of the meeting
before the adjournment thereof or shall forward such dissent by registered mail
to the Secretary of the corporation immediately after the adjournment of the
meeting. Such right to dissent shall not apply to a director who voted in favor
of such action.
3.12. Committees. The Board of Directors by resolution adopted by
the affirmative vote of a majority of the number of directors as provided in
Section 0.03 may designate one or more committees, each committee to consist of
three or more directors elected by the Board of Directors, which, to the extent
provided in said resolution as initially adopted, and as thereaf-
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ter supplemented or amended by further resolution adopted by a like vote, shall
have and may exercise, when the Board of Directors is not in session, the powers
of the Board of Directors in the management of the business and affairs of the
corporation, except action in respect to dividends to shareholders, election of
the principal officers or the filling of vacancies in the Board of Directors or
committees created pursuant to this section. The Board of Directors may elect
one or more of its members as alternate members of any such committee who may
take the place of any absent member or members at any meeting of such committee,
upon request by the Chairman of the Board or upon request by the chairman of
such meeting. Each such committee shall fix its own rules governing the conduct
of its activities and shall make such reports to the Board of Directors of its
activities as the Board of Directors may request.
3.13. Unanimous Consent Without Meeting. Any action required or
permitted by the Articles of Incorporation or Bylaws or any provision of law to
be taken by the Board of Directors at a meeting or by resolution may be taken
without a meeting if a consent in writing, setting forth the action so taken,
shall be signed by all of the directors then in office.
ARTICLE IV
OFFICERS
4.01. Number. The principal officers of the corporation shall be a
Chairman of the Board, a Vice Chairman of the Board, a President, the number of
Vice Presidents as provided in Section 0.05, a Secretary, and a Treasurer, each
of whom shall be elected by the Board of Directors. The Board of Directors may
from time to time elect or appoint such other officers and assistant officers as
may be deemed necessary. Any number of offices may be held by the same person.
4.02. Election and Term of Office. The officers of the corporation to
be elected by the Board of Directors shall be elected annually by the Board of
Directors at the first meeting of the Board of Directors held after each annual
meeting of the shareholders. If the election of officers shall not be held at
such meeting, such election shall be held as soon thereafter as conveniently may
be. Each officer shall hold office until his successor shall be duly elected or
until his prior death, resignation or removal. Any officer may resign at any
time upon written notice to the corporation. Failure to elect officers shall not
dissolve or otherwise affect the corporation.
4.03. Removal. Any officer or agent may be removed by the Board of
Directors whenever in its judgment the best interest of the corporation and its
shareholders will be served thereby, but such removal shall be without prejudice
to the contract
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rights, if any, of the person so removed. Election or appointment shall not of
itself create contract rights.
4.04. Vacancies. A vacancy in any principal office because of death,
resignation, removal, disqualification or otherwise, shall be filled by the
Board of Directors for the unexpired portion of the term.
4.05. Chairman of the Board. The Chairman of the Board shall be
elected or appointed by, and from the membership of the Board of Directors. He
shall, when present, preside at all meetings of the shareholders and of the
Board of Directors. He shall perform such other duties and functions as shall be
assigned to him from time to time by the Board of Directors or in these Bylaws.
Except where by law the signature of the President of the corporation is
required, the Chairman of the Board shall possess the same power and authority
to sign, execute and acknowledge, on behalf of the corporation, all deeds,
mortgages, bonds, stock certificates, contracts, leases, reports and all other
documents or instruments necessary or proper to be executed in the course of the
corporation's regular business, or which shall be authorized by resolution of
the Board of Directors; and except as otherwise provided by law or by the Board
of Directors, he may authorize the President or any Vice President or other
officer or agent of the corporation to sign, execute and acknowledge such
documents or instruments in his place and stead. During the absence or
disability of the President, or while that office is vacant, the Chairman of the
Board shall exercise all of the powers and discharge all of the duties of the
President.
4.06. Vice Chairman of the Board. During the absence or disability of
the Chairman of the Board, the Vice Chairman of the Board shall exercise all of
the functions of the Chairman of the Board. The Vice Chairman of the Board shall
perform all duties incident to the office of the Vice Chairman of the Board and
such other duties as shall from time to time be assigned to him by the Board of
Directors, the Chairman of the Board or as prescribed by these Bylaws.
4.07. President. The President shall be the chief executive officer
and chief operations officer of the corporation and, subject to the control of
the Board of Directors, shall in general determine the direction and goals of
the organization and supervise and control all of the business, operations and
affairs of the corporation. He shall have authority, subject to such rules as
may be prescribed by the Board of Directors, to appoint such agents and
employees of the corporation as he may deem necessary, to prescribe their
powers, duties and compensation, and to delegate authority to them. Such agents
and employees shall hold office at the discretion of the President. He shall
have authority, co-equal with the Chairman of the Board, to sign, execute and
acknowledge, on behalf of the corporation, all deeds,
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mortgages, bonds, stock certificates, contracts, leases, reports and all other
documents or instruments necessary or proper to be executed in the course of the
corporation's regular business, or which shall be authorized by resolution of
the Board of Directors; and, except as otherwise provided by law or by the Board
of Directors, he may authorize any Vice President or any other officer or agent
of the corporation to sign, execute and acknowledge such documents or
instruments in his place and stead. In general, he shall perform all duties
incident to the office of chief executive officer, chief operating officer and
President and such other duties as may be prescribed by the Board of Directors
from time to time.
4.08. Vice Presidents. In the absence of the Chairman of the Board,
the Vice Chairman of the Board and the President or in the event of their
deaths, inability or refusal to act, or in the event for any reason it shall be
impracticable for the Chairman of the Board, Vice Chairman of the Board or
President to act personally, the Vice President (or in the event there be more
than one Vice President, the Vice Presidents in the order designated by the
Board of Directors, or in the absence of any designation, then in the order of
their election) shall perform the duties of the Chairman of the Board, Vice
Chairman of the Board and/or President (as the case may be), and when so acting,
shall have all the powers of and be subject to all the restrictions upon the
Chairman of the Board, the Vice Chairman of the Board or President (as the case
may be). Any Vice President may sign, with the Secretary or Assistant Secretary,
certificates for shares of the corporation; and shall perform such other duties
and have such authority as from time to time may be delegated or assigned to him
by the Chairman of the Board, Vice Chairman of the Board, President or Board of
Directors. The execution of any instrument of the corporation by any Vice
President shall be conclusive evidence, as to third parties, of his authority to
act in the stead of the Chairman of the Board, the Vice Chairman of the Board
and/or President.
4.09. Secretary. The Secretary shall:
(a) keep the minutes of the meetings of the shareholders and the
Board of Directors in one or more books provided for that purpose;
(b) attest instruments to be filed with the Secretary of State;
(c) see that all notices are duly given in accordance with the
provisions of these Bylaws or as required by law;
(d) be custodian of the corporate records;
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(e) keep or arrange for the keeping of a register of the post office
address of each shareholder which shall be furnished to the Secretary by such
shareholders;
(f) sign with the Chairman of the Board, the Vice Chairman of the
Board or the President, certificates for shares of the corporation, the issuance
of which shall have been authorized by resolution of the Board of Directors;
(g) have general charge of the stock transfer books of the
corporation; and
(h) in general perform all duties incident to the office of the
Secretary and have such other duties and exercise such authority as from time to
time may be delegated or assigned to him by the Chairman of the Board, Vice
Chairman of the Board or by the President or by the Board of Directors.
4.10. Treasurer. The Treasurer shall:
(a) have charge and custody of and be responsible for all funds and
securities of the corporation;
(b) receive and give receipts for moneys due and payable to the
corporation from any source whatsoever, and deposit all such moneys in the name
of the corporation in such banks, trust companies or other depositories as shall
be selected in accordance with the provisions of Section 5.04; and
(c) in general perform all of the duties and exercise such other
authority as from time to time may be delegated or assigned to him by the
Chairman of the Board, the Vice Chairman of the Board or the President or by the
Board of Directors. If required by the Board of Directors, the Treasurer shall
give a bond for the faithful discharge of his duties in such sum and with such
surety or sureties as the Board of Directors shall determine.
4.11. Assistant Secretaries and Assistant Treasurers. There shall be
such number of Assistant Secretaries and Assistant Treasurers as the Board of
Directors may from time to time authorize. The Assistant Secretaries may sign
with the Chairman of the Board or the President certificates for shares of the
corporation the issuance of which shall have been authorized by a resolution of
the Board of Directors. The Assistant Treasurers shall respectively, if required
by the Board of Directors, give bonds for the faithful discharge of their duties
in such sums and with such sureties as the Board of Directors shall determine.
The Assistant Secretaries and Assistant Treasurers, in general, shall perform
such duties and have such authority as shall from time to time be delegated or
assigned to them by the Secretary or the Treasurer, respectively, or by the
Chairman of the Board, the
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Vice Chairman of the Board, the President or by the Board of Directors.
4.12. Other Assistants and Acting Officers. The Board of Directors
shall have the power to appoint any person to act as assistant to any officer,
or as agent for the corporation in his stead, or to perform the duties of such
officer whenever for any reason it is impracticable for such officer to act
personally, and such assistant or acting officer or other agent so appointed by
the Board of Directors shall have the power to perform all the duties of the
office to which he is so appointed to be an assistant, or as to which he is so
appointed to act, except as such power may be otherwise defined or restricted by
the Board of Directors.
4.13. Salaries. The salaries of the principal officers shall be fixed
from time to time by the Board of Directors or by a duly authorized committee
thereof, and no other officer shall be prevented from receiving such salary by
reason of the fact that he is also a director of the corporation.
ARTICLE V
CONTRACTS, LOANS, CHECKS
AND DEPOSITS; SPECIAL CORPORATE ACTS
5.01. Contracts. The Board of Directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute or deliver any
instrument in the name of and on behalf of the corporation, and such
authorization may be general or confined to specific instances. In the absence
of other designation, all deeds, mortgages and instruments of assignment or
pledge made by the corporation shall be executed in the name of the corporation
by the Chairman of the Board or the President or one of the Vice Presidents and
by the Secretary, an Assistant Secretary, the Treasurer or an Assistant
Treasurer; and when so executed no other party to such instrument or any third
party shall be required to make any inquiry into the authority of the signing
officer or officers.
5.02. Loans. No indebtedness for borrowed money shall be contracted on
behalf of the corporation and no evidences of such indebtedness shall be issued
in its name unless authorized by or under the authority of a resolution of the
Board of Directors. Such authorization may be general or confined to specific
instances.
5.03. Checks, Drafts, etc. All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name of
the corporation, shall be signed by such officer or officers, agent or agents of
the corporation and in such manner as shall from time to time be
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determined by or under the authority of a resolution of the Board of Directors.
5.04. Deposits. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the corporation in such
banks, trust companies or other depositories as may be selected by or under the
authority of a resolution of the Board of Directors.
5.05. Voting of Securities Owned by this Corporation. Subject always
to the specific directions of the Board of Directors, (a) any shares or other
securities issued by any other corporation and owned or controlled by this
corporation may be voted at any meeting of security holders of such other
corporation by the Chairman of the Board of this corporation if he be present,
or in his absence by the Vice Chairman of the Board of this corporation who may
be present, and (b) whenever, in the judgment of the Chairman of the Board, or
in his absence, the Vice Chairman, it is desirable for this corporation to
execute a proxy or written consent in respect to any shares or other securities
issued by any other corporation and owned by this corporation, such proxy or
consent shall be executed in the name of this corporation by the Chairman of the
Board or the Vice Chairman of the Board of this corporation, without necessity
of any authorization by the Board of Directors, countersignature or attestation
by another officer. Any person or persons designated in the manner above stated
as the proxy or proxies of this corporation shall have full right, power and
authority to vote the shares or other securities issued by such other
corporation and owned by this corporation the same as such shares or other
securities might be voted by this corporation.
ARTICLE VI
CERTIFICATES FOR SHARES AND THEIR TRANSFER
6.01. Certificates for Shares. Certificates representing shares of the
corporation shall be in such form, consistent with law, as shall be determined
by the Board of Directors. Such certificates shall be signed by the Chairman of
the Board or Vice Chairman of the Board and by the Secretary or an Assistant
Secretary. All certificates for shares shall be consecutively numbered or
otherwise identified. The name and address of the person to whom the shares
represented thereby are issued, with the number of shares and date of issue,
shall be entered on the stock transfer books of the corporation. All
certificates surrendered to the corporation for transfer shall be cancelled and
no new certificate shall be issued until the former certificate for a like
number of shares shall have been surrendered and cancelled, except as provided
in Section 6.06.
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6.02. Facsimile Signatures and Seal. The signature of the Chairman of
the Board or Vice Chairman of the Board and the Secretary or Assistant Secretary
upon a certificate may be facsimiles if the certificate is manually signed on
behalf of a transfer agent, or a registrar, other than the corporation itself or
an employee of the corporation. The corporation shall have a corporate seal.
6.03. Signature by Former Officers. In case any officer, who has
signed or whose facsimile signature has been placed upon any certificate for
shares, shall have ceased to be such officer before such certificate is issued,
it may be issued by the corporation with the same effect as if he were such
officer at the date of its issue.
6.04. Transfer of Shares. Prior to due presentment of a certificate
for shares for registration of transfer, the corporation may treat the
registered owner of such shares as the person exclusively entitled to vote, to
receive notifications and otherwise to have and exercise all the rights and
powers of an owner. Where a certificate for shares is presented to the
corporation with a request to register for transfer, the corporation shall not
be liable to the owner or any other person suffering loss as a result of such
registration of transfer if (a) there were on or with the certificate the
necessary endorsements, and (b) the corporation had no duty to inquire into
adverse claims or has discharged any such duty. The corporation may require
reasonable assurance that said endorsements are genuine and effective and in
compliance with such other regulations as may be prescribed by or under the
authority of the Board of Directors.
6.05. Restrictions on Transfer. The face or reverse side of each
certificate representing shares shall bear a conspicuous notation of any
restriction imposed by the corporation upon the transfer of such shares.
6.06. Lost, Destroyed or Stolen Certificates. Where the owner claims
that his certificate for shares has been lost, destroyed or wrongfully taken, a
new certificate shall be issued in place thereof if the owner (a) so requests
before the corporation has notice that such shares have been acquired by a
bona fide purchaser, and (b) files with the corporation a sufficient indemnity
bond, and (c) satisfies such other reasonable requirements as may be
prescribed by or under the authority of the Board of Directors.
6.07. Consideration for Shares. The shares of the corporation may be
issued for such consideration as shall be fixed from time to time by the Board
of Directors, provided that any shares having a par value shall not be issued
for a consideration less than the par value thereof. The consideration to be
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paid for shares may be paid in whole or in part, in money, in other property,
tangible or intangible, or in labor or services actually performed for the
corporation. When payment of the consideration for which shares are to be issued
shall have been received by the corporation, such shares shall be deemed to be
fully paid and nonassessable by the corporation. No certificate shall be issued
for any share until such share is fully paid.
6.08. Stock Regulations. The Board of Directors shall have the power
and authority to make all such further rules and regulations not inconsistent
with the statutes of the State of Wisconsin as it may deem expedient concerning
the issue, transfer and registration of certificates representing shares of the
corporation.
ARTICLE VII
AMENDMENTS
7.01. By Shareholders. Except as otherwise provided in the Articles of
Incorporation, these Bylaws may be altered, amended or repealed and new Bylaws
may be adopted by the shareholders by affirmative vote of not less than a
majority of the votes represented in person or by proxy entitled to be cast
therefor at any annual or special meeting of the shareholders at which a quorum
is in attendance.
7.02. By Directors. Except as otherwise provided in the Articles of
Incorporation, these Bylaws may also be altered, amended or repealed and new
Bylaws may be adopted by the Board of Directors by affirmative vote of a
majority of the number of directors present at any meeting at which a quorum is
in attendance; but no Bylaw adopted by the shareholders shall be amended or
repealed by the Board of Directors if the Bylaw so adopted so provides.
7.03. Implied Amendments. Any action taken or authorized by the
shareholders or by the Board of Directors, which would be inconsistent with the
Bylaws then in effect but is taken or authorized by affirmative vote of not less
than the number of shares or the number of directors required to amend the
Bylaws so that the Bylaws would be consistent with such action, shall be given
the same effect as though the Bylaws had been temporarily amended or suspended
so far, but only so far, as is necessary to permit the specific action so taken
or authorized.
ARTICLE VIII
INDEMNIFICATION
8.01. Certain Definitions. All capitalized terms used in this Article
VIII and not otherwise hereinafter defined in
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this Section 8.01 shall have the meaning set forth in Section 180.042 of the
Statute. The following capitalized terms (including any plural forms thereof)
used in this Article VIII shall be defined as follows:
(a) "Affiliate" shall include, without limitation, any corporation,
partnership, joint venture, employee benefit plan, trust or other enterprise
that directly or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, the Corporation.
(b) "Authority" shall mean the entity selected by the Director or
Officer to determine his or her right to indemnification pursuant to Section
8.04.
(c) "Board" shall mean the entire then elected and serving board of
directors of the Corporation, including all members thereof who are Parties to
the subject Proceeding or any related Proceeding.
(d) "Breach of Duty" shall mean the Director or Officer breached or
failed to perform his or her duties to the Corporation and his or her breach of
or failure to perform those duties is determined, in accordance with Section
8.04, to constitute misconduct under Section 180.044(2)(a) 1, 2, 3 or 4 of the
Statute.
(e) "Corporation" as used herein and as defined in the Statute and
incorporated by reference into the definitions of certain other capitalized
terms used herein, shall mean this Corporation, including, without limitation,
any successor corporation or entity to this Corporation by way of merger,
consolidation or acquisition of all or substantially all of the capital stock or
assets of this Corporation.
(f) "Director or Officer" shall have the meaning set forth in the
Statute; provided, that, for purposes of this Article VIII, it shall be
conclusively presumed that any Director or Officer serving as a director,
officer, partner, trustee, member of any governing or decision-making committee,
employee or agent of an Affiliate shall be so serving at the request of the
Corporation.
(g) "Disinterested Quorum" shall mean a quorum of the Board who are
not Parties to the subject Proceeding or any related Proceeding.
(h) "Party" shall have the meaning set forth in the Statute; provided,
that, for purposes of this Article VIII, the term "Party" shall also include any
Director or Officer who is or was a witness in a Proceeding at a time when he or
she has not otherwise been formally named a Party thereto.
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(i) "Proceeding" shall have the meaning set forth in the Statute;
provided, that, for purposes of this Article VIII, the term "Proceeding" shall
also include all Proceedings (i) brought under (in whole or in part) the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, their respective state counterparts, and/or any rule or regulation
promulgated under any of the foregoing; (ii) brought before an Authority or
otherwise to enforce rights hereunder; (iii) any appeal from a Proceeding; and
(iv) any Proceeding in which the Director or Officer is a plaintiff or
petitioner because he or she is a Director or Officer; provided, however, that
such Proceeding is authorized by a majority vote of a Disinterested Quorum.
(j) "Statute" shall mean Section 180.042 through 180.059, inclusive,
of the Wisconsin Business Corporation Law, Chapter 180 of the Wisconsin
Statutes, as the same shall then be in effect, including any amendments thereto,
but, in the case of any such amendment, only to the extent such amendment
permits or requires the Corporation to provide broader indemnification rights
than the Statute permitted or required the Corporation to provide prior to such
amendment.
8.02. Mandatory Indemnification. To the fullest extent permitted or
required by the Statute, the Corporation shall indemnify a Director of Officer
against all Liabilities incurred by or on behalf of such Director or Officer in
connection with a Proceeding in which the Director or Officer is a Party because
he or she is a Director or Officer.
8.03. Procedural Requirements.
(a) A Director or Officer who seeks indemnification under Section 8.02
shall make a written request therefor to the Corporation. Subject to Section
8.03(b), within sixty days of the Corporation's receipt of such request, the
Corporation shall pay or reimburse the Director or Officer for the entire amount
of Liabilities incurred by the Director or Officer in connection with the
subject Proceeding (net of any Expenses previously advanced pursuant to Section
8.05).
(b) No indemnification shall be required to be paid by the Corporation
pursuant to Section 8.02 if, within such sixty-day period, (i) a Disinterested
Quorum, by a majority vote thereof, determines that the Director or Officer
requesting indemnification engaged in misconduct constituting a Breach of Duty
or (ii) a Disinterested Quorum cannot be obtained.
(c) In either case of nonpayment pursuant to Section 8.03(b), the
Board shall immediately authorize by resolution that an Authority, as provided
in Section 8.04, determine whether the
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Director's or Officer's conduct constituted a Breach of Duty and therefore,
whether indemnification should be denied hereunder.
(d) (i) If the Board does not authorize an Authority to determine the
Director's or Officer's right to indemnification hereunder within such sixty-day
period and/or (ii) if indemnification of the requested amount of Liabilities is
paid by the Corporation, then it shall be conclusively presumed for all purposes
that a Disinterested Quorum has determined that the Director or Officer did not
engage in misconduct constituting a Breach of Duty and, in the case of
subsection (i) above (but not subsection (ii)), indemnification by the
Corporation of the requested amount of Liabilities shall be paid to the Director
or Officer immediately.
8.04. Determination of Indemnification.
(a) If the Board authorizes an Authority to determine a Director's or
Officer's right to indemnification pursuant to Section 8.03, then the Director
or Officer requesting indemnification shall have the absolute discretionary
authority to select one of the following as such Authority:
(i) An independent legal counsel; provided, that such counsel shall be
mutually selected by such Director or Officer and by a majority vote of a
Disinterested Quorum or, if a Disinte rested Quorum cannot be obtained,
then by a majority vote of the Board;
(ii) A panel of three arbitrators selected from the panels of
arbitrators of the American Arbitration Association in Madison, Wisconsin;
provided that (A) one arbitrator shall be selected by such Director or
Officer, the second arbitrator shall be selected by a majority vote of a
Disinterested Quorum or, if a Disinterested Quorum cannot be obtained, then
by a majority vote of the Board, and the third arbitrator shall be selected
by the two previously selected arbitrators, and (B) in all other respects,
such panel shall be governed by the American Arbitration Association's then
existing Commercial Arbitration Rules; or
(iii) A court pursuant to and in accordance with Section 180.051 of
the Statute.
(b) In any such determination by the selected Authority there shall
exist a rebuttable presumption that the Director's or Officer's conduct did not
constitute a Breach of Duty and that indemnification against the requested
amount of Liabilities is required. The burden of rebutting such a presumption by
clear and convincing evidence shall be on the Corporation or such other party
asserting that such indemnification should not be allowed.
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(c) The Authority shall make its determination within sixty days of
being selected and shall submit a written opinion of its conclusion
simultaneously to both the Corporation and the Director or Officer.
(d) If the Authority determines that indemnification is required
hereunder, the Corporation shall pay the entire requested amount of Liabilities
(net of any Expenses previously advanced pursuant to Section 8.05), including
interest thereon at a reasonable rate, as determined by the Authority, within
ten days of receipt of the Authority's opinion; provided, that if it is
determined by the Authority that a Director or Officer is entitled to
indemnification as to some claims, issues or matters, but not as to other
claims, issues or matters, involved in the subject Proceeding, the Corporation
shall be required to pay (as set forth above) only the amount of such requested
Liabilities as the Authority shall deem appropriate in light of all of the
circumstances of such Proceeding.
(e) The determination by the Authority that indemnification is
required hereunder shall be binding upon the Corporation regardless of any prior
determination that the Director or Officer engaged in a Breach of Duty.
(f) All Expenses incurred in the determination process under this
Section 8.04 by either the Corporation or the Director or Officer, including,
without limitation, all Expenses of the selected Authority, shall be paid by the
Corporation.
8.05. Mandatory Allowance of Expenses.
(a) The Corporation shall pay or reimburse, within ten days after the
receipt of the Director's or Officer's written request therefor, the reasonable
Expenses of the Director or Officer as such Expenses are incurred; provided, the
following conditions are satisfied:
(i) The Director or Officer furnishes to the Corporation an executed
written certificate affirming his or her good faith belief that he or she
has not engaged in misconduct which constitutes a Breach of Duty; and
(ii) The Director or Officer furnishes to the Corporation an unsecured
executed written agreement to repay any advances made under this Section
8.05 if it is ultimately determined by an Authority that he or she is not
entitled to be indemnified by the Corporation for such Expenses pursuant to
Section 8.04.
(b) If the Director or Officer must repay any previously advanced
Expenses pursuant to this Section 8.05, such
-21-
Director or Officer shall not be required to pay interest on such amounts.
8.06. Indemnification and Allowance of Expenses of Certain Others.
(a) The Corporation shall indemnify a director or officer of an
Affiliate (who is not otherwise serving as a Director or Officer) against all
Liabilities, and shall advance the reasonable Expenses, incurred by such
director or officer in a Proceeding to the same extent hereunder as if such
director or officer incurred such Liabilities because he or she was a Director
or Officer, if such director or officer is a Party thereto because he or she is
or was a director or officer of the Affiliate.
(b) The Board may, in its sole and absolute discretion as it deems
appropriate, pursuant to a majority vote thereof, indemnify against Liabilities
incurred by, and/or provide for the allowance of reasonable Expenses of, an
employee or authorized agent of the Corporation acting within the scope of his
or her duties as such and who is not otherwise a Director or Officer.
8.07. Insurance. The Corporation may purchase and maintain insurance
on behalf of a Director or Officer or any individual who is or was an employee
or authorized agent of the Corporation against any Liability asserted against or
incurred by such individual in his or her capacity as such or arising from his
or her status as such, regardless of whether the Corporation is required or
permitted to indemnify against any such Liability under this Article VIII.
8.08. Notice to the Corporation. A Director or Officer shall promptly
notify the Corporation in writing when he or she has actual knowledge of a
Proceeding which may result in a claim of indemnification against Liabilities or
allowance of Expenses hereunder, but the failure to do so shall not relieve the
Corporation of any liability to the Director or Officer hereunder unless the
Corporation shall have been irreparably prejudiced by such failure (as
determined by an Authority selected pursuant to Section 8.04(a)).
8.09. Severability. If any provision of this Article VIII shall be
deemed invalid or inoperative, or if a court of competent jurisdiction
determines that any of the provisions of this Article VIII contravene public
policy, this Article VIII shall be construed so that the remaining provisions
shall not be affected, but shall remain in full force and effect, and any such
provisions which are invalid or inoperative or which contravene public policy
shall be deemed, without further action or deed by or on behalf of the
Corporation, to be modified, amended and/or
-22-
limited, but only to the extent necessary to render the same
valid and enforceable.
8.10. Nonexclusivity of Article VIII. The rights of a Director or
Officer (or any other person) granted under this Article VIII shall not be
deemed exclusive of any other rights to indemnification against Liabilities or
advancement of Expenses which the Director or Officer (or such other person) may
be entitled to under any written agreement, Board resolution, vote of
shareholders of the Corporation or otherwise, including, without limitation,
under the Statute. Nothing contained in this Article VIII shall be deemed to
limit the Corporation's obligations to indemnify against Liabilities or advance
Expenses to a Director or Officer under the Statute.
8.11. Contractual Nature of Article VIII; Repeal or Limitation of
Rights. This Article VIII shall be deemed to be a contract between the
Corporation and each Director and Officer and any repeal or other limitation of
this Article VIII or any repeal or limitation of the Statute or any other
applicable law shall not limit any rights of indemnification against Liabilities
or allowance of Expenses then existing or arising out of events, acts or
omissions occurring prior to such repeal or limitation, including, without
limitation, the right to indemnification against Liabilities or allowance of
Expenses for Proceedings commenced after such repeal or limitation to enforce
this Article VIII with regard to acts, omissions or events arising prior to such
repeal or limitation.
-23-
Pursuant to an Action by Written Consent of the Board of Directors
(the "Board") of Rayovac Corporation (the "Company") dated as of September 12,
1996, the Board adopted the following resolutions which amended the Restated
Bylaws of the Company:
RESOLVED, that pursuant to Section 7.02 of the ByLaws, Section 2.13 of
the By-Laws be, and it hereby is, amended and restated as follows: "Any action
required or permitted by the Articles of Incorporation or Bylaws or any
provision of law to be taken at a meeting of the shareholders, may be taken
without a meeting if a consent or consents in writing, setting forth the action
so taken, shall be signed by the holders of outstanding stock having not less
than the minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all shares entitled to vote thereon were
present and voted. Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
shareholders who have not consented in writing in accordance with Section
180.0704 of the Wisconsin Business Corporation Law"; and further
RESOLVED, that pursuant to Section 7.02 of the ByLaws, Section 8.02 of
the By-Laws be, and it hereby is, amended and restated as follows: "To the
fullest extent permitted or required by the Statute, but not for any action,
suit, arbitration or other proceeding (or portion thereof) initiated by a
Director or Officer, the Corporation shall indemnify such Director or Officer
against all Liabilities incurred by or on behalf of such Director or Officer in
connection with a Proceeding in which the Director or Officer is a Party because
he or she is a Director or Officer."
-24-
EXHIBIT 4.1
================================================================================
RAYOVAC CORPORATION
Issuer
ROV HOLDING, INC.
Guarantor
10 1/4% SENIOR SUBORDINATED NOTES DUE 2006
-----------------
INDENTURE
Dated as of October 22, 1996
-----------------
-----------------
Marine Midland Bank
-----------------
Trustee
===============================================================================
CROSS-REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
310 (a)(1)................................................ 7.10
(a)(2)............................................... 7.10
(a)(3) .............................................. N.A.
(a)(4)............................................... N.A.
(a)(5)............................................... 7.10
(b) ................................................. 7.10
(c) ................................................. N.A.
311 (a) .................................................. 7.11
(b) ................................................. 7.11
(c) ................................................. N.A.
312 (a)................................................... 2.05
(b).................................................. 11.03
(c) ................................................. 11.03
313 (a) .................................................. 7.06
(b)(1) .............................................. 10.03
(b)(2) .............................................. 7.07
(c) ................................................. 7.06;11.02
(d).................................................. 7.06
314 (a) .................................................. 4.03;11.02
(b) ................................................. 10.02
(c)(1) .............................................. 11.04
(c)(2) .............................................. 11.04
(c)(3) .............................................. N.A.
(d).................................................. 10.03, 10.04, 10.05
(e) ................................................ 11.05
(f).................................................. N.A.
315 (a)................................................... 7.01
(b).................................................. 7.05,11.02
(c) ................................................ 7.01
(d).................................................. 7.01
(e).................................................. 6.11
316 (a)(last sentence) ................................... 2.09
(a)(1)(A)............................................ 6.05
(a)(1)(B) ........................................... 6.04
(a)(2) .............................................. N.A.
(b) ................................................. 6.07
(c) ................................................. 2.12
317 (a)(1) ............................................... 6.08
(a)(2)............................................... 6.09
(b) ................................................. 2.04
318 (a)................................................... 11.01
(b).................................................. N.A.
(c).................................................. 11.01
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions................................................. 1
Section 1.02. Other Definitions........................................... 15
Section 1.03. Incorporation by Reference of Trust Indenture Act........... 16
Section 1.04. Rules of Construction....................................... 16
Section 1.05. Business Day Certificate.................................... 17
ARTICLE 2
THE NOTES
Section 2.01. Form and Dating............................................. 17
Section 2.02. Execution and Authentication................................ 17
Section 2.03. Registrar and Paying Agent.................................. 18
Section 2.04. Paying Agent to Hold Money in Trust......................... 18
Section 2.05. Holder Lists................................................ 19
Section 2.06. Transfer and Exchange....................................... 19
Section 2.07. Replacement Notes........................................... 24
Section 2.08. Outstanding Notes........................................... 25
Section 2.09. Treasury Notes.............................................. 25
Section 2.10. Temporary Notes............................................. 25
Section 2.11. Cancellation................................................ 25
Section 2.12. Defaulted Interest.......................................... 26
ARTICLE 3
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee.......................................... 26
Section 3.02. Selection of Notes to Be Redeemed........................... 26
Section 3.03. Notice of Redemption........................................ 27
Section 3.04. Effect of Notice of Redemption.............................. 27
Section 3.05. Deposit of Redemption Price................................. 27
Section 3.06. Notes Redeemed in Part...................................... 28
Section 3.07. Optional Redemption......................................... 28
Section 3.08. Mandatory Redemption........................................ 29
Section 3.09. Offer to Purchase by Application of Excess Proceeds......... 29
ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes............................................ 31
Section 4.02. Maintenance of Office or Agency............................. 31
Section 4.03. Reports..................................................... 31
Section 4.04. Compliance Certificate...................................... 32
Section 4.05. Taxes....................................................... 33
Section 4.06. Stay, Extension and Usury Laws.............................. 33
Section 4.07. Restricted Payments......................................... 33
Section 4.08. Dividend and Other Payment Restrictions Affecting
Restricted Subsidiaries..................................... 35
i
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred
Stock....................................................... 36
Section 4.10. Asset Sales................................................. 37
Section 4.11. Transactions with Affiliates................................ 39
Section 4.12. Liens....................................................... 39
Section 4.13. Corporate Existence......................................... 40
Section 4.14. Offer to Repurchase Upon Change of Control.................. 40
Section 4.15. No Senior Subordinated Debt................................. 41
Section 4.16. Limitations on Guarantees of Company Indebtedness
by Restricted Subsidiaries.................................. 41
Section 4.17. Additional Guarantees....................................... 41
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets................... 42
Section 5.02. Successor Corporation Substituted.......................... 43
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.......................................... 44
Section 6.02. Acceleration............................................... 45
Section 6.03. Other Remedies............................................. 46
Section 6.04. Waiver of Past Defaults.................................... 46
Section 6.05. Control by Majority........................................ 47
Section 6.06. Limitation on Suits........................................ 47
Section 6.07. Rights of Holders of Notes to Receive Payment.............. 47
Section 6.08. Collection Suit by Trustee................................. 48
Section 6.09. Trustee May File Proofs of Claim........................... 48
Section 6.10. Priorities................................................. 48
Section 6.11. Undertaking for Costs...................................... 49
Section 6.12. Restoration of Rights and Remedies......................... 49
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee.......................................... 49
Section 7.02. Rights of Trustee.......................................... 50
Section 7.03. Individual Rights of Trustee............................... 51
Section 7.04. Trustee's Disclaimer....................................... 51
Section 7.05. Notice of Defaults......................................... 52
Section 7.06. Reports by Trustee to Holders of the Notes................. 52
Section 7.07. Compensation and Indemnity................................. 52
Section 7.08. Replacement of Trustee..................................... 53
Section 7.09. Successor Trustee by Merger, etc........................... 54
Section 7.10. Eligibility; Disqualification.............................. 54
Section 7.11. Preferential Collection of Claims Against Company.......... 54
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant
Defeasance................................................. 54
Section 8.02. Legal Defeasance and Discharge............................. 54
ii
Section 8.03. Covenant Defeasance........................................ 55
Section 8.04. Conditions to Legal or Covenant Defeasance................. 55
Section 8.05. Deposited Money and Government Securities to be
Held in Trust; Other Miscellaneous Provisions.............. 57
Section 8.06. Repayment to Company....................................... 57
Section 8.07. Reinstatement.............................................. 57
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes........................ 58
Section 9.02. With Consent of Holders of Notes........................... 58
Section 9.03. Compliance with Trust Indenture Act........................ 60
Section 9.04. Revocation and Effect of Consents.......................... 60
Section 9.05. Notation on or Exchange of Notes........................... 60
Section 9.06. Trustee to Sign Amendments, etc............................ 60
ARTICLE 10
GUARANTEES
Section 10.01. Guarantee................................................. 61
Section 10.02. Subordination............................................. 62
Section 10.03. Dissolution, Liquidation or Reorganization................ 62
Section 10.04. Default on Senior Debt of the Guarantor................... 63
Section 10.05. Acceleration of Notes..................................... 64
Section 10.06. Subrogation............................................... 64
Section 10.07. Obligations Unconditional................................. 65
Section 10.08. Relative Rights........................................... 65
Section 10.09. Event of Default Preserved................................ 65
Section 10.10. Trustee Duties............................................ 65
Section 10.11. Notice by a Guarantor..................................... 66
Section 10.12. Subordination May Not Be Impaired by Guarantor............ 66
Section 10.13. Reliance Upon Order....................................... 66
Section 10.14. Rights of Trustee and Paying Agent........................ 66
Section 10.15. Authorization to Effect Subordination..................... 66
Section 10.16. Amendments................................................ 67
Section 10.17. Limitation of Guarantor's Liability....................... 67
ARTICLE 11
SUBORDINATION
Section 11.01. Agreement to Subordinate.................................. 67
Section 11.02. No Payment on Notes Under Certain Circumstances........... 68
Section 11.03. Dissolution, Liquidation or Reorganization................ 68
Section 11.04. Subrogation............................................... 70
Section 11.05. Obligations Unconditional................................. 70
Section 11.06. Relative Rights........................................... 70
Section 11.07. Event of Default Preserved................................ 70
Section 11.08. Trustee Duties............................................ 70
Section 11.09. Notice by Company......................................... 71
Section 11.10. Subordination May Not Be Impaired by Company.............. 71
Section 11.11. Reliance Upon Order....................................... 71
Section 11.12. Rights of Trustee and Paying Agent........................ 71
Section 11.13. Authorization to Effect Subordination..................... 71
iii
ARTICLE 12
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls.............................. 72
Section 12.02. Notices................................................... 72
Section 12.03. Communication by Holders of Notes with Other
Holders of Notes......................................................... 73
Section 12.04. Certificate and Opinion as to Conditions Precedent........ 73
Section 12.05. Statements Required in Certificate or Opinion............. 74
Section 12.06. Rules by Trustee and Agents............................... 74
Section 12.07. No Personal Liability of Directors, Officers,
Employees and Stockholders................................ 74
Section 12.08. Governing Law............................................. 74
Section 12.09. No Adverse Interpretation of Other Agreements............. 74
Section 12.10. Successors................................................ 75
Section 12.11. Severability.............................................. 75
Section 12.12. Counterpart Originals..................................... 75
Section 12.13. Table of Contents, Headings, etc.......................... 75
Section 12.14. Further Instruments and Acts.............................. 75
EXHIBITS
Exhibit A FORM OF NOTE
Exhibit A-1 FORM OF NOTATION ON NOTE RELATING TO GUARANTEE
Exhibit B CERTIFICATE OF TRANSFEROR
iv
INDENTURE dated as of October 22, 1996 among Rayovac Corporation, a
Wisconsin corporation (the "Company"), ROV Holding, Inc., a Delaware corporation
(a "Guarantor") and Marine Midland Bank, as trustee (the "Trustee").
The Company, ROV Holding, Inc. and the Trustee agree as follows for
the benefit of each other and for the equal and ratable benefit of the Holders
of the 10 1/4% Senior Subordinated Notes due 2006 (the "Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01. DEFINITIONS.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including
Indebtedness incurred in connection with, or in contemplation of, such other
Person merging with or into or becoming a Subsidiary of such specified Person,
and (ii) Indebtedness encumbering any asset acquired by such specified Person.
"Additional Guarantee" means any guarantee of the Company's
obligations under this Indenture and the Notes issued after the date of this
Indenture as described in Sections 4.16 and 4.17 hereof.
"Additional Guarantor" means any Subsidiary of the Company that
guarantees the Company's obligations under this Indenture and the Notes issued
after the date of this Indenture as described in Sections 4.16 and 4.17 hereof.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Bank Agent" means Bank of America National Trust and Savings
Association, in its capacity as administrative agent for the lenders party to
the Credit Agreement, or any successor or successors thereto in such capacity.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Board of Directors" means the Board of Directors of the Company, or
any authorized committee of the Board of Directors.
"Board Resolution" means a duly adopted resolution of the Board of
Directors in full force and effect at the time of determination and certified as
such by the Secretary or an Assistant Secretary of the Company.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
that would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership, partnership
interests (whether general or limited) and (iv) any other interest or
participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person
(including, without limitation, membership interests in a limited liability
company).
"Cash Equivalents" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or guaranteed by a
government that is a member of the Organization for Economic Cooperation and
Development ("OECD Country") or any agency or instrumentality thereof (provided
that the full faith and credit of the United States of America or such OECD
Country, as applicable, is pledged in support thereof) having maturities of not
more than three years from the date of acquisition of such security, (ii)
marketable direct obligations issued by any State of the United States of
America or any local government or other political subdivision thereof rated (at
the time of acquisition of such security) at least AA by Standard & Poor's
Ratings Service, a division of the McGraw-Hill Companies, Inc. ("S&P") or the
equivalent thereof by Moody's Investors Service, Inc. ("Moody's") having
maturities of not more than one year from the date of acquisition of such
security, (iii) U.S. dollar denominated time deposits, certificates of deposit
and bankers' acceptances of (a) any domestic commercial bank of recognized
standing having capital and surplus in excess of $250.0 million or (b) any bank
whose short-term commercial paper rating (at the time of acquisition of such
security) by S&P is at least A-1 or the equivalent thereof, in each case with
maturities of not more than six months from the date of acquisition of such
security, (iv) commercial paper and variable rate notes issued by, or guaranteed
by, any industrial or financial company with a short-term commercial paper
rating (at the time of acquisition of such security) of at least A-1 or the
equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody's,
or guaranteed by any industrial company with a long-term unsecured debt rating
(at the time of acquisition of such security) of at least AA or the equivalent
thereof by Moody's and in each case maturing within one year after the date of
acquisition of such security and (v) repurchase agreements with any lender under
the Credit Agreement or any primary dealer maturing within one year from the
date of acquisition that are fully collateralized by investment instruments that
would otherwise be Cash Equivalents; provided that the terms of such repurchase
agreements comply with the guidelines set forth in the Federal Financial
Institutions Examination Council Supervisory Policy-Repurchase Agreements of
Depository Institutions With Securities Dealers and Others, as adopted by the
Comptroller of the Currency on October 31, 1985.
"Change of Control" means the occurrence of any of the following: (i)
(a) any transaction (including a merger or consolidation) the result of which is
that any "person" or "group" (each within the meaning of Sections 13(d) and
14(d)(2) of the Exchange Act), other than the Principals, becomes the
2
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of more than 50% of the total voting power of all Capital Stock
of the Company or a successor entity normally entitled to vote in the election
of directors, managers or trustees, as applicable, calculated on a fully diluted
basis, and (b) as a result of the consummation of such transaction, any "person"
or "group" (each as defined above) becomes the "beneficial owner" (as defined
above), directly or indirectly, of more of the voting stock of the Company than
is at the time "beneficially owned" (as defined above) by the Principals, or
(ii) the first day on which a majority of the members of the Board of Directors
are not Continuing Directors, or (iii) the sale, lease, transfer, conveyance or
other disposition (other than by way of merger or consolidation), in one or a
series of related transactions, of all or substantially all of the assets of the
Company and its Subsidiaries taken as a whole to any "person" (as such term is
used in Section 13(d)(3) of the Exchange Act) other than the Principals or their
Related Parties. For purposes of this definition, any transfer of an Equity
Interest of an entity that was formed for the purpose of acquiring voting stock
of the Company shall be deemed to be a transfer of such percentage of such
voting stock as corresponds to the percentage of the equity of such entity that
has been so transferred.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission.
"Consolidated Cash Flow" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period plus, without
duplication, (i) an amount equal to any extraordinary loss plus any net loss
realized in connection with an Asset Sale (to the extent such losses were
deducted in computing such Consolidated Net Income), (ii) provision for taxes
based on income or profits of such Person and its Restricted Subsidiaries for
such period, to the extent that such provision for taxes was included in
computing such Consolidated Net Income, (iii) consolidated interest expense of
such Person and its Restricted Subsidiaries for such period, whether paid or
accrued and whether or not capitalized (including, without limitation,
amortization of original issue discount, non-cash interest payments, the
interest component of any deferred payment obligations, the interest component
of all payments associated with Capital Lease Obligations, commissions,
discounts and other fees and other charges incurred in respect of letters of
credit or bankers' acceptance financings and net payments (if any) pursuant to
Hedging Obligations), to the extent that any such expense was deducted in
computing such Consolidated Net Income, (iv) depreciation, amortization
(including amortization of goodwill and other intangibles but excluding
amortization of prepaid cash expenses that were paid in a prior period and
deferred finance charges) and other non-cash charges of such Person and its
Restricted Subsidiaries for such period (excluding non-cash charges to the
extent that such non-cash charges represent an accrual of or reserve for cash
charges to be incurred in any future period), to the extent that such
depreciation, amortization and other non-cash charges were deducted in computing
such Consolidated Net Income, including without limitation non-cash charges
recorded in the period ended September 30, 1996 for the write-offs or
write-downs of assets related to (a) the rationalization of manufacturing
operations located in the United Kingdom, and (b) adjustments of Renewal Power
Station inventory valuation, and (v) the following non-recurring expenses
related to the recapitalization of the Company consummated on September 13, 1996
(the "Recapitalization"): (a) up to $2.3 million of debt prepayment penalties
incurred in connection with the prepayment of the Company's Indebtedness
outstanding prior to the Recapitalization; (b) up to $2.2 million of advisory
fees paid to the financial advisor to the Company's shareholders who sold shares
in the Recapitalization; (c) legal and consulting fees incurred in connection
with the Recapitalization of up to $4.2 million; and (d) up to $7.1 million of
compensation expense paid to present and former officers of the Company with
respect to obligations to such present and former
3
officers arising as a result of the Recapitalization, in each case to the extent
that such expenses were paid in cash during the period ended September 30, 1996
(or, in the case of up to $2.0 million of expenses incurred pursuant to clause
(d) above, during the period ended September 30, 1998), and deducted in
computing Consolidated Net Income for such period. Notwithstanding the
foregoing, the provision for taxes on the income or profits of, and the
depreciation and amortization and other non-cash charges of, a Subsidiary of the
referent Person shall be added to Consolidated Net Income to compute
Consolidated Cash Flow only to the extent (and in same proportion) that the Net
Income of such Subsidiary was included in calculating the Consolidated Net
Income of such Person and only if a corresponding amount would be permitted at
the date of determination to be dividended to the Company by such Subsidiary
without prior governmental approval (that has not been obtained), and without
direct or indirect restriction pursuant to the terms of its charter and all
agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to that Subsidiary or its stockholders.
"Consolidated Net Income" means, with respect to any period, the
aggregate of the Net Income of such Person and its Restricted Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP;
provided that (i) the Net Income (but not loss) of any Restricted Subsidiary
that is accounted for by the equity method of accounting shall be included only
to the extent of the amount of dividends or distributions paid in cash to the
Company or any of its Wholly Owned Restricted Subsidiaries, (ii) the Net Income
of any Restricted Subsidiary that is not a Wholly Owned Restricted Subsidiary
shall only be included to the extent of the amount of dividends or distribution
paid to the Company or any of its Wholly Owned Restricted Subsidiaries;
provided, however, that notwithstanding the foregoing, if at least 80% of the
Equity Interests having ordinary voting power (without regard to the occurrence
of any contingency) for the election of directors or other governing body of a
Restricted Subsidiary is owned by the Company directly or indirectly through one
or more of its Wholly Owned Restricted Subsidiaries, all of the Net Income of
such Restricted Subsidiary shall be included, (iii) the Net Income of any
Restricted Subsidiary acquired directly or indirectly by the Company in a
pooling of interests transaction for any period prior to the date of such
acquisition shall be excluded, (iv) the cumulative effect of a change in
accounting principles shall be excluded, (v) the Net Income of any Subsidiary
shall be excluded to the extent that the declaration or payment of dividends or
similar distributions by that Subsidiary of that Net Income is not at the date
of determination permitted without any prior governmental approval (that has not
been obtained), directly or indirectly, by operation of the terms of its charter
or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary or its stockholders and
(vi) the Net Income of any Unrestricted Subsidiary shall be excluded, whether or
not distributed to the Company or one of its Subsidiaries.
"Consolidated Net Worth" means, with respect to any Person as of any
date, the sum of (i) the consolidated equity of the common stockholders of such
Person and its consolidated Restricted Subsidiaries as of such date plus (ii)
the respective amounts reported on such Person's balance sheet as of such date
with respect to any series of preferred stock (other than Disqualified Stock)
that by its terms is not entitled to the payment of dividends unless such
dividends may be declared and paid only out of net earnings in respect of the
year of such declaration and payment, but only to the extent of any cash
received by such Person upon issuance of such preferred stock, less (a) all
write-ups (other than write-ups resulting from foreign currency translations and
write-ups of tangible assets of a going concern business made within 12 months
after the acquisition of such business) subsequent to the date of this Indenture
in the book value of any asset owned by such Person or a consolidated Restricted
Subsidiary of such Person, and (b) all investments as of such date in
unconsolidated Restricted Subsidiaries and in Persons that are not Restricted
Subsidiaries (except, in each case, Permitted Investments), and (c) all
unamortized debt
4
discount and expense and unamortized deferred charges as of such date, all of
the foregoing determined in accordance with GAAP.
"Consulting Agreements" means (i) the Consulting Agreement dated
September 12, 1996 between the Company and Thomas H. Pyle and (ii) the
Confidentiality, Non-Competition, No Solicitation and No Hire Agreement between
the Company and Thomas H. Pyle, each as in effect on the date of this Indenture
and as amended from time to time in a manner no less favorable, taken as a
whole, to the Company.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors who (i) was a member of such Board of Directors
on the date of this Indenture or (ii) was nominated for election or elected to
such Board of Directors with the approval of a majority of the Continuing
Directors who were members of such Board at the time of such nomination or
election.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 12.02 hereof or such other address as to which the
Trustee may give notice to the Company.
"Credit Agreement" means that certain Credit Agreement, dated as of
September 12, 1996, by and among the Company, the lenders party thereto, DLJ
Capital Funding, Inc., as documentation and joint syndication agent, and the
Bank Agent, as amended, supplemented or otherwise modified from time to time.
References to the Credit Agreement shall also include any credit agreement or
agreements entered into by the Company to replace, extend, renew, increase,
refund or refinance all or a portion of the Indebtedness under the Credit
Agreement; provided that the aggregate principal amount of Indebtedness
outstanding or available thereunder will not be increased except to the extent
permitted by Section 4.09 hereof.
"Default" means any event or condition that is or with the passage of
time or the giving of notice or both would, unless cured or waived, be an Event
of Default.
"Definitive Notes" means Notes that are in the form of the Notes
attached hereto as Exhibit A, that do not include the information called for by
footnotes 1 and 2 thereof.
"Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.03 hereof as
the Depositary with respect to the Notes, until a successor shall have been
appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depositary" shall mean or include such successor.
"Designated Senior Debt" means (i) so long as Senior Bank Debt is
outstanding, the Senior Bank Debt and (ii) thereafter, any other Senior Debt
permitted under this Indenture the principal amount of which is $25.0 million or
more and which has been designated by the Company as "Designated Senior Debt".
"Disqualified Stock" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable, mandatorily or at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the Holder
thereof, in whole or in part, on or prior to the date on which the Notes are
scheduled to mature.
5
"Employment Agreement" means the Employment Agreement dated September
12, 1996 between the Company and David A. Jones, as in effect on the date of
this Indenture and as amended from time to time in a manner no less favorable,
taken as a whole, to the Company.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Offer" means the offer that may be made by the Company
pursuant to the Registration Rights Agreement to exchange Notes for New Notes.
"Existing Indebtedness" means (i) Indebtedness of the Company and its
Subsidiaries (other than under the Credit Agreement) in existence on the date of
this Indenture, until such amounts are repaid, and (ii) Indebtedness incurred
after the date of this Indenture pursuant to the following agreements in
aggregate principal amount outstanding not to exceed $7.0 million (or the
equivalent thereof in any foreign currency), as each such agreement is in effect
as of the date of this Indenture and as the same may be amended on terms, taken
as a whole, that are no less favorable to the Company: (a) the Credit Agreement
between Rayovac Europe B.V. and ABN Amro Bank N.V.; (b) the Credit Agreement
between Rayovac (UK), Ltd. and NatWest Bank plc (England); and (c) the Credit
Agreement between Rayovac (UK), Ltd. and NationsBank, N.A.
"Financing Lease" means any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance with
GAAP to be capitalized on a balance sheet of the lessee.
"Fixed Charges" means, with respect to any Person for any period, the
sum of (i) the consolidated interest expense of such Person for such period,
whether paid or accrued, to the extent such expense was deducted in computing
Consolidated Net Income (including amortization of original issue discount,
non-cash interest payments and the interest component of any deferred payment
obligations, the interest component of all payments associated with Capital
Lease Obligations, commissions, discounts and other fees and charges incurred in
respect of letters of credit or bankers' acceptance financings, and net payments
(if any) pursuant to Hedging Obligations, but excluding amortization of deferred
financing fees) and (ii) the consolidated interest expense of such Person and
its Subsidiaries that was capitalized during such period, and (iii) any interest
expense on Indebtedness of another Person that is Guaranteed by such Person or
one of its Subsidiaries or secured by a Lien on assets of such Person or one of
its Subsidiaries (whether or not such Guarantee is called upon or Lien is
enforced) and (iv) the product of (a) all cash dividend payments (and non-cash
dividend payments in the case of a person that is a Subsidiary) on any series of
preferred stock of such Person, times (b) a fraction, the numerator of which is
one and the denominator of which is one minus the then current combined federal,
state and local statutory tax rate of such Person, expressed as a decimal, in
each case, on a consolidated basis and in accordance with GAAP.
6
"Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person for such period
to the Fixed Charges of such Person for such period. In the event that the
Company or any of its Subsidiaries incurs, assumes, guarantees or redeems any
Indebtedness (other than revolving credit borrowings) or issues preferred stock
subsequent to the commencement of the period for which the Fixed Charge Coverage
Ratio is being calculated but prior to the date on which the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"),
then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect
to such incurrence, assumption, Guarantee or redemption of Indebtedness, or such
issuance or redemption of preferred stock, as if the same had occurred at the
beginning of the applicable four-quarter reference period. In addition, for
purposes of making the computation referred to above, (i) acquisitions that have
been made by the Company or any of its Restricted Subsidiaries, including
through mergers or consolidations and including any related financing
transactions, during the four-quarter reference period or subsequent to such
reference period and on or prior to the Calculation Date shall be deemed to have
occurred on the first day of the four-quarter reference period and Consolidated
Cash Flow for such reference period shall be calculated without giving effect to
clause (iii) of the proviso set forth in the definition of Consolidated Net
Income, and (ii) the Consolidated Cash Flow attributable to discontinued
operations, as determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, shall be excluded, and (iii) the
Fixed Charges attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, but only to the extent that the obligations
giving rise to such Fixed Charges will not be obligations of the referent Person
or any of its Subsidiaries following the Calculation Date.
"Foreign Subsidiary" means a Restricted Subsidiary not organized or
existing under the laws of the United States, any state or territory thereof, or
the District of Columbia.
"GAAP" means generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date of
determination.
"Global Note" means a Note that contains the paragraph referred to in
footnote 1 and the additional schedule referred to in footnote 2 to the form of
the Note attached hereto as Exhibit A.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States of America is
pledged.
"Guarantee" of a Person means any agreement by which such Person
assumes, guarantees, endorses, contingently agrees to purchase or provide funds
for the payment of, or otherwise becomes liable upon, the obligation of any
other Person, or agrees to maintain the net worth or working capital or other
financial condition of any other Person or otherwise assures any creditor of
such other Person against loss, including, without limitation, any comfort
letter, operating agreement or take-or-pay contract and shall include, without
limitation, the contingent liability of such Person in connection with any
application for a letter of credit or letter of guarantee.
7
"Guarantor" means, collectively, ROV Holding, Inc., a Delaware
corporation, and each Subsidiary of the Company that has executed a Guarantee in
accordance with Sections 4.16 and 4.17 hereof, and their successors and assigns.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.
"Holder" means a Person in whose name a Note is registered.
"Indebtedness" means, with respect to any Person, without duplication:
(i) all indebtedness of such Person for borrowed money; (ii) all obligations
issued, undertaken or assumed by such Person as the deferred purchase price of
property or services (other than trade payables entered into and accrued
expenses arising in the ordinary course of business on ordinary terms); (iii)
all non-contingent reimbursement or payment obligations with respect to surety
instruments; (iv) all obligations of such Person evidenced by notes, bonds,
debentures or similar instruments; (v) all indebtedness of such Person created
or arising under any conditional sale or other title retention agreement, or
incurred as financing, in either case with respect to property acquired by such
Person (even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property); (vi) all Capital Lease Obligations of such Person; (vii) all
indebtedness referred to in clauses (i) through (vi) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien upon or in property (including accounts
and contract rights) owned by such Person, even though such Person has not
assumed or become liable for the payment of such Indebtedness; (viii) all
Hedging Obligations of such Person; and (ix) all Guarantees of such Person in
respect of indebtedness or obligations of others of the kinds referred to in
clauses (i) through (viii) above.
"Indenture" means this Indenture, as amended or supplemented from time
to time.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including Guarantees), advances or capital contributions
(excluding commission, travel and similar advances and loans and other
arrangements, in each case made to officers and employees in the ordinary course
of business), purchases or other acquisitions for consideration of Indebtedness,
Equity Interests or other securities and all other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP;
provided that an acquisition of assets, Equity Interests or other securities by
the Company for consideration consisting of common equity securities of the
Company shall not be deemed to be an Investment. If the Company or any
Restricted Subsidiary of the Company sells or otherwise disposes of any Equity
Interests of any direct or indirect Restricted Subsidiary of the Company such
that, after giving effect to any such sale or disposition, such Person is no
longer a Restricted Subsidiary of the Company, the Company shall be deemed to
have made an Investment on the date of any such sale or disposition equal to the
fair market value of the Equity Interests of such Restricted Subsidiary not sold
or disposed of.
"Joint Venture" means a corporation, partnership, limited liability
company, joint venture or other similar legal arrangement (whether created by
contract or conducted through a separate legal entity) which is not a Subsidiary
of the Company or any of its Restricted Subsidiaries and which is now or
8
hereafter formed by the Company or any of its Restricted Subsidiaries with
another Person in order to conduct a common venture or enterprise with such
Person.
"Legal Holiday" means a Saturday, a Sunday or a day on which
commercial banks in the City of New York, Chicago or San Francisco or at a place
of payment are authorized or required by law, regulation or executive order to
remain closed. If a payment date is a Legal Holiday at a place of payment,
payment may be made at that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever, including, without limitation, any
conditional sale or other title retention agreement and any Financing Lease
having substantially the same economic effect as any of the foregoing (other
than any option, call or similar right relating to treasury shares of the
Company to the extent that such option, call or similar right is granted (i)
under any employee stock option plan, employee stock ownership plan or similar
plan or arrangement of the Company or its Subsidiaries or (ii) in connection
with the issuance of Indebtedness permitted under Section 4.09 hereof).
"Liquidated Damages" means the additional amounts (if any) payable by
the Company in the event of a Registration Default under, and as defined in, the
Registration Rights Agreement.
"Net Income" means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b) the
disposition of any securities by such Person or any of its Subsidiaries or the
extinguishment of any Indebtedness of such Person or any of its Subsidiaries and
(ii) any extraordinary or nonrecurring gain (but not loss), together with any
related provision for taxes on such extraordinary or nonrecurring gain (but not
loss).
"Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale,
which amount is equal to the excess, if any, of (i) the cash received by the
Company or such Restricted Subsidiary (including any cash payments received by
way of deferred payment pursuant to, or monetization of, a note or installment
receivable or otherwise, but only as and when received) in connection with such
disposition over (ii) the sum of (a) the amount of any Indebtedness which is
secured by such asset and which is required to be repaid in connection with the
disposition thereof, plus (b) the reasonable out-of-pocket expenses incurred by
the Company or such Restricted Subsidiary, as the case may be, in connection
with such disposition or in connection with the transfer of such amount from
such Restricted Subsidiary to the Company, plus (c) provisions for taxes,
including income taxes, reasonably estimated to be attributable to the
disposition of such asset or attributable to required prepayments or repayments
of Indebtedness with the proceeds thereof plus (d) if the Company does not first
receive a transfer of such amount from the relevant Restricted Subsidiary with
respect to the disposition of an asset by such Restricted Subsidiary and such
Restricted Subsidiary intends to make such transfer as soon as practicable, the
out-of-pocket expenses and taxes that the Company reasonably estimates will be
incurred by the Company or such Restricted
9
Subsidiary in connection with such transfer at the time such transfer is
expected to be received by the Company (including, without limitation,
withholding taxes on the remittance of such amount).
"Non-Recourse Debt" means Indebtedness (i) as to which neither the
Company nor any of its Restricted Subsidiaries (a) provides credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable (as a guarantor
or otherwise), or (c) constitutes the lender; and (ii) no default with respect
to which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Company or any of its Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary, any Assistant Secretary or any Vice-President of such
Person.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 12.05 hereof.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
12.05 hereof. The counsel may be an employee of or counsel to the Company (or
any Guarantor, if applicable), any Subsidiary of the Company or the Trustee.
"Permitted Investments" means (i) any Investments in the Company or in
a Wholly Owned Restricted Subsidiary of the Company which, with respect to any
such Wholly Owned Restricted Subsidiary, has a fair market value which does not
exceed $1.0 million in the aggregate, or any Investments in a Wholly Owned
Restricted Subsidiary that (A) is a Guarantor, or (B) is not a Guarantor, but is
a Foreign Subsidiary and the aggregate fair market value of all Investments made
after the date of this Indenture in Foreign Subsidiaries does not exceed $3.0
million (or the equivalent thereof in one or more foreign currencies), (ii) any
Investments in Cash Equivalents; (iii) Investments by the Company or any
Restricted Subsidiary of the Company in a Person, if as a result of such
Investment (a) such Person becomes a Wholly Owned Restricted Subsidiary of the
Company that is a Guarantor or (b) such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Wholly Owned Restricted
Subsidiary of the Company that is a Guarantor; (iv) Investments in accounts and
notes receivable acquired in the ordinary course of business; (v) notes from
employees, officers, directors, and their transferees and Affiliates issued to
the Company representing payment of the exercise price of options to purchase
common stock of the Company; and (vi) other Investments made as a result of the
receipt of non-cash consideration from an Asset Sale that was made pursuant to
and in compliance with Section 4.10 hereof; (vii) Investments by the Company and
its Subsidiaries in Joint Ventures in the form of contributions of capital,
loans, advances or Guarantees; provided that, immediately before and after
giving effect to such Investment, (a) no Event
10
of Default shall have occurred and be continuing, and (b) the aggregate fair
market value of all Investments pursuant to this clause (vii) shall not exceed
$2.0 million in the aggregate; (viii) Hedging Obligations permitted by the terms
of the Credit Agreement and this Indenture to be outstanding; and (ix) other
Investments in any Person having an aggregate fair market value (measured on the
date each such Investment was made and without giving effect to subsequent
changes in value) not to exceed $5.0 million at any time outstanding. For
purposes of this definition, the aggregate fair market value of any Investment
shall be measured on the date such Investment is made without giving effect to
subsequent changes in value and shall be valued at the cash amount thereof, if
in cash, the fair market value thereof as determined by the Board of Directors,
if in property, and at the maximum amount thereof, if in Guarantees.
"Permitted Liens" means
(i) any Lien existing on property of the Company or any Subsidiary on
the date of this Indenture securing Indebtedness outstanding on such date;
(ii) any Lien securing obligations under the Senior Bank Debt and any
Guarantee thereof, which obligations or Guarantee are permitted by the terms
hereof to be incurred and outstanding;
(iii) Liens for taxes, fees, assessments or other governmental charges
which are not delinquent or remain payable without penalty, or which are being
contested in good faith by appropriate proceedings and for which adequate
reserves in accordance with GAAP are being maintained;
(iv) carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's or other similar Liens arising in the ordinary course of business
which are not delinquent or which are being contested in good faith and by
appropriate proceedings, which proceedings have the effect of preventing the
forfeiture or sale of the property subject thereto;
(v) Liens (other than any Lien imposed by ERISA) consisting of pledges
or deposits required in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other social security
legislation;
(vi) Liens on property of the Company or any Subsidiary securing (a)
the non-delinquent performance of bids, trade contracts (other than for borrowed
money), leases and statutory obligations, (b) surety bonds (excluding appeal
bonds and bonds posted in connection with court proceedings or judgments) and
(c) other non-delinquent obligations of a like nature, including pledges or
deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security
legislation, in each case, incurred in the ordinary course of business;
(vii) Liens consisting of judgment or judicial attachment Liens and
Liens securing contingent obligations on appeal bonds and other bonds posted in
connection with court proceedings or judgments; provided that the enforcement of
such Liens is effectively stayed and all such Liens in the aggregate at any time
outstanding for the Company and its Subsidiaries do not exceed $3.0 million;
(viii) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount, and which do not in
11
any case materially detract from the value of the property subject thereto or
interfere with the ordinary conduct of the businesses of the Company and its
Subsidiaries, taken as a whole;
(ix) purchase money security interests on any property acquired by the
Company or any Subsidiary in the ordinary course of business, securing
Indebtedness incurred or assumed for the purpose of financing all or any part of
the cost of acquiring such property, provided that (a) any such Lien attaches to
such property concurrently with or within 90 days after the acquisition thereof,
(b) such Lien attaches solely to the property so acquired in such transaction,
(c) the principal amount of the Indebtedness secured thereby does not exceed
100% of the cost of such property and (d) the principal amount of the
Indebtedness secured by all such purchase money security interests shall not at
any time exceed $5.0 million;
(x) Liens securing obligations in respect of Capital Lease Obligations
on assets subject to such leases, provided that such Capital Lease Obligations
are otherwise permitted hereunder;
(xi) Liens arising solely by virtue of any statutory or common law
provision relating to banker's liens, rights of setoff or similar rights and
remedies as to deposit accounts or other funds maintained with a creditor
depository institution; provided that (a) such deposit account is not a
dedicated cash collateral account and is not subject to restrictions against
access by the Company in excess of those set forth by regulations promulgated by
the Federal Reserve Board, and (b) such deposit account is not intended by the
Company or any Subsidiary to provide collateral to the depository institution;
(xii) Liens in favor of the Company or any Wholly Owned Restricted
Subsidiary that is a Guarantor;
(xiii) Liens on property of a Person existing at the time such Person
becomes a Restricted Subsidiary or such Person is merged into or consolidated
with the Company or any Restricted Subsidiary of the Company; provided that such
Liens were in existence prior to the contemplation of such merger or
consolidation and do not extend to any assets other than those of the Person
merged into or consolidated with the Company;
(xiv) Liens on property existing at the time of acquisition thereof by
the Company or any Restricted Subsidiary of the Company; provided that such
Liens were in existence prior to the contemplation of such acquisition;
(xv) extensions, renewals and replacements of Liens referred to in
clauses (i) through (xiv) above; provided that any such extension, renewal or
replacement Lien is limited to the property or assets covered by the Lien
extended, renewed or replaced and does not secure any Indebtedness in addition
to that secured immediately prior to such extension, renewal or replacement;
(xvi) Liens securing Indebtedness permitted by clause (xiv) of the
second paragraph of Section 4.09 hereof; and
(xvii) Liens securing other Indebtedness of the Company and its
Subsidiaries not expressly permitted by clauses (i) through (xvi) above;
provided that the aggregate amount of the Indebtedness secured by Liens
permitted pursuant to this clause (xvii) does not exceed $3.0 million in the
aggregate.
12
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
government (or any agency or political subdivision thereof) or other entity of
any kind.
"Principals" means Thomas H. Lee Equity Fund III, L.P. and its
co-investors, Thomas H. Lee Foreign Fund III L.P. and Thomas H. Lee Company, and
any Affiliates of Thomas H. Lee Company.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of October 17, 1996, by and among the Company and the other
parties named on the signature pages thereof, as such agreement may be amended,
modified or supplemented from time to time.
"Related Party" with respect to any Principal means (i) any
controlling stockholder, 80% (or more) owned Subsidiary, or spouse or immediate
family member (in the case of an individual) of such Principal or (ii) any
trust, corporation, partnership or other entity, the beneficiaries,
stockholders, partners, owners or Persons beneficially holding an 80% or more
controlling interest of which consist of such Principal and/or such other
Persons referred to in the immediately preceding clause (i).
"Representative" means, for purposes of Articles 6, 10 and 11, the
Bank Agent or other agent or representative for any Senior Debt or Designated
Senior Debt or, with respect to any Guarantor, for any Senior Debt of such
Guarantor.
"Responsible Officer," when used with respect to the Trustee, means
any officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) with direct responsibility for the
administration of this Indenture and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of his or her knowledge of and familiarity with the particular subject.
"Restricted Investment" means any Investment other than a Permitted
Investment.
"Restricted Subsidiary" means with respect to any Person, any
Subsidiary of the referent Person that is not an Unrestricted Subsidiary.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Bank Debt" means all Obligations outstanding under or in
connection with the Credit Agreement as such agreement may be restated, further
amended, supplemented or otherwise modified or replaced from time to time
hereafter, together with any refunding or replacement of such Indebtedness, up
to an aggregate maximum principal amount outstanding or available at any time of
$170.0 million plus the aggregate principal amount of Indebtedness issued under
the Credit Agreement pursuant to clause (vi) of the second paragraph of Section
4.09 hereof, less all outstanding Obligations with respect to Existing
Indebtedness, less the aggregate principal amount of Indebtedness issued
pursuant to clause (xiv) (b) of the second paragraph of Section 4.09 hereof,
less, without duplication, the aggregate amount of all mandatory repayments of
principal (which may not be reborrowed) of and/or mandatory permanent reductions
of availability of Indebtedness under such Senior Bank Debt and any optional
prepayments on any term loans under the Credit Agreement that have been made
since the date of this Indenture (including, without limitation, the aggregate
amount of all such mandatory payments and reductions made pursuant to Section
4.10 hereof).
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"Senior Debt" means (i) the Senior Bank Debt and (ii) any other
Indebtedness permitted to be incurred by the Company or any Guarantor, as the
case may be, under the terms of this Indenture, unless the instrument under
which such Indebtedness is incurred expressly provides that it is on a parity
with or subordinated in right of payment to the Notes; provided that the amount
of any Guarantee of Senior Bank Debt that constitutes Senior Debt with respect
to any Guarantor shall be determined without regard to any reduction in the
amount of any Guarantee of such Senior Bank Debt necessary to cause such
Guarantee not to be a fraudulent conveyance. Notwithstanding anything to the
contrary in the foregoing, Senior Debt shall not include (a) any liability for
federal, state, local or other taxes owed or owing by the Company, (b) any
Indebtedness of the Company to any of its Subsidiaries or other Affiliates, (c)
any trade payables or (d) any Indebtedness that is incurred in violation of this
Indenture.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of such Person or a combination
thereof.
"Subsidiary Guarantee" means, individually and collectively, the
guarantees given by ROV Holding, Inc. and any Additional Guarantor pursuant to
the terms of this Indenture.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA, provided that in the event the Trust Indenture Act of 1939 is
amended after such date, "Trust Indenture Act" means, to the extent required by
any such amendment, the Trust Indenture Act of 1939, as so amended.
"Transfer Restricted Securities" means securities that bear or are
required to bear the legend set forth in Section 2.06 hereof.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Unrestricted Subsidiary" means (i) Minera Vidaluz, S.A. de C.V., (ii)
Zoe Phos International, N.V., (iii) any Subsidiary that is designated by the
Board of Directors as an Unrestricted Subsidiary pursuant to a Board Resolution,
but only to the extent that such Subsidiary: (a) has no Indebtedness other than
Non-Recourse Debt, (b) is not party to any agreement, contract, arrangement or
understanding with the Company or any Restricted Subsidiary of the Company
unless the terms of any such agreement, contract, arrangement or understanding
are no less favorable to the Company or such Restricted Subsidiary of the
Company than those that might be obtained at the time from Persons who are not
Affiliates of the Company, (c) is a Person with respect to which neither the
Company nor any of its Restricted Subsidiaries has any direct or indirect
obligation (x) to subscribe for additional Equity Interest or (y) to maintain or
preserve such Person's financial condition or to cause such Person to achieve
any specified levels of operating results, and (d) has not guaranteed or
otherwise directly or indirectly provided credit support for any Indebtedness of
the Company or any of its Restricted Subsidiaries. Any
14
such designation by the Board of Directors shall be evidenced to the Trustee by
filing with the Trustee a certified copy of the Board Resolution giving effect
to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing conditions and was permitted by Section
4.07 hereof. If, at any time, any Unrestricted Subsidiary would fail to meet the
foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease
to be an Unrestricted Subsidiary for purposes of this Indenture and any
Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted
Subsidiary of the Company as of such date (and, if such Indebtedness is not
permitted to be incurred as of such date under Section 4.09 hereof, the Company
shall be in default of such Section). The Board of Directors of the Company may
at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary;
provided that such designation shall be deemed to be an incurrence of
Indebtedness by a Restricted Subsidiary of the Company of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if (i) such Indebtedness is permitted under Section 4.09 hereof, and
(ii) no Default or Event of Default would be in existence following such
designation.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" means any Restricted Subsidiary
of the Company all of the outstanding Capital Stock or other ownership interests
of which (other than directors' qualifying shares) shall at the time be owned by
the Company or by one or more Wholly Owned Restricted Subsidiaries of the
Company.
SECTION 1.02. OTHER DEFINITIONS.
Defined in
Term Section
"Affiliate Transaction"...................... 4.11
"Asset Sale"................................. 4.10
"Asset Sale Offer"........................... 3.09
"Benefitted Party"........................... 10.01
"Change of Control Offer".................... 4.14
"Change of Control Payment".................. 4.14
"Change of Control Payment Date"............. 4.14
"Covenant Defeasance"........................ 8.03
"Custodian".................................. 6.01
"Event of Default"........................... 6.01
"Excess Proceeds"............................ 4.10
"Guarantor Significant Senior Debt".......... 10.04
"incur"...................................... 4.09
"Legal Defeasance" .......................... 8.02
"Offer Amount"............................... 3.09
"Offer Period"............................... 3.09
"Other Indebtedness"......................... 4.16
"Paying Agent"............................... 2.03
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"Payment Blockage Notice"..................... 10.04
"Payment Default"............................. 6.01
"Purchase Date"............................... 3.09
"Refinancing Indebtedness".................... 4.09
"Registrar"................................... 2.03
"Restricted Payments"......................... 4.07
"Significant Senior Debt"..................... 11.02
"Subordinated Obligations".................... 11.01
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes and the Subsidiary Guarantees;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Notes means the Company and any successor obligor
upon the Notes or any Guarantor.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule under
the TIA have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular;
(5) provisions apply to successive events and transactions; and
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(6) references to sections of or rules under the Securities Act shall
be deemed to include substitute, replacement of successor sections or rules
adopted by the Commission from time to time.
SECTION 1.05. BUSINESS DAY CERTIFICATE.
On the date of execution and delivery of this Indenture (with respect
to the remainder of calendar year 1996) and thereafter, within 15 days prior to
the end of each calendar year while this Indenture remains in effect (with
respect to the succeeding calendar years), the Company shall deliver to the
Trustee an Officers' Certificate specifying the days on which banking
institutions in the City of Chicago and the City of San Francisco are authorized
or obligated by law to close.
ARTICLE 2
THE NOTES
SECTION 2.01. FORM AND DATING.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A hereto. The Subsidiary Guarantees shall
be substantially in the form of Exhibit A-1, the terms of which are incorporated
in and made part of this Indenture. The Notes may have notations, legends or
endorsements required by law, stock exchange rule or usage. Each Note shall be
dated the date of its authentication. The Notes shall be in denominations of
$1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture and the Company, ROV Holding
and the Trustee, by their execution and delivery of this Indenture, expressly
agree to such terms and provisions and to be bound thereby.
Notes issued in global form shall be substantially in the form of
Exhibit A attached hereto (including the text referred to in footnotes 1 and 2
thereto). Notes issued in definitive form shall be substantially in the form of
Exhibit A attached hereto (but without including the text referred to in
footnotes 1 and 2 thereto). Each Global Note shall represent such of the
outstanding Notes as shall be specified therein and each shall provide that it
shall represent the aggregate amount of outstanding Notes from time to time
endorsed thereon and that the aggregate amount of outstanding Notes represented
thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges and redemptions. Any endorsement of a Global Note to reflect
the amount of any increase or decrease in the amount of outstanding Notes
represented thereby shall be made by the Trustee, at the direction of the
Trustee, in accordance with instructions given by the Holder thereof as required
by Section 2.06 hereof.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
Two Officers shall sign the Notes for the Company by manual or
facsimile signature. The Company's seal shall be reproduced on the Notes and may
be in facsimile form.
If an Officer whose signature is on a Note no longer holds that office
at the time a Note is authenticated, the Note shall nevertheless be valid.
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A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature shall be conclusive evidence that the Note has
been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by two
Officers, authenticate Notes for original issue up to the aggregate principal
amount stated in paragraph 4 of the Notes. The aggregate principal amount of
Notes outstanding at any time may not exceed such amount except as provided in
Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Company or
an Affiliate of the Company.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company shall notify
the Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to
act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent with respect to the Global Notes.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, or interest on the Notes, and
will notify the Trustee of any default by the Company or any Guarantor in making
any such payment. While any such default continues, the Trustee may require a
Paying Agent to pay all money held by it to the Trustee. The Company at any time
may require a Paying Agent to pay all money held by it to the Trustee. Upon
payment over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent. Upon
any bankruptcy or reorganization proceedings relating to the Company or a
Guarantor, the Trustee shall serve as Paying Agent for the Notes.
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SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is
not the Registrar, the Company and/or the Guarantor shall furnish to the Trustee
at least seven Business Days before each interest payment date and at such other
times as the Trustee may request in writing, a list in such form and as of such
date as the Trustee may reasonably require of the names and addresses of the
Holders of Notes and the Company and the Guarantor shall otherwise comply with
TIA ss. 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Definitive Notes. When Definitive Notes
are presented by a Holder to the Registrar with a request:
(x) to register the transfer of the Definitive Notes; or
(y) to exchange such Definitive Notes for an equal principal amount
of Definitive Notes of other authorized denominations,
the Registrar shall register the transfer or make the exchange as requested if
its requirements for such transactions are met; provided, however, that the
Definitive Notes presented or surrendered for register of transfer or exchange:
(i) shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the
Registrar duly executed by such Holder or by his or her
attorney, duly authorized in writing; and
(ii) in the case of a Definitive Note that is a Transfer
Restricted Security, such request shall be accompanied by
the following additional information and documents, as
applicable:
(A) if such Transfer Restricted Security is being delivered
to the Registrar by a Holder for registration in the
name of such Holder, without transfer, a certification
to that effect from such Holder (in substantially the
form of Exhibit B hereto); or
(B) if such Transfer Restricted Security is being
transferred to a "qualified institutional buyer" (as
defined in Rule 144A under the Securities Act) in
accordance with Rule 144A under the Securities Act or
pursuant to an exemption from registration in
accordance with Rule 144 or Rule 904 under the
Securities Act or pursuant to an effective registration
statement under the Securities Act, a certification to
that effect from such Holder (in substantially the form
of Exhibit B hereto); or
(C) if such Transfer Restricted Security is being
transferred in reliance on another exemption from the
registration requirements of the Securities Act,
19
a certification to that effect from such Holder (in
substantially the form of Exhibit B hereto) and an
Opinion of Counsel from such Holder or the transferee
reasonably acceptable to the Company and to the
Registrar to the effect that such transfer is in
compliance with the Securities Act.
(b) Transfer of a Definitive Note for a Beneficial Interest in a
Global Note. A Definitive Note may not be exchanged for a beneficial interest in
a Global Note except upon satisfaction of the requirements set forth below. Upon
receipt by the Trustee of a Definitive Note, duly endorsed or accompanied by
appropriate instruments of transfer, in form satisfactory to the Trustee,
together with:
(i) if such Definitive Note is a Transfer Restricted Security, a
certification from the Holder thereof (in substantially the form
of Exhibit B hereto) to the effect that such Definitive Note is
being transferred by such Holder to a "qualified institutional
buyer" (as defined in Rule 144A under the Securities Act) in
accordance with Rule 144A under the Securities Act; and
(ii) whether or not such Definitive Note is a Transfer Restricted
Security, written instructions from the Holder thereof directing
the Trustee to make, an endorsement on the Global Note to reflect
an increase in the aggregate principal amount of the Notes
represented by the Global Note,
in which case the Trustee shall cancel such Definitive Note in accordance with
Section 2.11 hereof and cause the aggregate principal amount of Notes
represented by the Global Note to be increased accordingly. If no Global Notes
are then outstanding, the Company shall issue and, upon receipt of an
authentication order in accordance with Section 2.02 hereof, the Trustee shall
authenticate a new Global Note in the appropriate principal amount.
(c) Transfer and Exchange of Beneficial Interests in a Global Note.
The registration of transfer and exchange of beneficial interests in a Global
Note shall be effected through the Depositary, in accordance with this Indenture
and the procedures of the Depositary therefor, which shall include restrictions
on transfer comparable to those set forth herein to the extent required by the
Securities Act. The Trustee shall have no responsibility or liability for any
acts or omissions of the Depositary taken pursuant to this Section 2.06(c).
(d) Transfer of a Global Note for a Definitive Note.
(i) The Holder of a Global Note may upon request exchange any such
Global Note or portion thereof for a Definitive Note. Upon
receipt by the Trustee of written instructions or such other form
of instructions as is customary for the Depositary, from the
Depositary or its nominee on behalf of any Person having a
beneficial interest in a Global Note, and, in the case of a
Transfer Restricted Security, the following additional
information and documents (all of which may be submitted by
facsimile):
(A) if such beneficial interest is being transferred to the
Person designated by the Depositary as being the beneficial
owner, a certification to that effect from such Person (in
substantially the form of Exhibit B hereto); or
20
(B) if such beneficial interest is being transferred to a
"qualified institutional buyer" (as defined in Rule 144A
under the Securities Act) in accordance with Rule 144A under
the Securities Act or pursuant to an exemption from
registration in accordance with Rule 144 or Rule 904 under
the Securities Act or pursuant to an effective registration
statement under the Securities Act, a certification to that
effect from the transferor (in substantially the form of
Exhibit B hereto); or
(C) if such beneficial interest is being transferred in reliance
on another exemption from the registration requirements of
the Securities Act, a certification to that effect from the
transferor (in substantially the form of Exhibit B hereto)
and an Opinion of Counsel from the transferee or transferor
reasonably acceptable to the Company and to the Trustee to
the effect that such transfer is in compliance with the
Securities Act,
in which case the Trustee shall cause the aggregate principal
amount of Global Notes to be reduced accordingly and, following
such reduction, the Company shall execute and the Trustee shall
authenticate and deliver to the transferee a Definitive Note in
the appropriate principal amount.
(ii) Definitive Notes issued in exchange for a beneficial interest in
a Global Note pursuant to this Section 2.06(d) shall be
registered in such names and in such authorized denominations as
the Depositary, pursuant to instructions from its direct or
indirect participants or otherwise, shall instruct the Trustee.
The Trustee shall deliver such Definitive Notes to the Persons in
whose names such Notes are so registered.
(e) Restrictions on Transfer and Exchange of Global Notes.
Notwithstanding any other provision of this Indenture (other than the provisions
set forth in subsection (f) of this Section 2.06), a Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor Depositary or
a nominee of such successor Depositary.
(f) Authentication of Definitive Notes in Absence of Depositary. If at
any time:
(i) the Depositary for the Notes notifies the Company that the
Depositary is unwilling or unable to continue as Depositary for
the Global Notes and a successor Depositary for the Global Notes
is not appointed by the Company within 90 days after delivery of
such notice; or
(ii) the Company, at its sole discretion, notifies the Trustee in
writing that it elects to cause the issuance of Definitive Notes
under this Indenture,
then the Company shall execute, and the Trustee shall, upon receipt of an
authentication order in accordance with Section 2.02 hereof, authenticate and
deliver, Definitive Notes in an aggregate principal amount equal to the
principal amount of the Global Notes in exchange for such Global Notes.
(g) Legend.
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(i) Except as permitted by the following paragraphs (ii) and (iii),
each Note certificate evidencing Global Notes and Definitive
Notes (and all Notes issued in exchange therefor or substitution
thereof) shall bear legends in substantially the following form:
"THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5
OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND THE NOTE EVIDENCED HEREBY MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER
OF THE NOTE EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER
MAY BE RELYING ON THE EXEMPTION PROVIDED BY RULE 144A UNDER THE
SECURITIES ACT. THE HOLDER OF THE NOTE EVIDENCED HEREBY AGREES
FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH NOTE MAY BE RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (a) TO A PERSON WHO
THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE
SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED
UPON AN OPINION OF COUNSEL), (2) TO THE COMPANY OR (3) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B)
THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO,
NOTIFY ANY PURCHASER OF THE NOTE EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN (1) ABOVE."
(ii) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by a
Global Note) pursuant to Rule 144 under the Securities Act or
pursuant to an effective registration statement under the
Securities Act:
(A) in the case of any Transfer Restricted Security that is a
Definitive Note, the Registrar shall permit the Holder
thereof to exchange such Transfer Restricted Security for a
Definitive Note that does not bear the legend set forth in
(i) above and rescind any restriction on the transfer of
such Transfer Restricted Security; and
(B) in the case of any Transfer Restricted Security represented
by a Global Note, such Transfer Restricted Security shall
not be required to bear the first legend set forth in (i)
above, but shall continue to be subject to the provisions of
Section 2.06(c) hereof; provided, however, that with respect
to any request for an exchange of a Transfer Restricted
Security that is represented by a Global Note for a
Definitive Note that does not bear the legend set forth in
(i) above, which request is made in reliance upon Rule 144,
the Holder thereof shall certify in
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writing to the Registrar that such request is being made pursuant
to Rule 144 (such certification to be substantially in the form
of Exhibit B hereto).
(iii) Notwithstanding the foregoing, upon consummation of the Exchange
Offer, the Company shall issue and, upon receipt of an
authentication order in accordance with Section 2.02 hereof, the
Trustee shall authenticate New Notes in exchange for Notes
accepted for exchange in the Exchange Offer, which New Notes
shall not bear the legend set forth in (i) above, and the
Registrar shall rescind any restriction on the transfer of such
Notes.
(h) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate
Definitive Notes and Global Notes at the Registrar's
request.
(ii) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any transfer
tax or similar governmental charge payable in connection
therewith (other than any such transfer taxes or similar
governmental charge payable upon exchange or transfer
pursuant to Sections 3.07, 4.10, 4.14 and 9.05 hereto).
(iii) The Registrar shall not be required to register the
transfer of or exchange any Note selected for redemption in
whole or in part, except the unredeemed portion of any Note
being redeemed in part.
(iv) All Definitive Notes and Global Notes issued upon any
registration of transfer or exchange of Definitive Notes or
Global Notes shall be the valid obligations of the Company,
evidencing the same debt, and entitled to the same benefits
under this Indenture, as the Definitive Notes or Global
Notes surrendered upon such registration of transfer or
exchange.
(v) Neither the Company nor the Registrar shall be required:
(A) to issue, to register the transfer of or to exchange
Notes during a period beginning at the opening of
business 15 days before the day of any selection of
Notes for redemption under Section 3.02 hereof and
ending at the close of business on the day of
selection; or
(B) to register the transfer of or to exchange any Note so
selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part;
or
(C) to register the transfer of or to exchange a Note
between a record date and the next succeeding interest
payment date.
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(vi) Prior to due presentment for the registration of a transfer
of any Note, the Trustee, any Agent and the Company may deem
and treat the Person in whose name any Note is registered as
the absolute owner of such Note for the purpose of receiving
payment of principal of, interest and Liquidated Damages, if
any, on such Note, and neither the Trustee, any Agent nor
the Company shall be affected by notice to the contrary.
(vii)The Trustee shall authenticate Definitive Notes and Global
Notes in accordance with the provisions of Section 2.02
hereof.
SECTION 2.07. REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee, or the Company
and the Trustee receives evidence to its satisfaction of the destruction, loss
or theft of any Note, the Company shall issue and the Trustee, upon the written
order of the Company signed by two Officers of the Company, shall authenticate a
replacement Note if the Trustee's requirements are met. If required by the
Trustee or the Company, an indemnity bond must be supplied by the Holder that is
sufficient in the judgment of the Trustee and the Company to protect the
Company, the Trustee, any Agent and any authenticating agent from any loss that
any of them may suffer if a Note is replaced. The Company may charge for its
expenses, including the fees and expenses of the Trustee in replacing a Note.
Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section
4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes or any fraction
owned by the Company, any Guarantor or by any Person directly or indirectly
controlling or controlled by or under direct or indirect common control
24
with the Company, shall be considered as though not outstanding, except that for
the purposes of determining whether the Trustee shall be protected in relying on
any such direction, waiver or consent, only Notes that a Responsible Officer of
the Trustee knows are so owned shall be so disregarded.
SECTION 2.10. TEMPORARY NOTES.
Until definitive Notes are ready for delivery, the Company may prepare
and the Trustee shall authenticate temporary Notes upon a written order of the
Company signed by two Officers of the Company. Temporary Notes shall be
substantially in the form of definitive Notes but may have variations that the
Company considers appropriate for temporary Notes and as shall be reasonably
acceptable to the Trustee. Without unreasonable delay, the Company shall prepare
and the Trustee shall authenticate definitive Notes in exchange for temporary
Notes. Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
cancelled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all cancelled Notes shall be delivered
to the Company. The Company may not issue new Notes to replace Notes that it has
paid or that have been delivered to the Trustee for cancellation.
SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Notes, it
shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Notes and in Section 4.01 hereof. The Company shall notify the Trustee in
writing of the amount of defaulted interest proposed to be paid on each Note and
the date of the proposed payment. The Company shall fix or cause to be fixed
each such special record date and payment date, provided that no such special
record date shall be less than 10 days prior to the related payment date for
such defaulted interest. At least 15 days before the special record date, the
Company (or, upon the written request of the Company, the Trustee in the name
and at the expense of the Company) shall mail or cause to be mailed to Holders a
notice that states the special record date, the related payment date and the
amount of such interest to be paid.
ARTICLE 3
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 40 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Indenture pursuant to
which
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the redemption shall occur, (ii) the redemption date, (iii) the principal amount
of Notes to be redeemed and (iv) the redemption price.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.
If less than all of the Notes are to be redeemed at any time, the
Trustee shall select the Notes to be redeemed among the Holders of the Notes in
compliance with the requirements of the principal national securities exchange,
if any, on which the Notes are listed or, if the Notes are not so listed, on a
pro rata basis, by lot or in accordance with any other method the Trustee
considers fair and appropriate. In the event of partial redemption by lot, the
particular Notes to be redeemed shall be selected, unless otherwise provided
herein, not less than 30 nor more than 60 days prior to the redemption date by
the Trustee from the outstanding Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
SECTION 3.03. NOTICE OF REDEMPTION.
Subject to the provisions of Section 3.09 hereof, at least 30 days but
not more than 60 days before a redemption date, the Company shall mail or cause
to be mailed, by first class mail, a notice of redemption to each Holder whose
Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the redemption
date upon surrender of such Note, a new Note or Notes in principal amount
equal to the unredeemed portion shall be issued upon cancellation of the
original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption
payment, interest on Notes called for redemption ceases to accrue on and
after the redemption date;
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(g) the paragraph of the Notes and/or Section of this Indenture
pursuant to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.
One Business Day prior to the redemption date, the Company shall
deposit with the Trustee or with the Paying Agent money sufficient to pay the
redemption price of and accrued interest on all Notes to be redeemed on the
redemption date. The Trustee or the Paying Agent shall promptly return to the
Company any money deposited with the Trustee or the Paying Agent by the Company
in excess of the amounts necessary to pay the redemption price of, accrued
interest and Liquidated Damages, if any, on all Notes to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption. If a Note is redeemed
on or after an interest record date but on or prior to the related interest
payment date, then any accrued and unpaid interest shall be paid to the Person
in whose name such Note was registered at the close of business on such record
date. If any Note called for redemption shall not be so paid upon surrender for
redemption because of the failure of the Company to comply with the preceding
paragraph, interest shall be paid on the unpaid principal, from the redemption
date until such principal is paid, and to the extent lawful on any interest not
paid on such unpaid principal, in each case at the rate provided in the Notes
and in Section 4.01 hereof.
SECTION 3.06. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company shall
issue and, upon the Company's written request, the Trustee shall authenticate
for the Holder at the expense of the Company a new Note equal in principal
amount to the unredeemed portion of the Note surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
(a) Except as set forth in clause (b) of this Section 3.07, the
Company shall not have the option to redeem the Notes pursuant to this Section
3.07 prior to November 1, 2001. Thereafter, the Company shall have the option to
redeem the Notes, in whole or in part, at the redemption prices (expressed as
27
percentages of principal amount) set forth below plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the applicable redemption
date, if redeemed during the twelve-month period beginning on November 1 of the
years indicated below:
Year Percentage
2001.................................................... 105.125%
2002 ................................................... 103.417
2003 ................................................... 101.708
2004 and thereafter..................................... 100.000%
(b) Notwithstanding the provisions of clause (a) of this Section 3.07,
at any time during the first 36 months after the date of this Indenture, the
Company may redeem up to 35% of the initial principal amount of the Notes
originally issued with the net proceeds of one or more public offerings of
equity securities of the Company, at a redemption price equal to 109.250% of the
principal amount of such Notes, plus accrued and unpaid interest and Liquidated
Damages thereon, if any, to the date of redemption; provided that at least 65%
of the principal amount of the Notes originally issued remain outstanding
immediately after the occurrence of such redemption and that such redemption
occurs within 60 days of the date of the closing of such public offerings.
(c) Any redemption pursuant to this Section 3.07 shall be made
pursuant to the provisions of Sections 3.01 through 3.06 hereof.
SECTION 3.08. MANDATORY REDEMPTION.
Except as set forth under Sections 4.10 and 4.14 hereof, the Company
shall not be required to make mandatory redemption payments with respect to the
Notes.
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
In the event that, pursuant to Section 4.10 hereof, the Company shall
be required to commence an offer to all Holders to purchase Notes (an "Asset
Sale Offer"), it shall follow the procedures specified below.
The Asset Sale Offer shall remain open for a period of 20 Business
Days following its commencement and no longer, except to the extent that a
longer period is required by applicable law (the "Offer Period"). No later than
five Business Days after the termination of the Offer Period (the "Purchase
Date"), the Company shall purchase the principal amount of Notes required to be
purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than
the Offer Amount has been tendered, all Notes tendered in response to the Asset
Sale Offer. Payment for any Notes so purchased shall be made in the same manner
as interest payments are made.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.
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Upon the commencement of an Asset Sale Offer, the Company shall send,
by first class mail, a notice to the Trustee and each of the Holders, with a
copy to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Asset Sale
Offer. The Asset Sale Offer shall be made to all Holders. The notice, which
shall govern the terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this Section
3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer
shall remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue
to accrue interest;
(d) that, unless the Company defaults in making such payment, any Note
accepted for payment pursuant to the Asset Sale Offer shall cease to accrue
interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to an
Asset Sale Offer may only elect to have all of such Note purchased and may
not elect to have only a portion of such Note purchased;
(f) that Holders electing to have a Note purchased pursuant to any
Asset Sale Offer shall be required to surrender the Note, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Note
completed, or transfer by book-entry transfer, to the Company, a
Depositary, if appointed by the Company, or a Paying Agent at the address
specified in the notice at least three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if the
Company, the Depositary or the Paying Agent, as the case may be, receives,
not later than the expiration of the Offer Period, a telegram, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that
such Holder is withdrawing his or her election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Company shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1,000,
or integral multiples thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall be
issued new Notes equal in principal amount to the unpurchased portion of
the Notes surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale
Offer, or if less than the Offer Amount has been tendered, all Notes tendered,
and shall deliver to the Trustee an Officers' Certificate stating that such
Notes or portions thereof were accepted for payment by the Company in accordance
with the terms of this Section 3.09. The Company, the Depositary or the Paying
Agent, as the case may be, shall promptly (but in any case not later than
29
five days after the Purchase Date) mail or deliver to each tendering Holder an
amount equal to the purchase price of the Notes tendered by such Holder and
accepted by the Company for purchase, and the Company shall promptly issue a new
Note, and the Trustee, upon written request from the Company shall authenticate
and mail or deliver such new Note to such Holder, in a principal amount equal to
any unpurchased portion of the Note surrendered. Any Note not so accepted shall
be promptly mailed or delivered by the Company to the Holder thereof. The
Company shall publicly announce the results of the Asset Sale Offer on the
Purchase Date.
Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made subject to Sections 3.05 and 3.06
hereof. The Company shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of the Notes in connection with an Asset Sale Offer.
ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
The Company shall pay or cause to be paid the principal of, premium,
if any, and interest on the Notes on the dates and in the manner provided in the
Notes. Principal, premium, if any, and interest shall be considered paid on the
date due if the Paying Agent, if other than the Company or a Subsidiary thereof,
holds as of 10:00 a.m. Eastern Time on the due date money deposited by the
Company in immediately available funds and designated for and sufficient to pay
all principal, premium, if any, and interest then due. The Company shall pay all
Liquidated Damages, if any, in the same manner on the dates and in the amounts
set forth in the Registration Rights Agreement.
The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the rate equal
to 1% per annum in excess of the then applicable interest rate on the Notes to
the extent lawful; it shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace period) at the same
rate to the extent lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, The City of
New York, an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time
30
rescind such designations; provided, however, that no such designation or
rescission shall in any manner relieve the Company of its obligation to maintain
an office or agency in the Borough of Manhattan, The City of New York for such
purposes. The Company shall give prompt written notice to the Trustee of any
such designation or rescission and of any change in the location of any such
other office or agency.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.03.
SECTION 4.03. REPORTS.
(a) Whether or not required by the rules and regulations of the
Commission, so long as any Notes are outstanding, the Company and, if the
Company is required to file financial statements for any Guarantor, such
Guarantor shall furnish to the Trustee and to all Holders (i) all quarterly and
annual financial information that would be required to be contained in a filing
with the Commission on Forms 10-Q and 10-K if the Company and/or such Guarantor
were required to file such forms, including a "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and, with respect to
the annual information only, a report thereon by the Company's and/or the
Guarantor's certified independent accountants and (ii) all financial information
that would be required to be filed with the Commission on Form 8-K if the
Company and/or such Guarantor were required to file such reports. In addition,
whether or not required by the rules and regulations of the Commission, the
Company shall file a copy of all such information with the Commission for public
availability (unless the Commission will not accept such a filing) and shall
promptly make such information available to all securities analysts and
prospective investors upon written request. The Company and any Guarantor shall
at all times comply with TIA ss. 314(a).
(b) For so long as any Transfer Restricted Securities remain
outstanding, the Company and each Guarantor shall furnish to all Holders and
prospective purchasers of the Notes designated by the Holders of Transfer
Restricted Securities, promptly upon their request, the information required to
be delivered pursuant to Rule 144A(d)(4) under the Securities Act.
SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Company and each Guarantor shall deliver to the Trustee,
within 90 days after the end of each fiscal year of the Company, an Officers'
Certificate stating that a review of the activities of the Company and its
Subsidiaries during the preceding fiscal year has been made under the
supervision of the signing Officers with a view to determining whether the
Company has kept, observed, performed and fulfilled its obligations under this
Indenture, and further stating, as to each such Officer signing such
certificate, that to the best of his or her knowledge the Company has kept,
observed, performed and fulfilled each and every covenant contained in this
Indenture and is not in default in the performance or observance of any of the
terms, provisions and conditions of this Indenture (or, if a Default or Event of
Default shall have occurred, describing all such Defaults or Events of Default
of which he or she may have knowledge and what action the Company is taking or
proposes to take with respect thereto) and that to the best of his or her
knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of, interest or Liquidated Damages, if any,
on the Notes is prohibited or if such event has occurred, a description of the
event and what action the Company is taking or proposes to take with respect
thereto.
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(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article Four or Article Five hereof or, if any such violation
has occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Company is taking or proposes to take with
respect thereto.
SECTION 4.05. TAXES.
The Company shall pay, and shall cause each of its Subsidiaries to
pay, prior to delinquency, all material taxes, assessments, and governmental
levies except such as are contested in good faith and by appropriate proceedings
or where the failure to effect such payment is not adverse in any material
respect to the Holders of the Notes.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
The Company covenants (to the extent that it may lawfully do so) that
it shall not at any time insist upon, plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that may affect the covenants or
the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it shall not, by resort to any such law, hinder, delay
or impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though no such law has
been enacted.
SECTION 4.07. RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make
any distribution on account of the Company's or any of its Restricted
Subsidiaries' Equity Interests (including, without limitation, any payment in
connection with any merger or consolidation involving the Company) or to any
direct or indirect holders of the Company's Equity Interests in their capacity
as such (other than dividends or distributions payable in Equity Interests
(other than Disqualified Stock) of the Company or such Restricted Subsidiary or
dividends or distributions payable to the Company or any Wholly Owned Restricted
Subsidiary of the Company); (ii) purchase, redeem or otherwise acquire or retire
for value any Equity Interests of the Company or any Restricted Subsidiary or
other Affiliate of the Company (other than any such Equity Interests owned by
the Company or any Wholly Owned Restricted Subsidiary of the Company that is a
Guarantor); (iii) purchase, redeem, defease or otherwise acquire or retire for
value prior to a scheduled mandatory sinking fund payment date or final maturity
date any Indebtedness that is pari passu with or subordinated to the Notes; or
(iv) make any Restricted Investment (all such payments and other actions
32
set forth in clauses (i) through (iv) above being collectively referred to as
"Restricted Payments"), unless, at the time of and after giving effect to such
Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had been
made at the beginning of the applicable four-quarter period, have been permitted
to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in the first paragraph of Section 4.09 hereof; and
(c) such Restricted Payment, together with the aggregate of all other
Restricted Payments made by the Company and its Restricted Subsidiaries after
the date of this Indenture (including Restricted Payments permitted by the next
succeeding paragraph), is less than (w) 50% of the Consolidated Net Income of
the Company for the period (taken as one accounting period) from the beginning
of the first fiscal quarter commencing after the date of this Indenture to the
end of the Company's most recently ended fiscal quarter for which internal
financial statements are available at the time of such Restricted Payment (or,
if such Consolidated Net Income for such period is a deficit, 100% of such
deficit), plus (x) 100% of the aggregate net cash proceeds received by the
Company from the issuance or sale after the date of this Indenture of Equity
Interests of the Company or of debt securities of the Company that have been
converted into such Equity Interests (other than Equity Interests (or
convertible debt securities) sold to a Restricted Subsidiary of the Company and
other than Disqualified Stock or debt securities that have been converted into
Disqualified Stock), plus (y) $2.0 million, plus (z) to the extent that any
Unrestricted Subsidiary is designated to be a Restricted Subsidiary, the fair
market value (as determined in good faith by the Board of Directors) of the
Company's Equity Interests in such Subsidiary at the time of such designation.
The foregoing provisions will not prohibit: (i) the payment of any
dividend or other distribution within 60 days after the date of declaration
thereof, if at said date of declaration such payment would have complied with
the provisions of this Indenture; (ii) the redemption, repurchase, retirement or
other acquisition of any Equity Interests of the Company in exchange for, or out
of the proceeds of, the substantially concurrent sale (other than to a
Restricted Subsidiary of the Company) of other Equity Interests of the Company
(other than any Disqualified Stock); provided that the amount of any such net
cash proceeds that are utilized for any such redemption, repurchase, retirement
or other acquisition shall be excluded from clause (c)(x) of the preceding
paragraph; (iii) the defeasance, redemption or repurchase of pari passu or
subordinated Indebtedness with the net proceeds from an incurrence of
Refinancing Indebtedness or the substantially concurrent sale (other than to a
Subsidiary of the Company) of Equity Interests of the Company (other than
Disqualified Stock); provided that the amount of any such net cash proceeds that
are utilized for any such redemption, repurchase, retirement or other
acquisition shall be excluded from clause (c)(x) of the preceding paragraph;
(iv) the purchase, redemption or other acquisition prior to the stated maturity
thereof of Indebtedness that is subordinated to the Notes in exchange for or out
of the net cash proceeds of a substantially concurrent issue and sale (other
than to the Company or any of its Restricted Subsidiaries) of new Indebtedness;
provided that (x) the principal amount of such new Indebtedness shall not exceed
the principal amount of Indebtedness so refinanced (plus the amount of such
reasonable expenses incurred in connection therewith), (y) such new Indebtedness
shall have a Weighted Average Life to Maturity equal to or greater than the
Weighted Average Life to Maturity of the Indebtedness being refinanced, and (z)
the new Indebtedness shall be subordinate in right of payment
33
to the Notes; (v) the repurchase, redemption or other acquisition or retirement
for value of any Equity Interests of the Company held by any member of the
Company's (or any of its Restricted Subsidiaries') management pursuant to any
management equity subscription agreement or stock option agreement or in
connection with the termination of employment of any employees or management of
the Company or its Subsidiaries; provided that the aggregate price paid for all
such repurchased, redeemed, acquired or retired Equity Interests shall not
exceed $2.0 million in the aggregate plus the aggregate cash proceeds received
by the Company after the date of this Indenture from any reissuance of Equity
Interests by the Company to members of management of the Company and its
Restricted Subsidiaries; (vi) Investments received by the Company and its
Restricted Subsidiaries as non-cash consideration from Asset Sales to the extent
permitted by Section 4.10 hereof; and (vii) the repurchase of Notes pursuant to
a Change of Control Offer or an Asset Sale Offer; and no Default or Event of
Default shall have occurred and be continuing immediately after any such
transaction.
The Board of Directors may designate a Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default. For
purposes of making such determination, all outstanding Investments by the
Company and its Restricted Subsidiaries (except to the extent repaid in cash or
Government Securities) in the Subsidiary so designated will be deemed to be
Restricted Payments at the time of such designation and will reduce the amount
available for Restricted Payments under the first paragraph of this covenant.
Such designation will only be permitted if such Restricted Payment would be
permitted at such time and if such Restricted Subsidiary otherwise meets the
definition of an Unrestricted Subsidiary.
The amount of all Restricted Payments (other than cash or Government
Securities) shall be the fair market value (evidenced by a Board Resolution
delivered to the Trustee) on the date of the Restricted Payment of the asset(s)
proposed to be transferred by the Company or such Subsidiary, as the case may
be, pursuant to the Restricted Payment. Not later than the date of making any
Restricted Payment, the Company shall deliver to the Trustee an Officers'
Certificate stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculations required by this Section 4.07 were
computed, which calculations may be based upon the Company's latest available
financial statements.
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (i)(a) pay dividends or make any other distributions to
the Company or any of its Restricted Subsidiaries (x) on its Capital Stock or
(y) with respect to any other interest or participation in, or measured by, its
profits, or (b) pay any indebtedness owed to the Company or any of its
Restricted Subsidiaries, (ii) make loans or advances to the Company or any of
its Restricted Subsidiaries or (iii) transfer any of its properties or assets to
the Company or any of its Restricted Subsidiaries, except for such encumbrances
or restrictions existing under or by reason of (a) Existing Indebtedness as in
effect on the date of this Indenture, (b) the Credit Agreement and all related
Senior Bank Debt documents as in effect as of the date of this Indenture, and
any amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings thereof; provided that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacement or refinancings are no more restrictive with respect to such
dividend and other payment restrictions than those contained in the Credit
Agreement as in effect on the date of this Indenture, (c) this Indenture, the
Subsidiary Guarantees and the Notes, (d) applicable law, (e) any instrument
governing
34
Indebtedness or Capital Stock of a Person acquired by the Company or any of its
Restricted Subsidiaries as in effect at the time of such acquisition (except to
the extent such Indebtedness was incurred in connection with or in contemplation
of such acquisition), which encumbrance or restriction is not applicable to any
Person, or the properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired, provided that the Consolidated
Cash Flow of such Person is not taken into account in determining whether such
acquisition was permitted by the terms of this Indenture, (f) by reason of
customary non-assignment provisions in leases entered into in the ordinary
course of business and consistent with past practices, (g) purchase money
obligations or Capital Lease Obligations for property acquired in the ordinary
course of business that impose restrictions of the nature described in clause
(iii) above on the property so acquired, (h) permitted Refinancing Indebtedness,
provided that the restrictions contained in the agreements governing such
Refinancing Indebtedness are no more restrictive than those contained in the
agreements governing the Indebtedness being refinanced, (i) customary
restrictions imposed on the transfer of copyrighted or patented materials and
customary provisions in agreements that restrict the assignees of such
agreements or any rights thereunder, or (j) restrictions with respect to a
Subsidiary of the Company imposed pursuant to a binding agreement which has been
entered into for the sale or disposition of all or substantially all of the
Capital Stock or assets of such Subsidiary.
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guaranty
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, "incur") any Indebtedness (including Acquired
Debt) and that the Company shall not issue any Disqualified Stock and shall not
permit any of its Restricted Subsidiaries to issue any shares of preferred
stock; provided, however, that the Company may incur Indebtedness or issue
shares of Disqualified Stock if the Fixed Charge Coverage Ratio for the
Company's most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on which such
additional Indebtedness is incurred or such Disqualified Stock is issued would
have been at least 2.0 to 1, determined on a pro forma basis (including a pro
forma application of the net proceeds therefrom), as if the additional
Indebtedness had been incurred, or the Disqualified Stock had been issued, as
the case may be, at the beginning of such four-quarter period.
The foregoing limitations shall not apply to: (i) the incurrence by
the Company of Senior Bank Debt; (ii) Guarantees of the Senior Bank Debt
permitted under or required by the Credit Agreement and Guarantees permitted
under or required by this Indenture; (iii) the incurrence by the Company and its
Restricted Subsidiaries of the Existing Indebtedness; (iv) the incurrence by the
Company of Indebtedness represented by the Notes and this Indenture, and the
incurrence by Restricted Subsidiaries of Guarantees required or permitted to be
incurred under this Indenture; (v) the incurrence by the Company or any of its
Restricted Subsidiaries of Capital Lease Obligations and/or additional
Indebtedness constituting purchase money obligations in an aggregate principal
amount not to exceed $5.0 million at any time outstanding; (vi) the incurrence
by the Company of additional Indebtedness for any corporate purposes in an
outstanding principal amount (or accreted value, as applicable) at no time
exceeding $25.0 million (which may, but need not be, borrowed under the Credit
Agreement); (vii) the incurrence by any Foreign Subsidiary of Indebtedness,
which when aggregated with the principal amount of Indebtedness of all Foreign
Subsidiaries then outstanding and incurred pursuant to this clause (vii), does
not exceed $5.0 million (or the equivalent thereof in any other currency) at any
one time outstanding; (viii) the incurrence
35
by any Restricted Subsidiary of the Company of Acquired Debt in an aggregate
principal amount not to exceed $20.0 million for all Restricted Subsidiaries
(reduced by the amount of Acquired Debt repaid with the Net Proceeds of Asset
Sales of any Restricted Subsidiary subject to such Acquired Debt) that (a) has
not been incurred in connection with, or in contemplation of such Restricted
Subsidiary becoming a Restricted Subsidiary, or a merger of a Person subject to
such Acquired Debt with or into such Restricted Subsidiary, and (b) is without
recourse to the Company or any of its Restricted Subsidiaries or any of their
respective assets (other than the Restricted Subsidiary subject to such Acquired
Debt and its assets), and is not guaranteed by any such Person; provided that
(A) after giving pro forma effect to the incurrence thereof as if incurred by
the Company, the Company could incur at least $1.00 of Indebtedness under the
first paragraph of this Section 4.09, (B) any Refinancing Indebtedness with
respect thereto may not be incurred by any Person other than the Restricted
Subsidiary that is the obligor on such Acquired Indebtedness, and (C) such
Restricted Subsidiary becomes an Additional Guarantor upon incurrence of such
Acquired Debt in accordance with this Indenture; (ix) the incurrence by the
Company of Indebtedness in connection with the issuance of notes in payment of
the repurchase, redemption, acquisition or retirement of Equity Interests of the
Company or any Restricted Subsidiary of the Company to the extent permitted by
Section 4.07 hereof; (x) Hedging Obligations that are incurred for the purpose
of fixing or hedging interest rate risk with respect to any floating rate
Indebtedness that is permitted by the terms of the Credit Agreement or this
Indenture to be outstanding; (xi) Indebtedness arising out of letters of credit,
performance bonds, surety bonds, guarantees resulting from endorsements of
negotiable instruments and bankers' acceptances, incurred in the ordinary course
of business; (xii) all Obligations with respect to the foregoing; (xiii) the
incurrence by the Company and its Restricted Subsidiaries of Indebtedness issued
in exchange for, or the proceeds of which are used to repay, redeem, defease,
extend, refinance, renew, replace, or refund Indebtedness referred to in clauses
(ii) through (xii) above, and this clause (xiii) (the "Refinancing
Indebtedness"); provided that (a) the principal amount of such Refinancing
Indebtedness shall not exceed the principal amount of Indebtedness so extended,
refinanced, renewed, replaced, substituted or refunded (plus the amount of fees,
premiums, consent fees, prepayment penalties and expenses incurred in connection
therewith); (b) in the case of Refinancing Indebtedness for Indebtedness
permitted under clause (iii) or (viii) of this paragraph, the Refinancing
Indebtedness shall have a Weighted Average Life to Maturity equal to or greater
than the Weighted Average Life to Maturity of the Indebtedness being extended,
refinanced, renewed, replaced or refunded or shall mature after the scheduled
maturity date of the Notes; (c) to the extent such Refinancing Indebtedness
refinances Indebtedness subordinate to the Notes, such Refinancing Indebtedness
shall be subordinated in right of payment to the Notes on terms at least as
favorable to the holders of Notes as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed, replaced or
refunded; and (d) with respect to Refinancing Indebtedness incurred by a
Guarantor, such Refinancing Indebtedness shall rank no more senior, and shall be
at least as subordinated, in right of payment to the Guarantee of such Guarantor
as the Indebtedness being extended, refinanced, renewed, replaced or refunded;
(xiv) Indebtedness of the Company (a) not to exceed an aggregate principal
amount of $8.0 million outstanding at any time arising as a result of the
issuance of tax-exempt industrial development bonds or similar tax-exempt public
financing, and (b) additional Indebtedness arising out of the issuance of
additional tax-exempt public financing obligations, but only to the extent that
Indebtedness owing under the Credit Agreement is prepaid, concurrently with the
receipt of the net proceeds of such issuance, in an amount at least equal to the
amount of such proceeds, and term indebtedness or the availability of revolving
credit borrowings under the Credit Agreement is permanently reduced by the
amount of such net proceeds and (xv) the incurrence of Indebtedness between (a)
the Company and its Restricted Subsidiaries and (b) the Restricted Subsidiaries;
provided, that (x) any subsequent issuance or transfer of Equity Interests that
results in any such Indebtedness being held by a Person other than the Company
or a Wholly Owned
36
Restricted Subsidiary and (y) any sale or other transfer of any such
Indebtedness to a Person that is not either the Company or a Wholly Owned
Restricted Subsidiary shall be deemed, in each case, to constitute an incurrence
of such Indebtedness by the Company or such Restricted Subsidiary, as the case
may be.
SECTION 4.10. ASSET SALES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, (i) sell, lease, convey or otherwise dispose of any assets
(including by way of a sale and leaseback) other than sales of inventory in the
ordinary course of business (provided that the sale, lease, conveyance or other
disposition of all or substantially all of the assets of the Company will be
governed by Section 4.14 hereof and/or Section 5.01 hereof and not by the
provisions of this Section 4.10), or (ii) issue or sell Equity Interests of any
of its Restricted Subsidiaries, in the case of either clause (i) or (ii) above,
whether in a single transaction or a series of related transactions, (a) that
have a fair market value in excess of $1.0 million, or (b) for net proceeds in
excess of $1.0 million (each of the foregoing, an "Asset Sale"), unless (x) the
Company (or the Restricted Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair market
value (evidenced by an Officers' Certificate delivered to the Trustee, and for
Asset Sales having a fair market value or net proceeds in excess of $5.0
million, evidenced by a Board Resolution delivered to the Trustee) of the assets
sold or otherwise disposed of and (y) at least 75% of the consideration therefor
received by the Company or such Restricted Subsidiary is in the form of cash or
Cash Equivalents; provided, however, that the amount of (A) any liabilities (as
shown on the Company's or such Restricted Subsidiary's most recent balance sheet
or in the notes thereto) of the Company or any Restricted Subsidiary (other than
contingent liabilities and liabilities that are by their terms subordinated to
the Notes or any Guarantee) that are assumed by the transferee of any such
assets pursuant to a customary novation agreement that releases the Company or
such Restricted Subsidiary from further liability and (B) any notes or other
obligations received by the Company or any such Restricted Subsidiary from such
transferee that are immediately converted by the Company or such Restricted
Subsidiary into cash (to the extent of the cash received) or Cash Equivalents,
shall be deemed to be cash for purposes of this provision; and provided,
further, that the 75% limitation referred to in this clause (y) shall not apply
to any Asset Sale in which the cash portion of the consideration received
therefrom, determined in accordance with the foregoing proviso, is equal to or
greater than what the after-tax proceeds would have been had such Asset Sale
complied with the aforementioned 75% limitation. Notwithstanding the foregoing:
(i) a transfer of assets by the Company to a Wholly Owned Restricted Subsidiary
or by a Wholly Owned Restricted Subsidiary to the Company or to another Wholly
Owned Restricted Subsidiary, (ii) an issuance of Equity Interests (other than
Disqualified Stock) by a Wholly Owned Restricted Subsidiary to the Company or
another Wholly Owned Restricted Subsidiary, (iii) issuances of Equity Interests
by the Company pursuant to warrants outstanding on the date of this Indenture,
(iv) a Restricted Payment that is permitted by Section 4.07 hereof, (v) the
surrender or waiver of contract rights or the settlement, release or surrender
of contract, tort or other claims of any kind (other than assignment of such
rights or claims for value outside the ordinary course of business) or (vi) the
grant in the ordinary course of business of any non-exclusive license of
patents, trademarks, registration therefor and other similar intellectual
property, will not be deemed to be an Asset Sale. In addition, notwithstanding
the foregoing, the Company and any of its Restricted Subsidiaries may create or
assume Liens (or permit any foreclosure thereon) securing Indebtedness to the
extent that such Lien does not violate Section 4.12 hereof.
Within 270 days after the receipt of any Net Proceeds from any Asset
Sale, the Company shall apply such Net Proceeds from such Asset Sale to
permanently reduce Senior Debt in accordance with the
37
terms of the Credit Agreement, if applicable, or to the extent not required to
be applied thereunder, may, at its option, apply such Net Proceeds to repayment
of Indebtedness of a Restricted Subsidiary (in the case of Net Proceeds from an
Asset Sale effected by a Restricted Subsidiary) or to an investment in a
Restricted Subsidiary or in another business or capital expenditure or other
long-term/tangible assets, in each case, in the same or a similar line of
business as the Company or any of its Restricted Subsidiaries were engaged in on
the date of this Indenture or in businesses reasonably related thereto. Pending
the final application of any such Net Proceeds, the Company may temporarily
reduce Senior Debt or otherwise invest such Net Proceeds in any manner that is
not prohibited by this Indenture. Any Net Proceeds from an Asset Sale that are
not applied or invested as provided in the first sentence of this paragraph will
be deemed to constitute "Excess Proceeds". When the aggregate amount of Excess
Proceeds exceeds $5.0 million, the Company will be required to make an Asset
Sale Offer to all Holders of Notes to purchase the maximum principal amount of
Notes that may be purchased out of the Excess Proceeds, at an offer price in
cash in an amount equal to 101% of the principal amount thereof plus accrued and
unpaid interest and Liquidated Damages, if any, thereon to the date of purchase,
in accordance with the procedures set forth in Section 3.09 hereof. To the
extent that the aggregate amount of Notes tendered pursuant to an Asset Sale
Offer is less than the Excess Proceeds, the Company may use any remaining Excess
Proceeds for general corporate purposes. If the aggregate principal amount of
Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the Notes to be purchased on a pro rata basis. Upon
completion of such offer to purchase, the amount of Excess Proceeds shall be
reset at zero.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to or enter into any other
transaction with, or for the benefit of, an Affiliate of the Company (an
"Affiliate Transaction"), unless (i) such Affiliate Transaction is on terms that
are no less favorable to the Company or the relevant Restricted Subsidiary than
those that would have been obtained in a comparable transaction by the Company
or such Restricted Subsidiary with an unrelated Person and (ii) the Company
delivers to the Trustee (a) with respect to any Affiliate Transaction or series
of related Affiliate Transactions involving aggregate consideration in excess of
$1.0 million, a Board Resolution certifying that such Affiliate Transaction
complies with clause (i) above and that such Affiliate Transaction has been
approved by a majority of the disinterested members of the Board of Directors
and (b) with respect to any Affiliate Transaction involving aggregate
consideration in excess of $5.0 million, an opinion as to the fairness to the
Company or such Restricted Subsidiary of such Affiliate Transaction from a
financial point of view issued by an accounting, appraisal or investment banking
firm of national standing; provided that (v) the Employment Agreement and any
employment agreement entered into by the Company or any of its Restricted
Subsidiaries in the ordinary course of business and consistent with the past
practice (other than past practice with respect to Thomas F. Pyle) of the
Company or such Restricted Subsidiary, (w) transactions between or among the
Company and/or its Restricted Subsidiaries, (x) investment banking and
management fees in an aggregate amount no greater than $360,000 per annum plus
reimbursement of expenses to be paid by the Company to Thomas H. Lee Company,
(y) payments to Thomas F. Pyle pursuant to the Consulting Agreements (whether or
not Thomas F. Pyle would be considered an Affiliate), and (z) transactions
permitted by Section 4.07 hereof, in each case, shall not be deemed Affiliate
Transactions; further provided, however, that (A) the provisions of clause (ii)
shall not apply to sales of inventory by the Company or any Restricted
Subsidiary to any Affiliate in the ordinary course of business and (B) the
provisions of clause (ii)(b) shall not apply to loans or advances to the Company
38
or any Restricted Subsidiary from, or equity investments in the Company or any
Restricted Subsidiary by, any Affiliate to the extent permitted by Section 4.09
hereof.
SECTION 4.12. LIENS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien on any of their property, assets or revenue now owned or
hereafter acquired by them, or any income or profits therefrom or assign or
convey any right to receive income therefrom, except Permitted Liens; provided,
however, that in addition to creating Permitted Liens on its properties or
assets, the Company may create any Lien upon any of its properties or assets if
the Notes are secured on an equal and ratable basis with the obligations so
secured until such time as such obligation is no longer secured by a Lien.
SECTION 4.13. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of each
of its Restricted Subsidiaries, in accordance with the respective organizational
documents (as the same may be amended from time to time) of the Company or any
such Restricted Subsidiary and (ii) the rights (charter and statutory), licenses
and franchises of the Company and its Restricted Subsidiaries; provided,
however, that the Company shall not be required to preserve any such right,
license or franchise, or the corporate, partnership or other existence of any of
its Restricted Subsidiaries, if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and its Restricted Subsidiaries, taken as a whole, and that the loss
thereof is not adverse in any material respect to the Holders of the Notes.
SECTION 4.14. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
Upon the occurrence of a Change of Control, each Holder of Notes shall
have the right to require the Company to repurchase all or any part (equal to
$1,000 in principal amount or an integral multiple thereof) of such Holder's
Notes pursuant to the offer described below (the "Change of Control Offer") at
an offer price in cash equal to 101% of the aggregate principal amount thereof
plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the
date of purchase (the "Change of Control Payment"). Within 30 calendar days
following any Change of Control, the Company will mail a notice to each Holder
stating: (i) that the Change of Control Offer is being made pursuant to this
Section 4.14 and that all Notes tendered will be accepted for payment; (ii) the
purchase price and the purchase date, which will be no earlier than 30 calendar
days nor later than 60 calendar days from the date such notice is mailed (the
"Change of Control Payment Date"); (iii) that any Note not tendered will
continue to accrue interest; (iv) that, unless the Company defaults in the
payment of the Change of Control Payment, all Notes accepted for payment
pursuant to the Change of Control Offer will cease to accrue interest after the
Change of Control Payment Date; (v) that Holders electing to have any Notes
purchased pursuant to a Change of Control Offer will be required to surrender
the Notes, with the form entitled "Option of Holder to Elect Purchase" on the
reverse of the Notes completed, to the Paying Agent at the address specified in
the notice prior to the close of business on the third Business Day preceding
the Change of Control Payment Date; (vi) that Holders will be entitled to
withdraw their election if the Paying Agent receives, not later than the close
of business on the second Business Day preceding the Change of Control Payment
Date, a telegram, telex, facsimile transmission or letter setting forth the name
39
of the Holder, the principal amount of Notes delivered for purchase, and a
statement that such Holder is withdrawing such Holder's election to have such
Notes purchased; and (vii) that Holders whose Notes are being purchased only in
part will be issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered, which unpurchased portion must be equal to
$1,000 in principal amount or an integral multiple thereof. The Company shall
comply with the requirements of Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the Notes in
connection with a Change of Control.
On the Change of Control Payment Date, the Company will, to the extent
lawful, (i) accept for payment Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (iii) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of the Notes or portions thereof required to be
purchased by the Company. The Paying Agent will promptly mail to each Holder of
Notes so accepted the Change of Control Payment for such Notes, and the Trustee
will promptly authenticate and mail (or cause to be transferred by book entry)
to each Holder a new Note equal in principal amount to any unpurchased portion
of the Notes surrendered, if any; provided that each such new Note will be in a
principal amount of $1,000 or an integral multiple thereof. Prior to complying
with the provisions of this Section 4.14, but in any event within 90 calendar
days following a Change of Control, the Company shall either repay all
outstanding Senior Debt or obtain the requisite consents, if any, under all
agreements governing outstanding Senior Debt to permit the repurchase of Notes
required by this Section 4.14. The Company shall publicly announce the results
of the Change of Control Offer on or as soon as practicable after the Change of
Control Payment Date.
SECTION 4.15. NO SENIOR SUBORDINATED DEBT.
Notwithstanding the provisions of Section 4.09 hereof (i) the Company
shall not incur, create, issue, assume, guarantee or otherwise become liable for
any Indebtedness that is subordinated or junior in right of payment to any
Senior Debt of the Company and senior in any respect in right of payment to the
Notes, and (ii) the Company will not permit any Guarantor to incur, create,
issue, assume, guarantee or otherwise become liable for any Indebtedness that is
subordinated or junior in right of payment to its Senior Debt and senior in any
respect in right of payment to its Guarantee.
SECTION 4.16. LIMITATIONS ON GUARANTEES OF COMPANY INDEBTEDNESS BY RESTRICTED
SUBSIDIARIES.
In the event that any Restricted Subsidiary, directly or indirectly,
guarantees any Indebtedness of the Company other than the Notes (the "Other
Indebtedness") the Company shall cause such Restricted Subsidiary to deliver to
the Trustee a supplemental indenture pursuant to which such Restricted
Subsidiary shall concurrently guarantee the Company's Obligations under this
Indenture and the Notes to the same extent that such Restricted Subsidiary
guaranteed the Company's Obligations under the Other Indebtedness (including
waiver of subrogation, if any), provided that if such Other Indebtedness is
Senior Debt, the Additional Guarantee shall be subordinated in right of payment
to the guarantee of such Other Indebtedness, as provided by the provisions of
Article 11 hereof, and such Additional Guarantee shall be on the same terms and
subject to the same conditions as the initial Guarantee given by ROV Holding,
Inc. hereunder. Each Additional Guarantee shall by its terms provide that the
Additional Guarantor making such Additional Guarantee will be automatically and
unconditionally released and discharged from
40
its obligations under such Additional Guarantee upon the release or discharge of
the guarantee of the Other Indebtedness that resulted in the creation of such
Additional Guarantee, except a discharge or release by, or as a result of, any
payment under the guarantee of such Other Indebtedness by such Additional
Guarantor.
SECTION 4.17. ADDITIONAL GUARANTEES.
If (i) if the Company or any of its Restricted Subsidiaries shall,
after the date of this Indenture, transfer or cause to be transferred, including
by way of any Investment, in one or a series of transactions (whether or not
related), any assets, businesses, divisions, real property or equipment having
an aggregate fair market value (as determined in good faith by the Board of
Directors) in excess of $1.0 million to any Restricted Subsidiary that is not a
Guarantor, (ii) the Company or any of its Restricted Subsidiaries shall acquire
another Restricted Subsidiary having total assets with a fair market value (as
determined in good faith by the Board of Directors) in excess of $1.0 million,
or (iii) any Restricted Subsidiary shall incur Acquired Debt, then the Company
shall, at the time of such transfer, acquisition or incurrence, (i) cause such
transferee, acquired Restricted Subsidiary or Restricted Subsidiary incurring
Acquired Debt (if not then a Guarantor) to execute a Guarantee of the
Obligations of the Company hereunder in the form set forth herein and (ii)
deliver to the Trustee an Opinion of Counsel, in form reasonably satisfactory to
the Trustee, that such Guarantee is a valid, binding and enforceable obligation
of such transferee, acquired Restricted Subsidiary or Restricted Subsidiary
incurring Acquired Debt, subject to customary exceptions for bankruptcy and
equitable principles. Notwithstanding the foregoing, the Company or any of its
Restricted Subsidiaries may make a Restricted Investment in any Wholly Owned
Restricted Subsidiary of the Company without compliance with this Section 4.17
provided that such Restricted Investment is permitted by Section 4.07 hereof.
No Guarantor may consolidate with or merge with or into (whether or
not such Guarantor is the surviving Person), another Person (other than the
Company) whether or not affiliated with such Guarantor unless: (i) subject to
the provisions of the following paragraph, the Person formed by or surviving any
such consolidation or merger (if other than such Guarantor) assumes all the
obligations of such Guarantor pursuant to a supplemental indenture in form and
substance reasonably satisfactory to the Trustee, under its Guarantee, the Notes
and this Indenture; (ii) immediately after giving effect to such transaction, no
Default or Event of Default exists; and (iii) such Guarantor, or any Person
formed by or surviving any such consolidation or merger, (a) would have
Consolidated Net Worth (immediately after giving effect to such transaction),
equal to or greater than the Consolidated Net Worth of such Guarantor
immediately preceding the transaction and (b) would be permitted by virtue of
the Company's pro forma Fixed Charge Coverage Ratio to incur, immediately after
giving effect to such transaction, at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in the first
paragraph of Section 4.09 hereof.
In the event of a sale or other disposition of all of the assets of
any Guarantor, by way of merger, consolidation or otherwise, or a sale or other
disposition of all of the capital stock of any Guarantor, then such Guarantor
(in the event of a sale or other disposition, by way of such a merger,
consolidation or otherwise, of all of the capital stock of such Guarantor) or
the Person acquiring the property (in the event of a sale or other disposition
of all of the assets of such Guarantor) shall be released and relieved of any
obligations under its Guarantee; provided that the Net Proceeds of such sale or
other disposition are applied in accordance with the applicable provisions
hereof. In the event the Board of Directors designates a Guarantor to be an
Unrestricted Subsidiary, such Guarantor will be
41
released and relieved of any obligation under its Guarantee, provided that such
designation is conducted in accordance with the applicable provisions hereof
including, but not limited to, Section 4.07.
ARTICLE 5
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
The Company shall not consolidate or merge with or into (whether or
not the Company is the surviving Person), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions, to another Person unless (i) the
Company is the surviving corporation or the entity or the Person formed by or
surviving any such consolidation or merger (if other than the Company) or to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made is a corporation organized or existing under the laws of
the United States, any state thereof or the District of Columbia; (ii) the
Person formed by or surviving any such consolidation or merger (if other than
the Company) or the Person to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made assumes all the obligations
of the Company under the Notes and this Indenture pursuant to a supplemental
indenture in a form reasonably satisfactory to the Trustee; (iii) immediately
after such transaction no Default or Event of Default exists; and (iv) the
Company or the Person formed by or surviving any such consolidation or merger
(if other than the Company), or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made (a) will have Consolidated
Net Worth immediately after the transaction equal to or greater than the
Consolidated Net Worth of the Company immediately preceding the transaction and
(b) will, at the time of such transaction and after giving pro forma effect
thereto as if such transaction had occurred at the beginning of the applicable
four-quarter period, be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the
first paragraph of Section 4.09 hereof; provided, however, that this provision
shall not prohibit any merger or consolidation among the Company and one or more
of its Wholly Owned Restricted Subsidiaries that is a Guarantor.
In connection with any consolidation or merger, or any sale,
assignment, transfer, lease, conveyance, or other disposition of all or
substantially all of the assets of the Company in accordance with this Section
5.01, the Company shall deliver, or cause to be delivered, to the Trustee, in
form reasonably satisfactory to the Trustee, an Officers' Certificate and an
Opinion of Counsel, each stating that such consolidation, merger, sale,
assignment, transfer, lease, conveyance, or other disposition and any
supplemental indenture in respect thereto comply with this Article 5 and that
all conditions precedent herein provided for relating to such transaction have
been complied with.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or into or with which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for (so that from and after the date
of such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "Company" shall refer
42
instead to the successor corporation and not to the Company), and may exercise
every right and power of the Company under this Indenture with the same effect
as if such successor Person had been named as the Company herein; provided,
however, that the predecessor Company shall not be relieved from the obligation
to pay the principal of, interest and Liquidated Damages, if any, on the Notes
except in the case of a sale of all of the Company's assets that meets the
requirements of Section 5.01 hereof.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
An "Event of Default" occurs if:
(1) the Company defaults in the payment of interest or Liquidated
Damages, if any, on any Note when the same becomes due and payable and the
Default continues for a period of 30 days, whether or not such payment is
prohibited by the provisions of Article 11 hereof;
(2) the Company defaults in the payment of the principal of or
premium, if any, on any Note when the same becomes due and payable at
maturity, upon redemption or otherwise, whether or not such payment is
prohibited by the provisions of Article 11 hereof;
(3) the Company or any Guarantor, as the case may be, fails to observe
or perform any other covenant, condition or agreement on its part to be
observed or performed pursuant to Articles 4 or 5 hereof; provided that, in
the case of Sections 4.02, 4.03, 4.04, 4.05, 4.12 and 4.13, such failure
shall have continued for 60 days after receipt of written notice from the
Trustee or any Holder;
(4) a default occurs under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by a Guarantee of the
Company or any of its Restricted Subsidiaries), whether such Indebtedness
or Guarantee now exists or shall be created hereafter, if (a) such default
results in the acceleration of such Indebtedness prior to its express
maturity or shall constitute a default in the payment of such Indebtedness
at final maturity of such Indebtedness, and (b) the principal amount of any
such Indebtedness that has been accelerated or not paid at maturity, when
added to the aggregate principal amount of all other Indebtedness that has
been accelerated or not paid at maturity, exceeds $5.0 million;
(5) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the Company
or any of its Restricted Subsidiaries and such judgment or judgments remain
undischarged for a period (during which execution shall not be effectively
stayed) of 60 days, provided that the aggregate of all such undischarged
judgments (to the extent not covered by insurance) exceeds $5.0 million;
(6) the Company or any of its Restricted Subsidiaries pursuant to or
within the meaning of any Bankruptcy Law:
(a) commences a voluntary case,
43
(b) consents to the entry of an order for relief against it in an
involuntary case,
(c) consents to the appointment of a Custodian of it or for all
or substantially all of its property,
(d) makes a general assignment for the benefit of its creditors,
or
(e) generally is not paying its debts as they become due; or
(7) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(a) is for relief against the Company or any Restricted
Subsidiary in an involuntary case,
(b) appoints a Custodian of the Company or any Restricted
Subsidiary or for all or substantially all of the property of the
Company or any Restricted Subsidiary, or
(c) orders the liquidation of the Company or any Restricted
Subsidiary,
and the order or decree remains unstayed and in effect for 60 consecutive
days; and
(8) except as permitted by this Indenture, any Subsidiary Guarantee
issued by a Guarantor shall be held in any judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in full force
and effect or any Guarantor, or any Person acting by or on behalf of any
Guarantor, shall deny or disaffirm its obligations under its Subsidiary
Guarantee.
The term "Custodian" means any receiver, trustee, assignee, liquidator
or similar official under any Bankruptcy Law.
In the case of any Event of Default pursuant to the provisions of this
Section 6.01 occurring by reason of any willful action (or inaction) taken (or
not taken) by or on behalf of the Company with the intention of avoiding payment
of the premium that the Company would have had to pay if the Company then had
elected to redeem the Notes pursuant to Section 3.08 hereof, an equivalent
premium shall also become and be immediately due and payable to the extent
permitted by law upon acceleration of the Notes, anything in this Indenture or
in the Notes to the contrary notwithstanding. If an Event of Default occurs
prior to the November 1, 2001 by reason of any willful action (or inaction)
taken (or not taken) by or on behalf of the Company with the intention of
avoiding the prohibition on redemption of the Notes prior to November 1, 2001
pursuant to Section 3.07 hereof, then the premium payable for purposes of this
paragraph for each of the years beginning on November 1 of the years set forth
below shall be as set forth in the following table expressed as a percentage of
the amount that would otherwise be due but for the provisions of this sentence,
plus accrued interest, if any, to the date of payment:
Year Percentage
1996......................................... 110.250%
1997 ........................................ 109.225%
1998 ........................................ 108.200%
1999 ........................................ 107.175%
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2000 ........................................ 106.150%
SECTION 6.02. ACCELERATION.
If an Event of Default (other than an Event of Default specified in
clauses (6) and (7) of Section 6.01 relating to the Company, any Significant
Subsidiary of the Company or any group of Subsidiaries that, taken together,
would constitute a Significant Subsidiary of the Company) occurs and is
continuing, the Trustee by notice to the Company, or the Holders of at least 25%
in principal amount of the then outstanding Notes by written notice to the
Company, the Trustee and the Bank Agent may declare the unpaid principal of,
accrued interest and Liquidated Damages, if any, on all the Notes to be due and
payable. Upon such declaration the principal, interest and Liquidated Damages,
if any, shall be due and payable immediately (together with the premium referred
to in Section 6.01, if applicable); provided, however, that so long as any
Designated Senior Debt is outstanding, such declaration shall not become
effective until the earlier of (i) the day which is five Business Days after the
receipt by the Representative with regard to any Designated Senior Debt of such
written notice of acceleration or (ii) the date of acceleration of any
Designated Senior Debt. If an Event of Default specified in clause (6) or (7) of
Section 6.01 relating to the Company, any Significant Subsidiary of the Company
or any group of Subsidiaries that, taken together, would constitute a
Significant Subsidiary of the Company occurs, such an amount shall ipso facto
become and be immediately due and payable without any declaration or other act
on the part of the Trustee or any Holder. In the event of a declaration of
acceleration of the Notes because an Event of Default has occurred and is
continuing as a result of the acceleration of any Indebtedness described in
clause (4) of Section 6.01 hereof, the declaration of acceleration of the Notes
shall be automatically annulled if the holders of any Indebtedness described in
clause (4) have rescinded the declaration of acceleration in respect of such
Indebtedness within 30 days of the date of such declaration and if (a) the
annulment of the acceleration of the Notes would not conflict with any judgment
or decree of a court of competent jurisdiction, and (b) all existing Events of
Default, except nonpayment of principal or interest on the Notes that became due
solely because of the acceleration of the Notes, have been cured or waived and
all amounts due to the Trustee under Section 7.07 have been paid.
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal, premium, if
any, and interest on the Notes or to enforce the performance of any provision of
the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding, and any recovery
or judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the Holders of Notes. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
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SECTION 6.04. WAIVER OF PAST DEFAULTS.
Holders of not less than a majority in aggregate principal amount of
the then outstanding Notes by notice to the Trustee may on behalf of the Holders
of all of the Notes waive an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of, premium and Liquidated Damages, if any, or interest
on, the Notes (including in connection with an offer to purchase) (provided,
however, that the Holders of a majority in aggregate principal amount of the
then outstanding Notes may rescind an acceleration and its consequences,
including any related payment default that resulted from such acceleration).
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then outstanding
Notes may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. However, (i) the Trustee may refuse to follow any direction
that conflicts with law or this Indenture that the Trustee determines may be
unduly prejudicial to the rights of other Holders of Notes or that may involve
the Trustee in personal liability, and (ii) the Trustee may take any other
action deemed proper by the Trustee which is not inconsistent with such
direction. Notwithstanding any provision to the contrary in this Indenture, the
Trustee shall not be obligated to take any action with respect to the provisions
of the last paragraph of Section 6.01 unless directed to do so pursuant to this
Section 6.06.
SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this Indenture
or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the
remedy;
(c) such Holder of a Note or Holders of Notes offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against any
loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights of another
Holder of a Note or to obtain a preference or priority over another Holder of a
Note.
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SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Note to receive payment of principal, premium and Liquidated
Damages, if any, and interest on the Note, on or after the respective due dates
expressed in the Note (including in connection with an offer to purchase), or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01 occurs and is
continuing, the Trustee is authorized to recover judgment in its own name and as
trustee of an express trust against the Company or any Guarantor for the whole
amount of principal of, premium and Liquidated Damages, if any, and interest
remaining unpaid on the Notes and interest on overdue principal and, to the
extent lawful, interest and such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order, at the date or dates fixed by the
Trustee and, in case of the distribution of such money on account of principal
(premium, if any) or interest, upon presentation of the Notes and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:
47
First: to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the Notes
for principal, premium and Liquidated Damages, if any, and interest, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Notes for principal, premium and Liquidated Damages, if any, and
interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder of a
Note pursuant to Section 6.06 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
SECTION 6.12. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder of Notes has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case the Company, the
Trustee and the Holders shall, subject to any determination in such proceeding,
be restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
ARTICLE 7
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs.
(b) Except during the continuance of an Event of Default:
48
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform only
those duties that are specifically set forth in this Indenture and no
others, and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of this
Section;
(ii) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it is proved that the Trustee
was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.06 hereof.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
(g) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protections to the Trustee shall be
subject to the provisions of this Article 7 and to the provisions of the TIA.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document believed by it
to be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be
liable for any action it takes or omits to take
49
in good faith in reliance on such Officers' Certificate or Opinion of Counsel.
The Trustee may consult with counsel and the written advice of such counsel or
any Opinion of Counsel shall be full and complete authorization and protection
from liability in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not
be responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company or any Guarantor shall be
sufficient if signed by an Officer of the Company or such Guarantor.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to the provisions of this Indenture, including,
without limitation, the provisions of Section 6.06 hereof, unless such Holders
shall have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities that might be incurred by it in compliance with
such request or direction.
(g) The Trustee shall not be charged with knowledge of any Default or
Event of Default under Sections 6.01(3), 6.01(4), 6.01(5), 6.01(6), 6.01(7),
6.01(8) or 6.01(9) hereof and the Trustee shall not be charged with knowledge of
the existence of any Liquidated Damages unless either (i) a Responsible Officer
shall have actual knowledge thereof, or (ii) the Trustee shall have received
notice thereof in accordance with Section 12.02 hereof from the Company or any
Holder of Notes.
(h) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture or
other paper or document, but the Trustee, in its discretion may make such
further inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Company or the Guarantor, personally or by agent or attorney.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or any
Guarantor or any Affiliate of the Company or any Guarantor with the same rights
it would have if it were not Trustee. However, in the event that the Trustee
acquires any conflicting interest within the meaning of Section 3.10(b) of the
TIA it must eliminate such conflict within 90 days, apply to the Commission for
permission to continue as trustee or resign. Any Agent may do the same with like
rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.
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SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if it
is known to a Responsible Officer, the Trustee shall mail to Holders of Notes a
notice of the Default or Event of Default within 90 days after it occurs. Except
in the case of a Default or Event of Default in payment of principal of,
premium, if any, or interest on any Note, the Trustee may withhold the notice if
and so long as a committee of its Responsible Officers in good faith determines
that withholding the notice is in the interests of the Holders of the Notes.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each December 31 beginning with the December 31
following the date of this Indenture, and for so long as Notes remain
outstanding, the Trustee shall mail to the Holders of the Notes a brief report
dated as of such reporting date that complies with TIA ss. 313(a) (but if no
event described in TIA ss. 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA ss. 313(b)(2). The Trustee shall also transmit by mail all
reports as required by TIA ss. 313(c).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Company and filed with the Commission and each
stock exchange on which the Notes are listed in accordance with TIA ss. 313(d).
The Company shall promptly notify the Trustee when the Notes are listed on any
stock exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred or
made by it in addition to the compensation for its services. Such expenses shall
include the reasonable compensation, disbursements and expenses of the Trustee's
agents and counsel.
The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, including the
costs and expenses of enforcing this Indenture against the Company or any
Guarantor (including this Section 7.07) and defending itself against any claim
(whether asserted by the Company or any Guarantor or any Holder or any other
Person) or liability in connection with the exercise
51
or performance of any of its powers or duties hereunder, except to the extent
any such loss, liability or expense may be attributable to its negligence or bad
faith. The Trustee shall notify the Company promptly of any claim for which it
may seek indemnity. Failure by the Trustee to so notify the Company shall not
relieve the Company of its obligations hereunder. The Company shall defend the
claim and the Trustee shall cooperate in the defense. The Trustee may have
separate counsel and the Company shall pay the reasonable fees and expenses of
such counsel. The Company need not pay for any settlement made without its
consent, which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall survive
the resignation or removal of the Trustee and the satisfaction and discharge of
this Indenture.
To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the resignation or removal
of the Trustee and the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(7) or (8) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA ss. 313(b)(2) to
the extent applicable.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of Notes of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company may
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
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If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Notes of at least 10% in principal amount of the then outstanding
Notes may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee, after written request by any Holder of a Note who has
been a Holder of a Note for at least six months, fails to comply with Section
7.10, such Holder of a Note may petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, provided all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant
to this Section 7.08, the Company's obligations under Section 7.07 hereof shall
continue for the benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $50 million
as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA
ss. 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
53
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Board of Directors evidenced by
a Board Resolution, at any time, elect to have either Section 8.02 or 8.03
hereof be applied to all outstanding Notes upon compliance with the conditions
set forth below in this Article 8.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall be
deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Notes, which shall thereafter be deemed to be "outstanding" only for
the purposes of Section 8.05 hereof and the other Sections of this Indenture
referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated or discharged hereunder: (a) the rights of Holders of
outstanding Notes to receive solely from the trust fund described in Section
8.04 hereof, and as more fully set forth in such Section, payments in respect of
the principal of, premium, if any, and interest on such Notes when such payments
are due, (b) the Company's obligations with respect to such Notes under Article
2 and Section 4.02 hereof, (c) the rights, powers, trusts, duties and immunities
of the Trustee hereunder and the Company's obligations in connection therewith
and (d) this Article 8. Subject to compliance with this Article 8, the Company
may exercise its option under this Section 8.02 notwithstanding the prior
exercise of its option under Section 8.03 hereof.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from its
obligations under the covenants contained in Sections 4.07, 4.08, 4.09, 4.10,
4.11, 4.12, 4.13, 4.15, 4.16 and 4.17 hereof with respect to the outstanding
Notes on and after the date the conditions set forth below are satisfied
(hereinafter, "Covenant Defeasance"), and the Notes shall thereafter be deemed
not "outstanding" for the purposes of any direction, waiver, consent or
declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder (it being understood that such Notes shall not
be deemed outstanding for accounting purposes). For this purpose, Covenant
Defeasance means that, with respect to the outstanding Notes, the Company may
omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to any such covenant or
by reason of any reference in any such covenant to any other provision herein or
in any other document and such omission to comply shall not constitute a Default
or an Event of Default under Section 6.01 hereof, but, except as specified
above, the remainder of this Indenture and such Notes shall be unaffected
thereby. In
54
addition, upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03 hereof, subject to the satisfaction of the
conditions set forth in Section 8.04 hereof, Sections 6.01(4) through 6.01(6)
hereof shall not constitute Events of Default.
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in
trust, for the benefit of the Holders, cash in United States dollars,
non-callable Government Securities, or a combination thereof, in such
amounts as will be sufficient, in the opinion of a nationally
recognized firm of independent public accountants, to pay the
principal of, premium and Liquidated Damages, if any, and interest on
the outstanding Notes on the stated date for payment thereof or on the
applicable redemption date, as the case may be;
(b) in the case of an election under Section 8.02 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in
the United States reasonably acceptable to the Trustee confirming that
(A) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling or (B) since the date of this
Indenture, there has been a change in the applicable federal income
tax law, in either case to the effect that, and based thereon such
Opinion of Counsel shall confirm that, the Holders of the outstanding
Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Legal Defeasance had
not occurred;
(c) in the case of an election under Section 8.03 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in
the United States reasonably acceptable to the Trustee confirming that
the Holders of the outstanding Notes will not recognize income, gain
or loss for federal income tax purposes as a result of such Covenant
Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event
of Default resulting from the incurrence of Indebtedness all or a
portion of the proceeds of which will be used to defease the Notes
pursuant to this Article 8 concurrently with such incurrence) or
insofar as Sections 6.01(6) or 6.01(7) hereof is concerned, at any
time in the period ending on the 123rd day after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result
in a breach or violation of, or constitute a default under, any
material agreement or instrument (other than this Indenture) to which
the Company or any of its Restricted Subsidiaries is a party or by
which the Company or any of its Restricted Subsidiaries is bound;
55
(f) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that on the 123rd day following the deposit, the
trust funds will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with
the intent of preferring the Holders over any other creditors of the
Company or with the intent of defeating, hindering, delaying or
defrauding any other creditors of the Company; and
(h) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for or relating to the Legal Defeasance
or the Covenant Defeasance have been complied with.
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, and interest, but
such money need not be segregated from other funds except to the extent required
by law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 8.04 hereof or the principal
and interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.04(a) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
SECTION 8.06. REPAYMENT TO COMPANY.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of, premium, if any,
or interest on any Note and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall be
paid to the Company on its request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall thereafter, as a
secured creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such
56
trust money, and all liability of the Company as trustee thereof, shall
thereupon cease; provided, however, that the Trustee or such Paying Agent,
before being required to make any such repayment, may at the expense of the
Company cause to be published once, in the New York Times and The Wall Street
Journal (national edition), notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such notification or publication, any unclaimed balance of such money
then remaining will be repaid to the Company.
SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02 or
8.03 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02 or 8.03
hereof, as the case may be; provided, however, that, if the Company makes any
payment of principal of, premium, if any, or interest on any Note following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.02 of this Indenture, the Company, the
Guarantors and the Trustee may amend or supplement this Indenture or the Notes
without the consent of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(c) to provide for the assumption of the Company's obligations to the
Holders of Notes in the case of a merger or consolidation pursuant to
Article 5 hereof;
(d) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the
legal rights hereunder of any Holder of Notes; or
(e) to comply with requirements of the Commission in order to effect
or maintain the qualification of this Indenture under the TIA.
Upon the request of the Company accompanied by a Board Resolution
authorizing the execution of any such amended or supplemental indenture, and
upon receipt by the Trustee of the documents described in Section 7.02 hereof,
the Trustee shall join with the Company in the execution of any amended or
supplemental indenture authorized or permitted by the terms of this Indenture
and to make any further appropriate agreements and stipulations that may be
therein contained, but the Trustee shall
57
not be obligated to enter into such amended or supplemental indenture that
affects its own rights, duties or immunities under this Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.02, the Company, the
Guarantors and the Trustee may amend or supplement this Indenture and the Notes
may be amended or supplemented with the consent of the Holders of at least a
majority in principal amount of the Notes then outstanding (including consents
obtained in connection with a tender offer or exchange offer for the Notes),
and, subject to Sections 6.04 and 6.07 hereof, any existing Default or Event of
Default (other than a Default or Event of Default in the payment of the
principal of, premium, if any, interest or Liquidated Damages, if any, on the
Notes, except a payment default resulting from an acceleration that has been
rescinded) or compliance with any provision of this Indenture or the Notes may
be waived with the consent of the Holders of a majority in principal amount of
the then outstanding Notes (including consents obtained in connection with a
tender offer or exchange offer for the Notes).
Upon the request of the Company accompanied by a Board Resolution
authorizing the execution of any such amended or supplemental indenture, and
upon the filing with the Trustee of evidence satisfactory to the Trustee of the
consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee of
the documents described in Section 7.02 hereof, the Trustee shall join with the
Company in the execution of such amended or supplemental indenture unless such
amended or supplemental indenture affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise, in which case the Trustee may in
its discretion, but shall not be obligated to, enter into such amended or
supplemental indenture.
It shall not be necessary for the consent of the Holders of Notes
under this Section 9.02 to approve the particular form of any proposed amendment
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company shall mail to the Holders of Notes affected
thereby a notice briefly describing the amendment, supplement or waiver. Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amended or
supplemental indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the
Holders of a majority in aggregate principal amount of the Notes then
outstanding may waive compliance in a particular instance by the Company with
any provision of this Indenture or the Notes. However, without the consent of
each Holder affected, an amendment or waiver may not (with respect to any Notes
held by a non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must consent to
an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note
or alter or waive any of the provisions with respect to the redemption of
the Notes in a manner adverse to the Holders;
(c) reduce the rate of or change the time for payment of interest,
including default interest, on any Note;
58
(d) waive a Default or Event of Default in the payment of principal of
or premium, if any, or interest on the Notes (except a rescission of
acceleration of the Notes by the Holders of at least a majority in
aggregate principal amount of the then outstanding Notes and a waiver of
the payment default that resulted from such acceleration);
(e) make any Note payable in money other than that stated in the
Notes;
(f) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive
payments of principal of or interest on the Notes;
(g) waive a redemption payment with respect to any Note (other than a
payment required by Section 4.10 or Section 4.14);
(h) except pursuant to Sections 4.16 or 4.17, release any Guarantor
from its obligations under its Guarantee, or change any Guarantee in any
manner that would adversely affect the Holders; or
(i) make any change in Section 6.04 or 6.07 hereof or in the foregoing
amendment and waiver provisions.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Notes shall be
set forth in a amended or supplemental indenture that complies with the TIA as
then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall authenticate new Notes
that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall
not affect the validity and effect of such amendment, supplement or waiver.
59
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental indenture
authorized pursuant to this Article 9 if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
The Company may not sign an amendment or supplemental indenture until the Board
of Directors approves it. In executing any amended or supplemental indenture,
the Trustee shall be entitled to receive and (subject to Section 7.01) shall be
fully protected in relying upon, in addition to the documents required by
Section 12.04, an Officer's Certificate and an Opinion of Counsel stating that
the execution of such amended or supplemental indenture is authorized or
permitted by this Indenture.
ARTICLE 10
GUARANTEES
SECTION 10.01. GUARANTEE.
Each Guarantor and each Restricted Subsidiary of the Company which in
accordance with Section 4.16 or 4.17 hereof is required to guarantee the
obligations of the Company under the Notes, upon execution of a counterpart of
this Indenture, hereby jointly and severally unconditionally guarantees to each
Holder of a Note authenticated and delivered by the Trustee and to the Trustee
and its successors and assigns, irrespective of the validity or enforceability
of this Indenture, the Notes or the obligations of the Company under this
Indenture or the Notes, that: (i) the principal of, premium (if any) and
interest and Liquidated Damages, if any, on the Notes will be paid in full when
due, whether at the maturity or interest payment date, by acceleration, call for
redemption or otherwise, and interest on the overdue principal of, interest or
Liquidated Damages, if any, on the Notes and all other obligations of the
Company to the Holders or the Trustee under this Indenture or the Notes will be
promptly paid in full or performed, all in accordance with the terms of this
Indenture and the Notes; and (ii) in case of any extension of time of payment or
renewal of any Notes or any of such other obligations, they will be paid in full
when due or performed in accordance with the terms of the extension or renewal,
whether at maturity, by acceleration or otherwise. Failing payment when due of
any amount so guaranteed for whatever reason, each Guarantor will be obligated
to pay the same whether or not such failure to pay has become an Event of
Default which could cause acceleration pursuant to Section 6.02 hereof. Each
Guarantor agrees that this is a guarantee of payment not a guarantee of
collection.
Each Guarantor hereby agrees that its obligations with regard to this
Subsidiary Guarantee shall be joint and several, unconditional, irrespective of
the validity or enforceability of the Notes or the obligations of the Company
under this Indenture, the absence of any action to enforce the same, the
recovery of any judgment against the Company or any other obligor with respect
to this Indenture, the Notes or the obligations of the Company under this
Indenture or the Notes, any action to enforce the same or any other
circumstances (other than complete performance) which might otherwise constitute
a legal or equitable discharge or defense of a Guarantor. Each Guarantor
further, to the extent permitted by law, waives and relinquishes all claims,
rights and remedies accorded by applicable law to guarantors and agrees not to
assert or take advantage of any such claims, rights or remedies, including but
not limited to: (a) any right to require the Trustee, the Holders or the Company
(each, a "Benefitted Party") to proceed against the Company or any other Person
or to proceed against or exhaust any security held by a Benefitted Party at any
time or to pursue any other remedy in any Benefitted Party's power before
60
proceeding against such Guarantor; (b) the defense of the statute of limitations
in any action hereunder or in any action for the collection of any Indebtedness
or the performance of any obligation hereby guaranteed; (c) any defense that may
arise by reason of the incapacity, lack of authority, death or disability of any
other Person or the failure of a Benefitted Party to file or enforce a claim
against the estate (in administration, bankruptcy or any other proceeding) of
any other Person; (d) demand, protest and notice of any kind including but not
limited to notice of the existence, creation or incurring of any new or
additional Indebtedness or obligation or of any action or non-action on the part
of such Guarantor, the Company, any Benefitted Party, any creditor of such
Guarantor, the Company or on the part of any other Person whomsoever in
connection with any Indebtedness or obligations hereby guaranteed; (e) any
defense based upon an election of remedies by a Benefitted Party, including but
not limited to an election to proceed against such Guarantor for reimbursement;
(f) any defense based upon any statute or rule of law which provides that the
obligation of a surety must be neither larger in amount nor in other respects
more burdensome than that of the principal; (g) any defense arising because of a
Benefitted Party's election, in any proceeding instituted under Bankruptcy Law,
of the application of 11 U.S.C. Section 1111(b)(2); or (h) any defense based on
any borrowing or grant of a security interest under 11 U.S.C. Section 364. Each
Guarantor hereby covenants that its Subsidiary Guarantee will not be discharged
except by complete performance of the obligations contained in its Subsidiary
Guarantee and this Indenture.
If any Holder or the Trustee is required by any court or otherwise to
return to either the Company or any Guarantor, or any Custodian acting in
relation to either the Company or such Guarantor, any amount paid by the Company
or such Guarantor to the Trustee or such Holder, the applicable Subsidiary
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect. Each Guarantor agrees that it will not be entitled to any
right of subrogation in relation to the Holders in respect of any obligations
guaranteed hereby until payment in full of all obligations guaranteed hereby.
Each Guarantor further agrees that, as between such Guarantor, on the
one hand, and the Holders and the Trustee, on the other hand, (i) the maturity
of the Obligations guaranteed hereby may be accelerated as provided in Section
6.02 hereof for the purposes of this Subsidiary Guarantee, notwithstanding any
stay, injunction or other prohibition preventing such acceleration as to the
Company or any other obligor on the Notes of the Obligations guaranteed hereby,
and (ii) in the event of any declaration of acceleration of those Obligations as
provided in Section 6.02 hereof, those Obligations (whether or not due and
payable) will forthwith become due and payable by such Guarantor for the purpose
of this Subsidiary Guarantee.
To evidence its Subsidiary Guarantee, each Guarantor hereby agrees
that a notation of such Guarantee substantially in the form of Exhibit A-1
hereto shall be endorsed by an officer of such Guarantor on each Note
authenticated and delivered by the Trustee and that this Indenture shall be
executed on behalf of such Guarantor by its President or one of its Vice
Presidents and attested to by an Officer.
SECTION 10.02. SUBORDINATION.
Each Guarantor, the Trustee, and each Holder by accepting a Note
agrees, that the Indebtedness evidenced by the Subsidiary Guarantee is
subordinated in right of payment, to the extent and in the manner provided in
this Article 10, to the prior payment in full of all Obligations with respect to
Senior Debt of such Guarantor (whether outstanding on the date hereof or
hereafter created, incurred, assumed
61
or guaranteed), and that the subordination is for the benefit of the holders of
Senior Debt of such Guarantor.
SECTION 10.03. DISSOLUTION, LIQUIDATION OR REORGANIZATION.
Upon any distribution of assets of any Guarantor upon any dissolution,
winding up, liquidation or reorganization of such Guarantor (whether in
bankruptcy, insolvency, receivership or similar proceeding related to the
Guarantor or its property or upon an assignment for the benefit of creditors or
otherwise):
(a) the holders of all Senior Debt of such Guarantor will first be
entitled to receive payment in full in cash or U.S. dollar denominated Cash
Equivalents of the principal of and interest due on Senior Debt of such
Guarantor and other amounts due in connection with Senior Debt of such
Guarantor (including interest accruing subsequent to certain bankruptcy
events and certain winding up events described in clauses (6) and (7) of
Section 6.01 hereof at the rate provided for in the documents governing
such Senior Debt, whether or not such interest is an allowed claim
enforceable against the debtor in a bankruptcy case under Title 11 of the
United States Code) before the Holders are entitled to receive any payment
or distribution from such Guarantor with respect to such Guarantor's
Subsidiary Guarantee;
(b) any payment or distribution of assets of such Guarantor of any
kind or character, whether in cash, property or securities, to which the
Holders or the Trustee would be entitled except for the provisions of this
Article 10 will be paid by the liquidating trustee or agent or other Person
making such a payment or distribution directly to the holders of Senior
Debt of such Guarantor or their Representatives to the extent necessary to
make payment in full in cash or U.S. dollar denominated Cash Equivalents of
all Senior Debt of such Guarantor remaining unpaid, after giving effect to
any concurrent payment or distribution to the holders of such Senior Debt;
and
(c) if, notwithstanding the foregoing, any payment or distribution of
assets of such Guarantor of any kind or character, whether in cash,
property or securities, is received by the Trustee or the Holders on
account of the Subsidiary Guarantee before all Senior Debt of such
Guarantor is paid in full in cash or U.S. dollar denominated Cash
Equivalents, such payment or distribution will be received and held in
trust for and will be paid over forthwith to the holders of the Senior Debt
of such Guarantor remaining unpaid or their Representatives for application
to the payment of such Senior Debt until all such Senior Debt has been paid
in full in cash or U.S. dollar denominated Cash Equivalents, after giving
effect to any concurrent payment or distribution to the holders of such
Senior Debt (except that Holders may receive payments made from the trust
described in Section 8.04 hereof).
Each Guarantor will give prompt written notice to the Holders and to
the Trustee of any dissolution, winding up, liquidation or reorganization
of such Guarantor or any assignment for the benefit of its creditors and of
any event of default in respect of Senior Debt of such Guarantor.
For purposes of this Article 10, the words "cash, property or
securities" shall not be deemed to include (i) shares of Capital Stock of a
Guarantor as reorganized or readjusted (excluding Capital Stock redeemable at
the option of the holder thereof prior to the final maturity date or any
mandatory pre-payment date with respect to any Designated Senior Debt of such
Guarantor or Guarantor Significant
62
Senior Debt (as defined below), (ii) Capital Stock convertible into or
exchangeable for Indebtedness which is subordinated, to at least the same extent
as the Subsidiary Guarantee, to the payment of all Senior Debt of such Guarantor
then outstanding, (iii) securities of the Guarantor or any other corporation
provided for by a plan of reorganization or readjustment which are subordinated,
to at least the same extent as the Subsidiary Guarantee, to the payment of all
Senior Debt of such Guarantor then outstanding, or (iv) any payment or
distribution of securities of such Guarantor or any other corporation authorized
by an order or decree giving effect, and stating in such order or decree that
effect has been given, to subordination of the Subsidiary Guarantee to Senior
Debt of such Guarantor and made by a court of competent jurisdiction in a
reorganization proceeding under any applicable bankruptcy, insolvency or similar
law.
SECTION 10.04. DEFAULT ON SENIOR DEBT OF THE GUARANTOR.
(a) No payment will be made on account of the Subsidiary Guarantees,
or to acquire any of the Notes for cash, property or securities or on account of
the redemption provisions of the Notes upon the maturity of any (i) Senior Bank
Debt or other Designated Senior Debt guaranteed by a Guarantor or (ii) any
Senior Debt permitted by clause (xiv) of the second paragraph of Section 4.09
hereof guaranteed by a Guarantor and any other Senior Debt of a Guarantor issued
in a single transaction or a series of related transactions having an aggregate
principal amount outstanding of $5.0 million or more ("Guarantor Significant
Senior Debt"), by lapse of time, acceleration or otherwise, unless and until all
such Designated Senior Debt or Guarantor Significant Senior Debt, as the case
may be (including interest accruing subsequent to certain bankruptcy events and
certain winding up events at the rate provided for in documents governing such
Senior Debt, whether or not such interest is an allowed claim enforceable
against the debtor in a bankruptcy case under Title 11 of the United States
Code), shall first be paid in full in cash or U.S. dollar denominated Cash
Equivalents.
(b) No Guarantor may make any payment or distribution upon or in
respect of its Subsidiary Guarantee, including, without limitation, by way of
set-off or otherwise, or redeem (or make a deposit in redemption of), defease or
acquire any of the Notes, for cash, property or securities if (i) a default in
the payment of any Obligation under any Significant Senior Debt that is
guaranteed by such Guarantor or any Designated Senior Debt or in the payment of
any Obligation of such Guarantor with respect to (a) any Guarantee of Designated
Senior Debt or (b) Guarantor Significant Senior Debt occurs and is continuing or
(ii) any other default (or any event that, after notice or passage of time would
become an event of default) occurs and is continuing with respect to any
Designated Senior Debt and, in the case of clause (ii), the Trustee receives
notice of such default (a "Payment Blockage Notice") from the holders (or the
agent or Representative of such holders) of any Designated Senior Debt. Payment
on the Notes or any Subsidiary Guarantee may and shall be resumed (i) in the
case of a payment default, upon the date on which such default is cured or
waived and (ii) in case of a nonpayment default, the earlier of the date on
which such nonpayment default is cured or waived or 179 days after the date on
which the applicable Payment Blockage Notice is received, unless the maturity of
any such Designated Senior Debt or Guarantor Significant Senior Debt has been
accelerated. No new period of payment blockage pursuant to a Payment Blockage
Notice may be commenced unless and until (i) 360 days have elapsed since the
effectiveness of the immediately prior Payment Blockage Notice and (ii) all
scheduled payments of principal, premium, if any, and interest on the Notes that
have come due have been paid in full in cash. No nonpayment default that existed
or was continuing on the date of delivery of any Payment Blockage Notice to the
Trustee shall be, or be made, the basis for a subsequent Payment Blockage
Notice.
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(c) If any payment or distribution of assets of a Guarantor is
received by any Holder in respect of the Subsidiary Guarantees at a time when
that payment or distribution should not have been made because of paragraph (a)
or (b), such payment or distribution will be received and held in trust for and
will be paid over forthwith to the holders of Senior Debt of such Guarantor
which is due and payable and remains unpaid (pro rata as to each of such holders
on the basis of the respective amounts of Senior Debt of such Guarantor which is
due and payable held by them) until all such Senior Debt of such Guarantor has
been paid in full in cash or U.S. dollar denominated Cash Equivalents, after
giving effect to any concurrent payment or distribution to the holders of such
Senior Debt (except that Holders may receive payments made from the trust
described in Section 8.04 hereof).
SECTION 10.05. ACCELERATION OF NOTES.
If payment of the Notes is accelerated because of an Event of Default,
each Guarantor shall promptly notify the Representative of the holders of Senior
Debt of such Guarantor of the acceleration.
SECTION 10.06. SUBROGATION.
With respect to any Guarantor, following the payment in full of all
Senior Debt of such Guarantor, the Holders will be subrogated to the rights of
the holders of Senior Debt of such Guarantor to receive payments or
distributions of assets of such Guarantor applicable to the Senior Debt of such
Guarantor until all amounts owing on the Notes have been paid in full, and for
the purpose of such subrogation no such payments or distributions to the holders
of Senior Debt of such Guarantor by or on behalf of the Guarantor or by or on
behalf of the Holders by virtue of this Article 10 which otherwise would have
been made to the Holders will, as between the Guarantor and Holders, be deemed
to be payment by the Guarantor to or on account of the Senior Debt of such
Guarantor, it being understood that the provisions of this Article 10 are
intended solely for the purpose of defining the relative rights of the Holders,
on the one hand, and the holders of Senior Debt of any Guarantor, on the other
hand.
SECTION 10.07. OBLIGATIONS UNCONDITIONAL.
Nothing contained in this Article 10 or elsewhere in this Indenture or
the Notes is intended to or will impair, as between any Guarantor and the
Holders, the obligations of the Guarantor, which are absolute and unconditional,
to pay principal of, interest and Liquidated Damages, if any, on the Notes in
accordance with the terms of the Subsidiary Guarantee as and when such
Obligations become due and payable, or is intended to or will affect the
relative rights of the Holders and creditors of the Guarantor other than the
holders of the Senior Debt of such Guarantor, nor will anything herein or
therein prevent any Holder from exercising all remedies otherwise permitted by
applicable law upon default of the Notes, subject to the rights, if any, under
this Article 10 of the holders of Senior Debt of such Guarantor in respect of
cash, property or securities of the Guarantor received upon the exercise of any
such remedy.
SECTION 10.08. RELATIVE RIGHTS.
No right of any present or future holders of any Senior Debt of any
Guarantor to enforce subordination as provided in this Article 10 will at any
time in any way be prejudiced or impaired by any act or failure to act on the
part of the Guarantor or by any act or failure to act by any such holders, or by
any noncompliance by the Guarantor with the terms of the Notes, regardless of
any knowledge thereof which any such holders may have or otherwise be charged
with. The holders of Senior Debt of any
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Guarantor may extend, renew, modify or amend the terms of the Senior Debt or any
security therefor and release, sell or exchange such security and otherwise deal
freely with the Guarantor, all without affecting the liabilities and obligations
of the parties to the document or the Holders. No amendment to these provisions
will be effective against the holders of the Senior Debt of any Guarantor who
have not consented thereto in writing.
SECTION 10.09. EVENT OF DEFAULT PRESERVED.
The failure to make a payment on account of any Subsidiary Guarantee
by reason of any provision of this Article 10 will not be construed as
preventing the occurrence of an Event of Default.
SECTION 10.10. TRUSTEE DUTIES.
With respect to the holders of Senior Debt of any Guarantor, the
Trustee undertakes to perform only such obligations on the part of the Trustee
as are specifically set forth in this Article 10, and no implied covenants or
obligations with respect to the holders of Senior Debt of such Guarantor shall
be read into this Indenture against the Trustee. The Trustee shall not be deemed
to owe any fiduciary duty to the holders of Senior Debt of such Guarantor, and
shall not be liable to any such holders if the Trustee shall pay over or
distribute to or on behalf of Holders or the Company or any other Person money
or assets to which any holders of Senior Debt of such Guarantor shall be
entitled by virtue of this Article 10, except if such payment is made as a
result of the willful misconduct or gross negligence of the Trustee.
SECTION 10.11. NOTICE BY A GUARANTOR.
Each Guarantor shall promptly notify the Trustee and the Paying Agent
of any facts known to such Guarantor that would cause a payment of any
Obligations with respect to the Notes or its Subsidiary Guarantee to violate
this Article 10, but failure to give such notice shall not affect the
subordination of its Subsidiary Guarantee or of the Notes to the Senior Debt of
such Guarantor as provided in this Article 10.
SECTION 10.12. SUBORDINATION MAY NOT BE IMPAIRED BY GUARANTOR.
No right of any holder of Senior Debt of any Guarantor to enforce the
subordination of the Indebtedness evidenced by a Subsidiary Guarantee shall be
impaired by any act or failure to act by the Guarantor or any Holder or by the
failure of the Guarantor or any Holder to comply with this Indenture.
SECTION 10.13. RELIANCE UPON ORDER.
Upon any payment or distribution of assets of a Guarantor referred to
in this Article 10, the Trustee and the Holders shall be entitled to rely upon
any order or decree made by any court of competent jurisdiction or upon any
certificate of the liquidating trustee or agent or other Person making any
distribution to the Trustee or to the Holders for the purpose of ascertaining
the Persons entitled to participate in such distribution, the holders of the
Senior Debt of such Guarantor and other Indebtedness of the Guarantor, the
amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article 10; provided
that the foregoing shall only apply if such court has been apprised of the
subordination provisions of this Article 10.
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SECTION 10.14. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 10 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least five Business Days prior to the date of such
payment written notice of facts that would cause the payment of any Obligations
with respect to the Notes to violate this Article 10. Nothing in this Article 10
shall impair the claims of, or payments to, the Trustee under or pursuant to
Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold Senior
Debt of a Guarantor with the same rights it would have if it were not Trustee.
Any Agent may do the same with like rights.
SECTION 10.15. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of a Note by the Holder's acceptance thereof authorizes
and directs the Trustee on the Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as the Holder's attorney-in-fact for
any and all such purposes. If the Trustee does not file a proper proof of claim
or proof of debt in the form required in any proceeding relative to any
Guarantor referred to in Section 6.09 hereof at least 30 days before the
expiration of the time to file such claim, the Representatives of Senior Debt of
such Guarantor are hereby authorized to file an appropriate claim for and on
behalf of the Holders of the Notes.
SECTION 10.16. AMENDMENTS.
With respect to any Guarantor, the provisions of Section 10.02 through
10.16 hereof shall not be amended or modified without the written consent of the
holders of all Senior Debt of such Guarantor.
SECTION 10.17. LIMITATION OF GUARANTOR'S LIABILITY.
Each Guarantor and by its acceptance hereof, each beneficiary hereof,
hereby confirm that it is its intention that the Subsidiary Guarantee of such
Guarantor not constitute a fraudulent transfer or conveyance for purposes of the
Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar federal or state law to the extent applicable to any
Guarantee. To effectuate the foregoing intention, each such person hereby
irrevocably agrees that the obligation of such Guarantor under its Subsidiary
Guarantee under this Article 10 shall be limited to the maximum amount as will,
after giving effect to such maximum amount and all other (contingent or
otherwise) liabilities of such Guarantor that are relevant under such laws, and
after giving effect to any collections from, rights to receive contribution from
or payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under this Article 10, result in the
obligations of such Guarantor in respect of such maximum amount not constituting
a fraudulent conveyance. Each beneficiary under the Subsidiary Guarantees, by
accepting the benefits hereof, confirms its intention that, in the event of a
bankruptcy, reorganization or other similar proceeding of the Company or any
Guarantor in which concurrent claims are made upon such Guarantor hereunder, to
the extent such claims will not be fully satisfied, each such claimant with a
valid claim against the Company shall be entitled to a ratable share of all
payments by such Guarantor in respect of such concurrent claims.
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ARTICLE 11
SUBORDINATION
SECTION 11.01. AGREEMENT TO SUBORDINATE.
The Company, for itself and its successors, and each Holder, by its
acceptance of the Notes, agrees that the payment of all Obligations with respect
to the Notes and this Indenture, including principal, premium, if any, and
interest (including post-petition interest, as provided below) on, and
Liquidated Damages, if any, with respect to, the Notes and any claim for
rescission or damages in respect thereof under any applicable law (the
"Subordinated Obligations") by the Company is subordinated, to the extent and in
the manner provided in this Article 11, to the prior payment of Senior Debt.
This Article 11 will constitute a continuing offer to all persons who,
in reliance upon its provisions, become holders of, or continue to hold, Senior
Debt, and such provisions are made for the benefit of the holders of Senior
Debt, and such holders are made obligees under this Article 11 and they and/or
each of them may enforce its provisions.
SECTION 11.02. NO PAYMENT ON NOTES UNDER CERTAIN CIRCUMSTANCES.
(a) No payment will be made on account of the Subordinated
Obligations, or to acquire any of the Notes for cash, property or securities or
on account of the redemption provisions of the Notes upon the maturity of any
(i) Designated Senior Debt or (ii) any Senior Debt permitted by clause (xiv) of
the second paragraph of Section 4.09 of this Indenture and any other outstanding
Senior Debt issued in a single transaction or a series of related transactions
having an aggregate principal amount outstanding of $5.0 million or more
("Significant Senior Debt"), by lapse of time, acceleration or otherwise, unless
and until all such Designated Senior Debt or Significant Senior Debt, as the
case may be (including interest accruing subsequent to certain bankruptcy events
and certain winding up events at the rate provided for in documents governing
such Senior Debt, whether or not such interest is an allowed claim enforceable
against the debtor in a bankruptcy case under Title 11 of the United States
Code), shall first be paid in full in cash or U.S. dollar denominated Cash
Equivalents.
(b) The Company may not make any payment or distribution upon or in
respect of the Subordinated Obligations, including, without limitation, by way
of set-off or otherwise, or redeem (or make a deposit in redemption of), defease
or acquire any of the Notes, for cash, property or securities if (i) a default
in the payment of any Obligation of the Company with respect to (a) any
Designated Senior Debt or (b) any Significant Senior Debt, occurs and is
continuing or (ii) any other default (or any event that, after notice or passage
of time would become an event of default) occurs and is continuing with respect
to any Designated Senior Debt and, in the case of clause (ii), the Trustee
receives a Payment Blockage Notice from the holders (or the agent or
Representative of such holders) of any Designated Senior Debt. Payment on the
Notes may and shall be resumed (i) in the case of a payment default, upon the
date on which such default is cured or waived and (ii) in case of a nonpayment
default, the earlier of the date on which such nonpayment default is cured or
waived or 179 days after the date on which the applicable Payment Blockage
Notice is received, unless the maturity of any such Designated Senior Debt or
Significant Senior Debt has been accelerated. No new period of payment blockage
pursuant to a Payment Blockage Notice may be commenced unless and until (i) 360
days have elapsed since the effectiveness of the immediately prior Payment
Blockage Notice and (ii) all scheduled payments of
67
principal, premium, if any, and interest on the Notes that have come due have
been paid in full in cash. No nonpayment default that existed or was continuing
on the date of delivery of any Payment Blockage Notice to the Trustee shall be,
or be made, the basis for a subsequent Payment Blockage Notice.
(c) If any payment or distribution of assets of the Company is
received by any Holder in respect of the Subordinated Obligations at a time when
that payment or distribution should not have been made because of paragraph (a)
or (b), such payment or distribution will be received and held in trust for and
will be paid over forthwith to the holders of Senior Debt which is due and
payable and remains unpaid (pro rata as to each of such holders on the basis of
the respective amounts of Senior Debt which is due and payable held by them)
until all such Senior Debt has been paid in full in cash or U.S. dollar
denominated Cash Equivalents, after giving effect to any concurrent payment or
distribution to the holders of such Senior Debt (except that Holders may receive
payments made from the trust described in Section 8.04 hereof).
SECTION 11.03. DISSOLUTION, LIQUIDATION OR REORGANIZATION.
Upon any distribution of assets of the Company upon any dissolution,
winding up, liquidation or reorganization of the Company (whether in bankruptcy,
insolvency, receivership or similar proceeding related to the Company or its
property or upon an assignment for the benefit of creditors or otherwise):
(a) the holders of all Senior Debt will first be entitled to receive
payment in full in cash or U.S. dollar denominated Cash Equivalents of the
principal of and interest due on Senior Debt and other amounts due in
connection with Senior Debt (including interest accruing subsequent to
certain bankruptcy events and certain winding up events described in
clauses (6) and (7) of Section 6.01 hereof at the rate provided for in the
documents governing such Senior Debt, whether or not such interest is an
allowed claim enforceable against the debtor in a bankruptcy case under
Title 11 of the United States Code) before the Holders are entitled to
receive any payment on account of the principal of, premium, if any, or
interest or Liquidated Damages, if any, on the Notes;
(b) any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, to which the Holders
or the Trustee would be entitled except for the provisions of this Article
11 will be paid by the liquidating trustee or agent or other person making
such a payment or distribution directly to the holders of Senior Debt or
their Representatives to the extent necessary to make payment in full in
cash or U.S. dollar denominated Cash Equivalents of all Senior Debt
remaining unpaid, after giving effect to any concurrent payment or
distribution to the holders of such Senior Debt; and
(c) if, notwithstanding the foregoing, any payment or distribution of
assets of the Company of any kind or character, whether in cash, property
or securities, is received by the Trustee or the Holders on account of the
Subordinated Obligations before all Senior Debt is paid in full in cash or
U.S. dollar denominated Cash Equivalents, such payment or distribution will
be received and held in trust for and will be paid over forthwith to the
holders of the Senior Debt remaining unpaid or their Representatives for
application to the payment of such Senior Debt until all such Senior Debt
has been paid in full in cash or U.S. dollar denominated Cash Equivalents,
after giving effect to any concurrent payment or distribution to the
holders of such Senior Debt (except that Holders may receive payments made
from the trust described in Section 8.04 hereof).
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The Company will give prompt written notice to the Holders of any
dissolution, winding up, liquidation or reorganization of it or any
assignment for the benefit of its creditors and of any event of default in
respect of Senior Debt.
For purposes of this Article 11, the words "cash, property or
securities" shall not be deemed to include (i) shares of Capital Stock of the
Company as reorganized or readjusted (excluding Capital Stock redeemable at the
option of the holder thereof prior to the final maturity date or any mandatory
pre-payment date with respect to any Designated Senior Debt), (ii) Capital Stock
convertible into or exchangeable for Indebtedness which is subordinated, to at
least the same extent as the Notes, to the payment of all Senior Debt then
outstanding, (iii) securities of the Company or any other corporation provided
for by a plan of reorganization or readjustment which are subordinated, to at
least the same extent as the Notes, to the payment of all Senior Debt then
outstanding or (iv) any payment or distribution of securities of the Company or
any other corporation authorized by an order or decree giving effect, and
stating in such order or decree that effect has been given, to subordination of
the Notes to Senior Debt and made by a court of competent jurisdiction in a
reorganization proceeding under any applicable bankruptcy, insolvency or similar
law. For purposes of this Article 11, "payment on the account of the
Subordinated Obligations" shall not include the issuance of the Notes or any
sale or transfer of the Notes.
SECTION 11.04. SUBROGATION.
Following the payment in full of all Senior Debt, the Holders will be
subrogated to the rights of the holders of Senior Debt to receive payments or
distributions of assets of the Company applicable to the Senior Debt until all
amounts owing on the Notes have been paid in full, and for the purpose of such
subrogation no such payments or distributions to the holders of Senior Debt by
or on behalf of the Company or by or on behalf of the Holders by virtue of this
Article 11 which otherwise would have been made to the Holders will, as between
the Company and Holders, be deemed to be payment by the Company to or on account
of the Senior Debt, it being understood that the provisions of this Article 11
are and are intended solely for the purpose of defining the relative rights of
the Holders, on the one hand, and the holders of Senior Debt, on the other hand.
SECTION 11.05. OBLIGATIONS UNCONDITIONAL.
Nothing contained in this Article 11 or elsewhere in this Indenture or
the Notes is intended to or will impair, as between the Company and the Holders,
the obligations of the Company, which are absolute and unconditional, to pay to
the Holders the Subordinated Obligations as and when they become due and payable
in accordance with their terms, or is intended to or will affect the relative
rights of the Holders and creditors of the Company other than the holders of the
Senior Debt, nor will anything herein or therein prevent any Holder from
exercising all remedies otherwise permitted by applicable law upon default the
Notes, subject to the rights, if any, under this Article 11 of the holders of
Senior Debt in respect of cash, property or securities of the Company received
upon the exercise of any such remedy.
SECTION 11.06. RELATIVE RIGHTS.
No right of any present or future holders of any Senior Debt to
enforce subordination as provided in this Article 11 will at any time in any way
be prejudiced or impaired by any act or failure to act on the part of the
Company or by any act or failure to act by any such holders, or by any
noncompliance by the Company with the terms of the Notes, regardless of any
knowledge thereof which
69
any such holders may have or otherwise be charged with. The holders of Senior
Debt may extend, renew, modify or amend the terms of the Senior Debt or any
security therefor and release, sell or exchange such security and otherwise deal
freely with the Company, all without affecting the liabilities and obligations
of the parties to the document or the Holders. No amendment to these provisions
will be effective against the holders of the Senior Debt who have not consented
thereto in writing.
SECTION 11.07. EVENT OF DEFAULT PRESERVED.
The failure to make a payment on account of the Subordinated
Obligations by reason of any provision of this Article 11 will not be construed
as preventing the occurrence of an Event of Default.
SECTION 11.08. TRUSTEE DUTIES.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically set
forth in this Article 11, and no implied covenants or obligations with respect
to the holders of Senior Debt shall be read into this Indenture against the
Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt, and shall not be liable to any such holders if the
Trustee shall pay over or distribute to or on behalf of Holders or the Company
or any other Person money or assets to which any holders of Senior Debt shall be
entitled by virtue of this Article 11, except if such payment is made as a
result of the willful misconduct or gross negligence of the Trustee.
SECTION 11.09. NOTICE BY COMPANY.
The Company shall promptly notify the Trustee and the Paying Agent of
any facts known to the Company that would cause a payment of any Obligations
with respect to the Notes to violate this Article 11, but failure to give such
notice shall not affect the subordination of the Notes to the Senior Debt as
provided in this Article 11.
SECTION 11.10. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY.
No right of any holder of Senior Debt to enforce the subordination of
the Indebtedness evidenced by the Notes shall be impaired by any act or failure
to act by the Company or any Holder or by the failure of the Company or any
Holder to comply with this Indenture.
SECTION 11.11. RELIANCE UPON ORDER.
Upon any payment or distribution of assets of the Company referred to
in this Article 11, the Trustee and the Holders shall be entitled to rely upon
any order or decree made by any court of competent jurisdiction or upon any
certificate of the liquidating trustee or agent or other Person making any
distribution to the Trustee or to the Holders for the purpose of ascertaining
the Persons entitled to participate in such distribution, the holders of the
Senior Debt and other Indebtedness of the Company, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article 11; provided that the foregoing shall only
apply if such court has been apprised of the provisions of this Article 11.
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SECTION 11.12. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 11 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least five Business Days prior to the date of such
payment written notice of facts that would cause the payment of any Obligations
with respect to the Notes to violate this Article 11. Nothing in this Article 11
shall impair the claims of, or payments to, the Trustee under or pursuant to
Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold Senior
Debt with the same rights it would have if it were not Trustee. Any Agent may do
the same with like rights.
SECTION 11.13. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of a Note by the Holder's acceptance thereof authorizes
and directs the Trustee on the Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 11, and appoints the Trustee to act as the Holder's attorney-in-fact for
any and all such purposes. If the Trustee does not file a proper proof of claim
or proof of debt in the form required in any proceeding referred to in Section
6.09 hereof at least 30 days before the expiration of the time to file such
claim, the Bank Agent is hereby authorized to file an appropriate claim for and
on behalf of the Holders of the Notes.
ARTICLE 12
MISCELLANEOUS
SECTION 12.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA ss.318(c), the imposed duties shall control.
SECTION 12.02. NOTICES.
Any notice or communication by the Company, a Guarantor or the Trustee
to the others is duly given if in writing and delivered in Person or mailed by
first class mail (registered or certified, return receipt requested), telex,
telecopier or overnight air courier guarantying next day delivery, to the
others' address:
If to the Company:
Rayovac Corporation
601 Rayovac Drive
Madison, WI 53711-2497
Attention: David A. Jones
Telecopier No.: (608) 275-3340
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With a copy to:
Thomas H. Lee Company
75 State Street, Suite 2600
Boston, MA 02119
Attention: Scott A. Schoen
Telecopier No.: (617) 227-3514
If to a Guarantor:
c/o ROV Holding, Inc.
Delaware Corporate Management, Inc.
1105 North Market Street, Suite 1300
Wilmington, DE 19899
If to the Trustee:
Marine Midland Bank
140 Broadway, 12th Floor
New York, NY 10005
Telecopier No.: (212) 658-6425
Attention: Corporate Trust Department
The Company, the Guarantor or the Trustee, by notice to the others may
designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guarantying next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guarantying next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA ss. 313(c), to the extent required by the TIA. Failure
to mail a notice or communication to a Holder or any defect in it shall not
affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
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SECTION 12.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.
Holders may communicate pursuant to TIA ss. 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company, any
Guarantor, the Trustee, the Registrar and anyone else shall have the protection
of TIA ss. 312(c).
SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company and/or any Guarantor to
the Trustee to take any action under this Indenture, the Company and/or such
Guarantor, as the case may be, shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 12.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 12.05 hereof) stating that, in the opinion of such counsel, all
such conditions precedent and covenants have been satisfied.
SECTION 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA ss. 314(a)(4)) shall comply with the provisions of TIA
ss. 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion has
read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been satisfied; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
SECTION 12.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
73
SECTION 12.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS.
No past, present or future director, officer, employee, incorporator
or stockholder of the Company, as such, shall have any liability for any
obligations of the Company under the Notes or this Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Notes.
SECTION 12.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES.
SECTION 12.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other indenture, loan
or debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture or the Subsidiary Guarantees.
SECTION 12.10. SUCCESSORS.
All agreements of the Company in this Indenture and the Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors.
SECTION 12.11. SEVERABILITY.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 12.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
74
SECTION 12.14. FURTHER INSTRUMENTS AND ACTS.
Upon request of the Trustee, the Company will execute and deliver such
further instruments and do such further acts as may be reasonably necessary or
proper to carry out more effectively the purposes of this Indenture.
IN WITNESS WHEREOF, each of RAYOVAC CORPORATION and ROV HOLDING, INC.,
has caused this Indenture to be signed in its corporate name and acknowledged by
one of its duly authorized officers; and MARINE MIDLAND BANK has caused this
Indenture to be signed and acknowledged by one of its duly authorized
signatories, and its seal to be affixed hereunto or impressed hereon, duly
attested, as of the day and year first above written.
[Signatures on following page]
75
SIGNATURES
Dated as of October 22, 1996 RAYOVAC CORPORATION
By: /s/ James A. Broderick
-------------------------
Name: James A. Broderick
Title: Vice President
Attest:
/s/ Lorrie Rimorsky
- - -------------------------
Dated as of October 22, 1996 ROV HOLDING, INC.
By: /s/ Roger F. Warren
-------------------------
Name: Roger F. Warren
Title: President
Attest:
/s/ Lorrie Rimorsky
- - -------------------------
Dated as of October 22, 1996 MARINE MIDLAND BANK
(SEAL) By: /s/ Frank J. Godino
-------------------------
Name: Frank J. Godino
Title: Assistant Vice President
Attest:
/s/ Eileen M. Hughes
- - -------------------------
S-1
===============================================================================
EXHIBIT A
(Face of Note)
10 1/4% Senior Subordinated Notes due 2006
No. $__________
RAYOVAC CORPORATION
promises to pay to
or registered assigns,
the principal sum of
Dollars on November 1, 2006.
Interest Payment Dates: May 1, and November 1
Record Dates: April 15, and October 15
Dated: _______________ __, _____
RAYOVAC CORPORATION
By:______________________________
Name:
Title:
By:______________________________
Name:
Title:
(SEAL)
This is one of the Global
Notes referred to in the
within-mentioned Indenture:
Trustee's Certificate of Authentication
MARINE MIDLAND BANK,
as Trustee, certifies that this is one of the
Notes referred to in the Indenture.
By:__________________________________
===============================================================================
A-1
(Back of Note)
10 1/4% Senior Subordinated Notes due 2006
[Unless and until it is exchanged in whole or in part for Notes in
definitive form, this Note may not be transferred except as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary. Unless this certificate is presented by an authorized representative
of The Depository Trust Company (55 Water Street, New York, New York) ("DTC"),
to the issuer or its agent for registration of transfer, exchange or payment,
and any certificate issued is registered in the name of Cede & Co. or such other
name as may be requested by an authorized representative of DTC (and any payment
is made to Cede & Co. or such other entity as may be requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.](1)
THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED
IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE
NOTE EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE NOTE EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER
MAY BE RELYING ON THE EXEMPTION PROVIDED BY RULE 144A UNDER THE SECURITIES
ACT. THE HOLDER OF THE NOTE EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE
COMPANY THAT (A) SUCH NOTE MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED,
ONLY (1) (a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN OF RULE 144A UNDER THE SECURITIES ACT)
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT,
(c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE
WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT (AND BASED UPON AN OPINION OF COUNSEL), (2) TO THE COMPANY OR (3)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND
EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THE NOTE
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (1) ABOVE.
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Rayovac Corporation, a Wisconsin corporation (the
"Company"), promises to pay interest on the principal amount of this Note at 10
1/4% per annum from October 22, 1996 until maturity and shall pay the Liquidated
Damages payable pursuant to Section 5 of the Registration Rights Agreement
- - --------
(1) This Paragraph should be included only if the Note is issued in global
form.
A-2
referred to below. The Company will pay interest and Liquidated Damages
semi-annually on May 1 and November 1 of each year, or if any such day is not a
Business Day, on the next succeeding Business Day (each an "Interest Payment
Date"). Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of
original issuance; provided that if there is no existing Default in the payment
of interest, and if this Note is authenticated between a record date referred to
on the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date; provided, further, that
the first Interest Payment Date shall be May 1, 1997. The Company shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time on
demand at a rate that is 1% per annum in excess of the rate then in effect; it
shall pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Liquidated Damages
(without regard to any applicable grace periods) from time to time on demand at
the same rate to the extent lawful. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the Notes
(except defaulted interest) and Liquidated Damages, if any, to the Persons who
are registered Holders of Notes at the close of business on the Record Date set
forth on the face hereof next preceding the Interest Payment Date, even if such
Notes are cancelled after such record date and on or before such Interest
Payment Date, except as provided in Section 2.12 of the Indenture with respect
to defaulted interest. The Notes will be payable as to principal, premium,
interest and Liquidated Damages, if any, at the office or agency of the Company
maintained for such purpose within or without the City and State of New York,
or, at the option of the Company, payment of interest and Liquidated Damages, if
any, may be made by check mailed to the Holders at their addresses set forth in
the register of Holders, and provided that payment by wire transfer of
immediately available funds will be required with respect to principal of and
interest, premium and Liquidated Damages, if any, on, all Global Notes and all
other Notes the Holders of which shall have provided wire transfer instructions
to the Paying Agent on or prior to the applicable Record Date. Such payment
shall be in such coin or currency of the United States of America as at the time
of payment is legal tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, Marine Midland Bank, the
Trustee under the Indenture, will act as Paying Agent and Registrar. The Company
may change any Paying Agent or Registrar without notice to any Holder. The
Company or any of its Subsidiaries may act in any such capacity.
4. INDENTURE. The Company issued the Notes under an Indenture dated as
of October 22, 1996 ("Indenture") between the Company, ROV Holding and the
Trustee. The terms of the Notes include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (15 U.S. Code ss.ss. 77aaa-77bbbb). The Notes are subject to all such
terms, and Holders are referred to the Indenture and such Act for a statement of
such terms. The Notes are unsecured obligations of the Company limited to $100.0
million in aggregate principal amount.
5. OPTIONAL REDEMPTION.
The Notes will not be redeemable at the Company's option prior to
November 1, 2001. Thereafter, the Notes will be subject to redemption at the
option of the Company, in whole or in part, upon not less than 30 nor more than
60 days' notice, at the redemption prices (expressed as percentages of principal
amount) set forth below plus accrued and unpaid interest and Liquidated Damages,
if any,
A-3
thereon to the applicable redemption date, if redeemed during the twelve-month
period beginning on November 1 of the years indicated below:
Year Percentage
2001 . . . . . . . . . . . . . . . . . . . . . . . 105.125%
2002 . . . . . . . . . . . . . . . . . . . . . . . 103.417
2003 . . . . . . . . . . . . . . . . . . . . . . . 101.708
2004 and thereafter. . . . . . . . . . . . . . . . 100.000%
Notwithstanding the foregoing, at any time during the first 36 months
after the date of the Indenture, the Company may redeem up to 35% of the initial
principal amount of the Notes originally issued with the net proceeds of one or
more public offerings of equity securities of the Company, at a redemption price
equal to 109.250% of the principal amount of such Notes, plus accrued and unpaid
interest and Liquidated Damages, if any, to the date of redemption; provided,
that at least 65% of the principal amount of Notes originally issued remain
outstanding immediately after the occurrence of any such redemption and that
such redemption occurs within 60 days following the closing of any such public
offering.
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall not be
required to make mandatory redemption or sinking fund payments with respect to
the Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) If there is a Change of Control, the Company shall be required to
make an offer (a "Change of Control Offer") to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of each Holder's Notes at a purchase
price equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest and Liquidated Damages, if any, to the date of purchase (the
"Change of Control Payment"). Within 10 days following any Change of Control,
the Company shall mail a notice to each Holder setting forth the procedures
governing the Change of Control Offer as required by the Indenture.
(b) If the Company or a Restricted Subsidiary consummates any Asset
Sales, within five days of each date on which the aggregate amount of Excess
Proceeds exceeds $5.0 million, the Company shall commence an offer to all
Holders of Notes (an "Asset Sale Offer") pursuant to Section 3.09 of the
Indenture to purchase the maximum principal amount of Notes that may be
purchased out of the Excess Proceeds at an offer price in cash in an amount
equal to or 101% of the principal amount thereof plus accrued and unpaid
interest and Liquidated Damages, if any, to the date fixed for the closing of
such offer, in accordance with the procedures set forth in the Indenture. To the
extent that the aggregate amount of Notes tendered pursuant to an Asset Sale
Offer is less than the Excess Proceeds, the Company (or such Subsidiary) may use
such deficiency for general corporate purposes. If the aggregate principal
amount of Notes surrendered by Holders thereof exceeds the amount of Excess
Proceeds, the Trustee shall select the Notes to be purchased on a pro rata
basis. Holders of Notes that are the subject of an offer to purchase will
receive an Asset Sale Offer from the Company prior to any related purchase date
and may elect to have such Notes purchased by completing the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Notes.
A-4
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least
30 days but not more than 60 days before the redemption date to each Holder
whose Notes are to be redeemed at its registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the redemption date interest ceases to accrue on Notes or portions thereof
called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, the Company
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.
10. SUBORDINATION. This Note is subject to the subordination
provisions set forth in Article 11 of the Indenture. Each Holder of a Note, by
accepting the same, agrees to be bound by such provisions, authorizes and
directs the Trustee, on behalf of such Holder, to take such action as may be
necessary or appropriate to effectuate such subordination and appoints the
Trustee to act as such Holder's attorney-in-fact for such purpose.
11. PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes.
12. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions,
the Indenture or the Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the then outstanding
Notes, and any existing default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes. Without the consent
of any Holder of a Note, the Indenture or the Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's obligations to Holders of the Notes
in case of a merger or consolidation, to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder, or to
comply with the requirements of the Commission in order to effect or maintain
the qualification of the Indenture under the Trust Indenture Act.
13. DEFAULTS AND REMEDIES. Events of Default include: (i) default for
30 days in the payment when due of interest or Liquidated Damages on the Notes;
(ii) default in payment when due of principal of or premium, if any, on the
Notes when the same becomes due and payable at maturity, upon redemption
(including in connection with an offer to purchase) or otherwise, (iii) failure
by the Company to comply with Articles 4 or 5 of the Indenture, provided that
such failure with respect to Sections 4.02, 4.03, 4.04, 4.05, 4.12 and 4.13 of
the Indenture remains uncured for 60 days after written notice; (iv) default
under certain other agreements relating to Indebtedness of the Company which
default results in the acceleration of such Indebtedness prior to its express
maturity; (v) certain final judgments for the payment of money that remain
undischarged for a period of 60 days; and (vi) certain events of bankruptcy or
insolvency with respect to the Company or any of its Restricted Subsidiaries. If
any Event of Default occurs and is continuing, the Trustee or the Holders of at
least 25% in principal amount of the then
A-5
outstanding Notes may declare all the Notes to be due and payable.
Notwithstanding the foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency, all outstanding Notes will become
due and payable without further action or notice. Holders may not enforce the
Indenture or the Notes except as provided in the Indenture. Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
Notes may direct the Trustee in its exercise of any trust or power. The Trustee
may withhold from Holders of the Notes notice of any continuing Default or Event
of Default (except a Default or Event of Default relating to the payment of
principal or interest) if it determines that withholding notice is in their
interest. The Holders of a majority in aggregate principal amount of the Notes
then outstanding by notice to the Trustee may on behalf of the Holders of all of
the Notes waive any existing Default or Event of Default and its consequences
under the Indenture except a continuing Default or Event of Default in the
payment of the principal of, Liquidated Damages, if any, or interest on the
Notes. The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.
14. GUARANTEES. Payment of principal of, Liquidated Damages, if any,
and interest (including interest on overdue principal, Liquidated Damages, if
any, and interest, if lawful) on the Notes is guaranteed on an unsecured, senior
subordinated basis by the Guarantors pursuant to Article 10 of the Indenture.
Each Holder of a Note, by accepting the same, agrees to be bound by such
provisions, authorizes and directs the Trustee, on behalf of such Holder, to
take such action as may be necessary or appropriate to effectuate such
subordination and appoints the Trustee to act as such Holder's attorney-in-fact
for such purpose.
15. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company, any Guarantor or their Affiliates, and may otherwise
deal with the Company or its Affiliates, as if it were not the Trustee.
16. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes or the Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
17. AUTHENTICATION. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
18. ABBREVIATIONS. Customary abbreviations may be used in the name of
a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
19. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES. In
addition to the rights provided to Holders of Notes under the Indenture, Holders
of Transferred Restricted Securities shall have all the rights set forth in the
Registration Rights Agreement dated as of October 17, 1996, between the Company
and the parties named on the signature pages thereof (the "Registration Rights
Agreement").
A-6
20. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Rayovac Corporation
601 Rayovac Drive
Madison, WI 53711-2497
Attention: David A. Jones
A-7
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
_______________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date:_________________________________
Your Signature:__________________________________
(Sign exactly as your name appears
on the face of this Note)
Signature Guarantee.
A-8
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.14 of the Indenture, check the box below:
/ / Section 4.10 / / Section 4.14
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.14 of the Indenture, state the
amount you elect to have purchased: $_____________
Date: ________________________ Your Signature:____________________________
(Sign exactly as your name appears
on the Note)
Tax Identification No.:________________
Signature Guarantee.
A-9
SCHEDULE OF EXCHANGES OF DEFINITIVE NOTE(2)
The following exchanges of a part of this Global Note for Definitive
Notes have been made:
Principal Amount of this Signature of
Amount of decrease in Amount of increase in Global Note authorized officer of
Principal Amount of Principal Amount of following such decrease Trustee or Note
Date of Exchange this Global Note this Global Note (or increase) Custodian
- - ---------------------- ----------------------- ------------------------ ------------------------ ----------------
- - ---------------
(2) This should be included only if the Note is issued in global form.
A-10
EXHIBIT A-1
FORM OF NOTATION ON NOTE
RELATING TO GUARANTEE
The Guarantor set forth below and each Subsidiary of the Company which
in accordance with Section 4.16 or 4.17 of the Indenture is required to
guarantee the obligations of the Company under the Notes upon execution of a
counterpart of the Indenture or a supplemental Indenture, has jointly and
severally unconditionally guaranteed (i) the due and punctual payment of the
principal of, interest and Liquidated Damages, if any, on the Notes, whether at
the maturity or interest payment date, by acceleration, call for redemption or
otherwise, and of interest on the overdue principal of, interest and Liquidated
Damages, if any, on the Notes and all other obligations of the Company to the
Holders or the Trustee under the Indenture or the Notes and (ii) in case of any
extension of time of payment or renewal of any Notes or any of such other
obligations, that the same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, whether at maturity,
by acceleration or otherwise.
The obligations of each Guarantor to the Holder and to the Trustee
pursuant to this Subsidiary Guarantee and the Indenture are as expressly set
forth in Article 10 of the Indenture and in such other provisions of the
Indenture as are applicable to Guarantors, and reference is hereby made to such
Indenture for the precise terms of this Subsidiary Guarantee. The terms of
Article 10 of the Indenture and such other provisions of the Indenture as are
applicable to Guarantors are incorporated herein by reference.
This is a continuing guarantee and shall remain in full force and
effect and shall be binding upon each Guarantor and its successors and assigns
until full and final payment of all of the Company's obligations under the Notes
and the Indenture and shall inure to the benefit of the successors and assigns
of the Trustee and the Holders and, in the event of any transfer or assignment
of rights by any Holder or the Trustee, the rights and privileges herein
conferred upon that party shall automatically extend to and be vested in such
transferee or assignee, all subject to the terms and conditions hereof. This is
a guarantee of payment and not a guarantee of collection.
This Guarantee shall not be valid or obligatory for any purpose until
the certificate of authentication on the Note upon which this Guarantee is noted
shall have been executed by the Trustee under the Indenture by the manual
signature of one of its authorized officers.
ROV HOLDING, INC.
By:__________________________________
Name:
Title:
A1-1
===============================================================================
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF
TRANSFER OF NOTES
Re: 10 1/4% Senior Subordinated Notes due 2006 of Rayovac Corporation.
This Certificate relates to $_____ principal amount of Notes held in *
________ book-entry or *_______ definitive form by ________________ (the
"Transferor").
The Transferor*:
/ / has requested the Trustee by written order to deliver in exchange
for its beneficial interest in the Global Note held by the Depositary a Note or
Notes in definitive, registered form of authorized denominations in an aggregate
principal amount equal to its beneficial interest in such Global Note (or the
portion thereof indicated above); or
/ / has requested the Trustee by written order to exchange or register
the transfer of a Note or Notes.
In connection with such request and in respect of each such Note, the
Transferor does hereby certify that Transferor is familiar with the Indenture
relating to the above captioned Notes and as provided in Section 2.06 of such
Indenture, the transfer of this Note does not require registration under the
Securities Act (as defined below) because:*
/ / Such Note is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 2.06(a)(ii)(A) or Section
2.06(d)(i)(A) of the Indenture).
/ / Such Note is being transferred to a "qualified institutional
buyer" (as defined in Rule 144A under the Securities Act of 1933, as amended
(the "Securities Act")) in reliance on Rule 144A (in satisfaction of Section
2.06(a)(ii)(B), Section 2.06(b)(i) or Section 2.06(d)(i) (B) of the Indenture)
or pursuant to an exemption from registration in accordance with Rule 904 under
the Securities Act (in satisfaction of Section 2.06(a)(ii)(B) or Section
2.06(d)(i)(B) of the Indenture.)
- - ---------------
*Check applicable box.
B-1
/ / Such Note is being transferred in accordance with Rule 144 under
the Securities Act, or pursuant to an effective registration statement under the
Securities Act (in satisfaction of Section 2.06(a)(ii)(B) or Section
2.06(d)(i)(B) of the Indenture).
/ / Such Note is being transferred in reliance on and in compliance
with an exemption from the registration requirements of the Securities Act,
other than Rule 144A, 144 or Rule 904 under the Securities Act. An Opinion of
Counsel to the effect that such transfer does not require registration under the
Securities Act accompanies this Certificate (in satisfaction of Section
2.06(a)(ii)(C) or Section 2.06(d)(i)(C) of the Indenture).
_____________________________________
[INSERT NAME OF TRANSFEROR]
By:__________________________________
Date:______________________________
B-2
EXHIBIT 4.2
- - --------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
Dated as of October 17, 1996
by and among
Rayovac Corporation
and
Donaldson, Lufkin & Jenrette
Securities Corporation
BA Securities, Inc.
===============================================================================
This Registration Rights Agreement (this "Agreement") is made and
entered into as of October 17, 1996, by and among Rayovac Corporation, a
Wisconsin corporation (the "Company"), and Donaldson, Lufkin & Jenrette
Securities Corporation and BA Securities, Inc. as the initial purchasers named
in Schedule I to the Purchase Agreement dated as of October 17, 1996 (the
"Purchase Agreement") (each an "Initial Purchaser" and, collectively, the
"Initial Purchasers"), each of whom has agreed to purchase the Company's 10 1/4%
Senior Subordinated Notes due 2006 (the "Notes") pursuant to the Purchase
Agreement.
This Agreement is made pursuant to the Purchase Agreement. In order to
induce the Initial Purchasers to purchase the Notes, the Company has agreed to
provide the registration rights set forth in this Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
Act: The Securities Act of 1933, as amended.
Business Day: Any day except a Saturday, Sunday or other day in the City
of New York, or in the city of the corporate trust office of the Trustee, on
which banks are authorized to close.
Broker-Dealer: Any broker or dealer registered under the Exchange Act.
Broker-Dealer Transfer Restricted Securities: New Notes that are
acquired by a Broker-Dealer in the Exchange Offer in exchange for Notes that
such Broker-Dealer acquired for its own account as a result of market-making
activities or other trading activities (other than Notes acquired directly from
the Company or any of its affiliates).
Certificated Securities: As defined in the Indenture.
Closing Date: The date hereof.
Commission: The Securities and Exchange Commission.
Consummate: An Exchange Offer shall be deemed "Consummated" for purposes
of this Agreement upon the occurrence of (a) the filing and effectiveness under
the Act of the Exchange Offer Registration Statement relating to the New Notes
to be issued in the Exchange Offer, (b) the maintenance of such Registration
Statement continuously effective and the keeping of the Exchange Offer open for
a period not less than the minimum period required pursuant to Section 3(b)
hereof and (c) the delivery by the Company to the Registrar under the Indenture
of New Notes in the same aggregate principal amount as the aggregate principal
amount of Notes tendered by Holders thereof pursuant to the Exchange Offer.
Damages Payment Date: With respect to the Notes, each Interest Payment
Date.
1
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exchange Offer: The registration by the Company under the Act of the New
Notes pursuant to the Exchange Offer Registration Statement pursuant to which
the Company shall offer the Holders of all outstanding Transfer Restricted
Securities the opportunity to exchange all such outstanding Transfer Restricted
Securities for New Notes in an aggregate principal amount equal to the aggregate
principal amount of the Transfer Restricted Securities tendered in such exchange
offer by such Holders.
Exchange Offer Registration Statement: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
Exempt Resales: The transactions in which the Initial Purchasers propose
to sell the Notes to certain "qualified institutional buyers," as such term is
defined in Rule 144A under the Act, and to certain "accredited investors," as
such term is defined in Rule 501(a)(1), (2), (3), and (7) of Regulation D under
the Act.
Global Note: As defined in the Indenture.
Holders: As defined in Section 2 hereof.
Indemnified Holder: As defined in Section 8(a) hereof.
Indenture: The Indenture, dated the Closing Date, between the Company
and Marine Midland Bank, as trustee (the "Trustee"), pursuant to which the
Senior Notes are to be issued, as such Indenture is amended or supplemented from
time to time in accordance with the terms thereof.
Interest Payment Date: As defined in the Senior Notes.
NASD: National Association of Securities Dealers, Inc.
New Notes: The Company's 10 1/4% Senior Subordinated Notes due 2006 to
be issued pursuant to the Indenture (i) in the Exchange Offer or (ii) upon the
request of any Holder of Notes covered by a Shelf Registration Statement, in
exchange for such Notes.
Person: An individual, partnership, corporation, trust, unincorporated
organization, or a government or agency or political subdivision thereof.
Prospectus: The prospectus included in a Registration Statement at the
time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
Record Holder: With respect to any Damages Payment Date, each Person who
is a Holder of Senior Notes on the record date with respect to the Interest
Payment Date on which such Damages Payment Date shall occur.
Registration Default: As defined in Section 5 hereof.
2
Registration Statement: Any registration statement of the Company
relating to (a) an offering of New Notes pursuant to an Exchange Offer or (b)
the registration for resale of Transfer Restricted Securities pursuant to the
Shelf Registration Statement, in each case, (i) which is filed pursuant to the
provisions of this Agreement and (ii) including the Prospectus included therein,
all amendments and supplements thereto (including post-effective amendments) and
all exhibits and material incorporated by reference therein.
Restricted Broker-Dealer: Any Broker-Dealer which holds Broker-Dealer
Transfer Restricted Securities.
Senior Notes: The Notes and the New Notes.
Shelf Registration Statement: As defined in Section 4 hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as
in effect on the date of the Indenture.
Transfer Restricted Securities: Each Note, until (i) the date on which
such Note has been exchanged by a person other than a Broker-Dealer for a New
Note in the Exchange Offer, (ii) following the exchange by a Broker-Dealer in
the Exchange Offer of a Note for a New Note, the date on which such New Note is
sold to a purchaser who receives from such Broker-Dealer on or prior to the date
of such sale a copy of the prospectus contained in the Exchange Offer
Registration Statement, (ii) the date on which such Note has been effectively
registered under the Securities Act and disposed of in accordance with the Shelf
Registration Statement or (iv) the date on which such Note is distributed to the
public pursuant to Rule 144 under the Act.
Underwritten Registration or Underwritten Offering: A registration in
which securities of the Company are sold to an underwriter for reoffering to the
public.
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities
(each, a "Holder") whenever such Person owns Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by applicable
federal law or Commission policy, the Company shall (i) cause to be filed with
the Commission as soon as practicable after the Closing Date, but in no event
later than the later of (A) 60 days after the Closing Date or (B) the date the
procedures set forth in Section 6(a)(i) below have been complied with, the
Exchange Offer Registration Statement, (ii) use its reasonable best efforts to
cause such Exchange Offer Registration Statement to become effective at the
earliest possible time, but in no event later than 135 days after the Closing
Date, (iii) in connection with the foregoing, (A) file all pre-effective
amendments to such Exchange Offer Registration Statement as may be necessary in
order to cause such Exchange Offer Registration Statement to become effective,
(B) file, if applicable, a post-effective amendment to such Exchange Offer
Registration Statement pursuant to Rule 430A under the Act and (C) cause all
necessary filings, if any, in connection with the registration and qualification
3
of the New Notes to be made under the Blue Sky laws of such jurisdictions as are
necessary to permit Consummation of the Exchange Offer, provided that in no
event shall the Company be obligated to qualify to do business in any
jurisdiction where it is not now so qualified, or take any action which would
subject it to general service of process in any jurisdiction where it is not now
so subject, and (iv) upon the effectiveness of such Exchange Offer Registration
Statement, use its reasonable best efforts to commence and Consummate the
Exchange Offer. The Exchange Offer shall be on the appropriate form permitting
registration of the New Notes to be offered in exchange for the Notes that are
Transfer Restricted Securities and to permit sales of Broker-Dealer Transfer
Restricted Securities by Restricted Broker-Dealers as contemplated by Section
3(c) below.
(b) The Company shall use its best efforts to cause the Exchange Offer
Registration Statement to be effective continuously, and shall keep the Exchange
Offer open for a period of not less than the minimum period required under
applicable federal and state securities laws to Consummate the Exchange Offer;
provided, however, that in no event shall such period be less than 20 Business
Days. The Company shall cause the Exchange Offer to comply with all applicable
federal and state securities laws. No securities other than the Senior Notes
shall be included in the Exchange Offer Registration Statement. The Company
shall use its reasonable best efforts to cause the Exchange Offer to be
Consummated on the earliest practicable date after the Exchange Offer
Registration Statement has become effective, but in no event later than 30
Business Days thereafter.
(c) The Company shall include a "Plan of Distribution" section in the
Prospectus contained in the Exchange Offer Registration Statement and indicate
therein that any Restricted Broker-Dealer who holds Notes that are Transfer
Restricted Securities and that were acquired for the account of such
Broker-Dealer as a result of market-making activities or other trading
activities, may exchange such Notes (other than Transfer Restricted Securities
acquired directly from the Company or any affiliate of the Company) pursuant to
the Exchange Offer; however, such Broker-Dealer may be deemed to be an
"underwriter" within the meaning of the Act and must, therefore, deliver a
prospectus meeting the requirements of the Act in connection with its initial
sale of each Senior Note received by such Broker-Dealer in the Exchange Offer,
which prospectus delivery requirement may be satisfied by the delivery by such
Broker-Dealer of the Prospectus contained in the Exchange Offer Registration
Statement. Such "Plan of Distribution" section shall also contain all other
information with respect to such sales of Broker-Dealer Transfer Restricted
Securities by Restricted Broker-Dealers that the Commission may require in order
to permit such sales pursuant thereto, but such "Plan of Distribution" shall not
name any such Broker-Dealer or disclose the amount of Senior Notes held by any
such Broker-Dealer, except to the extent required by the Commission as a result
of a change in policy after the date of this Agreement.
The Company shall use its best efforts to keep the Exchange Offer
Registration Statement continuously effective, supplemented and amended as
required by the provisions of Section 6(c) below to the extent necessary to
ensure that it is available for sales of Broker-Dealer Transfer Restricted
Securities by Restricted Broker-Dealers, and to ensure that such Registration
Statement conforms with the requirements of this Agreement, the Act and the
policies, rules and regulations of the Commission as announced from time to
time, for a period expiring on the earlier of (i) the date that all Holders of
Broker-Dealer Transfer Restricted Securities have sold such securities and (ii)
180 days from the date on which the Exchange Offer Registration Statement is
declared effective; provided, however, that any Restricted Broker-Dealer must
notify the Company (by means of delivering a letter of transmittal in the
Exchange Offer or otherwise) that it is a Restricted Broker-Dealer.
4
The Company shall provide sufficient copies of the latest version of
such Prospectus to such Restricted Broker-Dealers promptly upon request, and in
no event later than one day after such request, at any time during such period
in order to facilitate such sales.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Company is not required to file an
Exchange Offer Registration Statement with respect to the New Notes because the
Exchange Offer is not permitted by applicable law (after the procedures set
forth in Section 6(a)(i) below have been complied with) or (ii) if any Holder of
$1,000,000 aggregate principal amount or more of Transfer Restricted Securities
shall notify the Company within 20 Business Days following the Consummation of
the Exchange Offer that (A) such Holder was prohibited by law or Commission
policy from participating in the Exchange Offer or (B) such Holder may not
resell the New Notes acquired by it in the Exchange Offer to the public without
delivering a prospectus and the Prospectus contained in the Exchange Offer
Registration Statement is not appropriate or available for such resales by such
Holder or (C) such Holder is a Broker-Dealer and holds Notes acquired directly
from the Company or one of its affiliates, then the Company shall (x) cause to
be filed on or prior to 60 days after the date on which the Company determines
that it is not required to file the Exchange Offer Registration Statement
pursuant to clause (i) above (but in no event prior to the Company's completion
of the procedures described in the parenthetical of clause (i)) or 60 days after
the date on which the Company receives the notice specified in clause (ii) above
a shelf registration statement pursuant to Rule 415 under the Act (which may be
an amendment to the Exchange Offer Registration Statement (in either event, the
"Shelf Registration Statement")), relating to all Transfer Restricted Securities
the Holders of which shall have provided the information required pursuant to
Section 4(b) hereof, and shall (y) use its reasonable best efforts to cause such
Shelf Registration Statement to become effective on or prior to 165 days after
the Closing Date. If, after the Company has filed an Exchange Offer Registration
Statement which satisfies the requirements of Section 3(a) above, the Company is
required to file and make effective a Shelf Registration Statement solely
because the Exchange Offer shall not be permitted under applicable federal law,
then the filing of the Exchange Offer Registration Statement shall be deemed to
satisfy the requirements of clause (x) above. Such an event shall have no effect
on the requirements of clause (y) above. The Company shall use its reasonable
best efforts to keep the Shelf Registration Statement discussed in this Section
4(a) continuously effective, supplemented and amended as required by and subject
to the provisions of Sections 6(b) and (c) hereof to the extent necessary to
ensure that it is available for sales of Transfer Restricted Securities by the
Holders thereof entitled to the benefit of this Section 4(a), and to ensure that
it conforms with the requirements of this Agreement, the Act and the policies,
rules and regulations of the Commission as announced from time to time, for a
period expiring on the earlier of (i) the date that all Holders of Transfer
Restricted Securities have sold such securities pursuant to the Shelf
Registration Statement and (ii) three years following the Closing Date.
(b) Provision by Holders of Certain Information in Connection with the
Shelf Registration Statement. No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until (i) such Holder furnishes
to the Company in writing, within the earlier of (x) 20 days after receipt of a
request therefor or (y) the time such Holder delivers the request described in
clause (ii) immediately below, such information specified in Item 507 of
Regulation S-K under the Act, or otherwise required by the Act or the Commission
for use in connection with any Shelf Registration Statement or Prospectus or
preliminary Prospectus included therein and (ii) requests the Company in writing
to
5
include such Holders' Transfer Restricted Securities in such Shelf Registration
Statement no later than 10 Business Days prior to the date the Company is
required to file such Shelf Registration Statement under Section 4(a) hereof. No
Holder of Transfer Restricted Securities shall be entitled to Liquidated Damages
pursuant to Section 5 hereof unless and until such Holder has provided all such
information required to be provided by such holder for inclusion therein. Each
Holder as to which any Shelf Registration Statement is being effected agrees to
furnish promptly to the Company in writing all information required to be
disclosed in order to make the information previously furnished to the Company
by such Holder not materially misleading.
SECTION 5. LIQUIDATED DAMAGES
If (i) any Registration Statement required by this Agreement is not
filed with the Commission on or prior to the date specified for such filing in
this Agreement, (ii) any such Registration Statement has not been declared
effective by the Commission on or prior to the date specified for such
effectiveness in this Agreement, (iii) the Exchange Offer has not been
Consummated within 30 Business Days after the Exchange Offer Registration
Statement is first declared effective by the Commission or (iv) any Registration
Statement required by this Agreement is filed and declared effective but shall
thereafter cease to be effective or fail to be usable in connection with resales
of Transfer Restricted Securities during the periods specified in this
Agreement, without being succeeded immediately by a post-effective amendment to
such Registration Statement that cures such failure and that is itself declared
effective within 5 Business Days (each such event referred to in clauses (i)
through (iv), a "Registration Default"), then the Company hereby agrees to pay
liquidated damages to each Holder of Transfer Restricted Securities with respect
to the first 90-day period immediately following the occurrence of such
Registration Default, in an amount equal to $.05 per week per $1,000 principal
amount of Transfer Restricted Securities held by such Holder for each week or
pro rata for a portion of each week that the Registration Default continues. The
amount of the liquidated damages shall increase by an additional $.05 per week
per $1,000 in principal amount of Transfer Restricted Securities with respect to
each subsequent 90-day period until all Registration Defaults have been cured,
up to a maximum amount of liquidated damages of $.50 per week per $1,000
principal amount of Transfer Restricted Securities. Notwithstanding anything to
the contrary set forth herein, (1) upon filing of the Exchange Offer
Registration Statement (and/or, if applicable, the Shelf Registration
Statement), in the case of (i) above, (2) upon the effectiveness of the Exchange
Offer Registration Statement (and/or, if applicable, the Shelf Registration
Statement), in the case of (ii) above, (3) upon Consummation of the Exchange
Offer, in the case of (iii) above, or (4) upon the filing of a post-effective
amendment to the Registration Statement or an additional Registration Statement
that causes the Exchange Offer Registration Statement (and/or, if applicable,
the Shelf Registration Statement) to again be declared effective or made usable
in the case of (iv) above, the liquidated damages payable with respect to the
Transfer Restricted Securities as a result of such clause (i), (ii), (iii) or
(iv), as applicable, shall cease.
All accrued liquidated damages shall be paid by the Company on each
Damages Payment Date to the Global Note Holder by wire transfer of immediately
available funds or by federal funds check and to Holders of Certificated
Securities by wire transfer to the accounts specified by them or by mailing
checks to their registered addresses if no such accounts have been specified.
Following the cure of all Registration Defaults, the accrual of liquidated
damages shall cease. All obligations of the Company set forth in the preceding
paragraph that are outstanding with respect to any Transfer Restricted Security
at the time such security ceases to be a Transfer Restricted Security shall
survive until such time as all such obligations with respect to such security
shall have been satisfied in full.
6
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the
Exchange Offer, the Company shall comply with all applicable provisions of
Section 6(c) below, shall use its reasonable best efforts to effect such
exchange and to permit the sale of Broker-Dealer Transfer Restricted Securities
being sold in accordance with the intended method or methods of distribution
thereof, and shall comply with all of the following provisions:
(i) If, following the date hereof there has been published a change in
Commission policy with respect to exchange offers such as the Exchange
Offer, such that in the reasonable opinion of counsel to the Company there
is a substantial question as to whether the Exchange Offer is permitted by
applicable federal law, the Company hereby agrees to seek a no-action
letter or other favorable decision from the Commission allowing the Company
to Consummate an Exchange Offer for such Notes. The Company hereby agrees
to pursue the issuance of such a decision to the Commission staff level. In
connection with the foregoing, the Company hereby agrees to take all such
other actions as are requested by the Commission or otherwise required in
connection with the issuance of such decision, including without limitation
(A) participating in telephonic conferences with the Commission, (B)
delivering to the Commission staff an analysis prepared by counsel to the
Company setting forth the legal bases, if any, upon which such counsel has
concluded that such an Exchange Offer should be permitted and (C)
diligently pursuing a resolution (which need not be favorable) by the
Commission staff of such submission. Notwithstanding anything to the
contrary in this Agreement, if the Company determines, in good faith, that
it would be impracticable to comply with the procedures set forth in this
Section 6(a)(i), then the Company shall file a Shelf Registration Statement
pursuant to the terms of Section 4 hereof.
(ii) As a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each Holder of Transfer Restricted
Securities shall furnish, upon the request of the Company, prior to the
Consummation of the Exchange Offer, a written representation to the Company
(which may be contained in the letter of transmittal contemplated by the
Exchange Offer Registration Statement) to the effect that (A) it is not an
affiliate of the Company, (B) it is not engaged in, and does not intend to
engage in, and has no arrangement or understanding with any person to
participate in, a distribution of the New Notes to be issued in the
Exchange Offer and (C) it is acquiring the New Notes in its ordinary course
of business. Each Holder hereby acknowledges and agrees that any
Broker-Dealer and any such Holder using the Exchange Offer to participate
in a distribution of the securities to be acquired in the Exchange Offer
(1) could not under Commission policy as in effect on the date of this
Agreement rely on the position of the Commission enunciated in Morgan
Stanley and Co., Inc. (available June 5, 1991) and Exxon Capital Holdings
Corporation (available May 13, 1988), as interpreted in the Commission's
letter to Shearman & Sterling dated July 2, 1993, and similar no-action
letters (including, if applicable, any no-action letter obtained pursuant
to clause (i) above), and (2) must comply with the registration and
prospectus delivery requirements of the Act in connection with a secondary
resale transaction and that such a secondary resale transaction must be
covered by an effective registration statement containing the selling
security holder information required by Item 507 or 508, as applicable, of
Regulation S-K if the resales are of New Notes obtained by such Holder in
exchange for Notes acquired by such Holder directly from the Company or an
affiliate thereof.
7
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Company shall provide a supplemental letter to the
Commission (A) stating that the Company is registering the Exchange Offer
in reliance on the position of the Commission enunciated in Exxon Capital
Holdings Corporation (available May 13, 1988), Morgan Stanley and Co., Inc.
(available June 5, 1991) and, if applicable, any no-action letter obtained
pursuant to clause (i) above, (B) including a representation that the
Company has not entered into any arrangement or understanding with any
Person to distribute the New Notes to be received in the Exchange Offer and
that, to the best of the Company's information and belief, each Holder
participating in the Exchange Offer is acquiring the New Notes in its
ordinary course of business and has no arrangement or understanding with
any Person to participate in the distribution of the New Notes received in
the Exchange Offer and (C) any other undertaking or representation required
by the Commission as set forth in any no-action letter obtained pursuant to
clause (i) above.
(b) Shelf Registration Statement. In connection with the Shelf
Registration Statement, the Company shall comply with all the provisions of
Section 6(c) below and shall use its best efforts to effect such registration to
permit the sale of the Transfer Restricted Securities being sold in accordance
with the intended method or methods of distribution thereof (as indicated in the
information furnished to the Company pursuant to Section 4(b) hereof), and
pursuant thereto the Company will prepare and file with the Commission a
Registration Statement relating to the registration on any appropriate form
under the Act, which form shall be available for the sale of the Transfer
Restricted Securities in accordance with the intended method or methods of
distribution thereof within the time periods and otherwise in accordance with
the provisions hereof.
(c) General Provisions. In connection with any Registration Statement
and any related Prospectus required by this Agreement to permit the sale or
resale of Transfer Restricted Securities (including, without limitation, any
Exchange Offer Registration Statement and the related Prospectus, to the extent
that the same are required to be available to permit sales of Broker-Dealer
Transfer Restricted Securities by Restricted Broker-Dealers), the Company shall:
(i) use its reasonable best efforts to keep such Registration
Statement continuously effective and provide all requisite financial
statements for the period specified in Section 3 or 4 of this Agreement, as
applicable. Upon the occurrence of any event that would cause any such
Registration Statement or the Prospectus contained therein (A) to contain a
material misstatement or omission or (B) not to be effective and usable for
resale of Transfer Restricted Securities during the period required by this
Agreement, the Company shall promptly file an appropriate amendment to such
Registration Statement, (1) in the case of clause (A), correcting any such
misstatement or omission, and (2) in the case of clauses (A) and (B), use
its reasonable best efforts to cause such amendment to be declared
effective and such Registration Statement and the related Prospectus to
become usable for their intended purpose(s) as soon as practicable
thereafter.
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be necessary
to keep the Registration Statement effective for the applicable period set
forth in Section 3 or 4 hereof, or such shorter period as will terminate
when all Transfer Restricted Securities covered by such Registration
Statement have been sold; cause the Prospectus to be supplemented by any
required Prospectus supplement, and as so supplemented to be filed pursuant
to Rule 424 under the Act, and to comply fully with Rules 424, and 430A, as
applicable, under the Act in a timely manner; and comply with the
provisions of the Act with respect to the disposition of all securities
covered by such Registration
8
Statement during the applicable period in accordance with the intended
method or methods of distribution by the sellers thereof set forth in such
Registration Statement or supplement to the Prospectus;
(iii) in the case of a Shelf Registration Statement, advise the
underwriter(s), if any, and selling Holders promptly and, if requested by
such Persons, confirm such advice in writing, (A) when the Prospectus or
any Prospectus supplement or post-effective amendment has been filed, and,
with respect to any Registration Statement or any post-effective amendment
thereto, when the same has become effective, (B) of any request by the
Commission for amendments to the Registration Statement or amendments or
supplements to the Prospectus or for additional information relating
thereto, (C) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement under the Act or of the
suspension by any state securities commission of the qualification of the
Transfer Restricted Securities for offering or sale in any jurisdiction, or
the initiation of any proceeding for any of the preceding purposes, (D) of
the existence of any fact or the happening of any event that makes any
statement of a material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto or any document
incorporated by reference therein untrue, or that requires the making of
any additions to or changes in the Registration Statement in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading, or that requires the making of any additions to or
changes in the Prospectus in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. If
at any time the Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, or any state securities
commission or other regulatory authority shall issue an order suspending
the qualification or exemption from qualification of the Transfer
Restricted Securities under state securities or Blue Sky laws, the Company
shall use its reasonable best efforts to obtain the withdrawal or lifting
of such order at the earliest possible time;
(iv) furnish to each selling Holder named in any Shelf Registration
Statement or related Prospectus and each of the underwriter(s) in
connection with such sale, if any, before filing with the Commission,
copies of any Registration Statement or any Prospectus included therein or
any amendments or supplements to any such Registration Statement or
Prospectus (other than all documents incorporated by reference after the
initial filing of such Registration Statement), which documents will be
subject to the review and comment of such Holders and underwriter(s) in
connection with such sale, if any, for a period of at least five Business
Days, and the Company will not file any such Registration Statement or
Prospectus or any amendment or supplement to any such Registration
Statement or Prospectus (other than all such documents incorporated by
reference) to which the selling Holders of the Transfer Restricted
Securities covered by such Registration Statement or the underwriter(s) in
connection with such sale, if any, shall reasonably object within five
Business Days after the receipt thereof. A selling Holder or underwriter,
if any, shall be deemed to have reasonably objected to such filing if such
Registration Statement, amendment, Prospectus or supplement, as applicable,
as proposed to be filed, contains a material misstatement or omission or
fails to comply with the applicable requirements of the Act;
(v) promptly prior to the filing of any report on Form 8-K that is to
be incorporated by reference into a Shelf Registration Statement or related
Prospectus, provide copies of such document to the selling Holders and to
the underwriter(s) in connection with such sale, if any, make the Company's
representatives available for discussion of such document and other
9
customary due diligence matters, and include such information in such
document prior to the filing thereof as such selling Holders or
underwriter(s), if any, reasonably may request;
(vi) make available at reasonable times for inspection by the selling
Holders, any managing underwriter participating in any disposition pursuant
to such Shelf Registration Statement and any attorney or accountant
retained by such selling Holders or any of such underwriter(s), all
pertinent financial and other records, pertinent corporate documents and
properties of the Company and cause the Company's officers, directors and
employees to supply all information reasonably requested by any such
Holder, underwriter, attorney or accountant in connection with such
Registration Statement or any post-effective amendment thereto subsequent
to the filing thereof and prior to its effectiveness. If requested by the
Company, each such Holder, underwriter, attorney or accountant will agree
with the Company that such financial and other records, corporate documents
and other information which the Company determines, in good faith, to be
confidential and any such financial and other records, corporate documents
and other information which it notifies any such Holder, underwriter,
attorney or accountant are confidential shall not be disclosed by any such
Holder, underwriter, attorney or accountant, unless (A) the disclosure of
such financial and other records, corporate documents and other information
is necessary to avoid or correct a misstatement or omission in such
Registration Statement, (B) the release of such financial and other
records, corporate documents and other information is ordered pursuant to a
subpoena or other order from a court of competent jurisdiction or (C) the
information in such financial and other records, corporate documents and
other information has been made generally available to the public;
(vii) if requested by any selling Holders or the underwriter(s) in
connection with such sale, if any, promptly include in any Shelf
Registration Statement or related Prospectus, pursuant to a supplement or
post-effective amendment if necessary, such information as such selling
Holders and underwriter(s), if any, may reasonably request to have included
therein, including, without limitation, information relating to the "Plan
of Distribution" of the Transfer Restricted Securities, information with
respect to the principal amount of Transfer Restricted Securities being
sold to such underwriter(s), the purchase price being paid therefor and any
other terms of the offering of the Transfer Restricted Securities to be
sold in such offering; and make all required filings of such Prospectus
supplement or post-effective amendment as soon as practicable after the
Company is notified of the matters to be included in such Prospectus
supplement or post-effective amendment;
(viii) furnish to each selling Holder and each of the underwriter(s)
in connection with such sale, if any, without charge, at least one copy of
the Shelf Registration Statement, as first filed with the Commission, and
of each amendment thereto, including all documents incorporated by
reference therein and all exhibits (including exhibits incorporated therein
by reference);
(ix) deliver to each selling Holder and each of the underwriter(s), if
any, without charge, as many copies of the Prospectus (including each
preliminary prospectus) and any amendment or supplement thereto as such
Persons reasonably may request; the Company hereby consents to the use (in
accordance with law) of the Prospectus and any amendment or supplement
thereto by each of the selling Holders and each of the underwriter(s), if
any, in connection with the offering and the sale of the Transfer
Restricted Securities covered by the Prospectus or any amendment or
supplement thereto;
10
(x) enter into such agreements (including in the case of a Shelf
Registration Statement, unless not required pursuant to Section 10 hereof,
an underwriting agreement) and make such representations and warranties and
take all such other actions in connection therewith in order to expedite or
facilitate the disposition of the Transfer Restricted Securities pursuant
to any Registration Statement contemplated by this Agreement as may be
reasonably requested by any Holder of Transfer Restricted Securities or
underwriter in connection with any sale or resale pursuant to any
Registration Statement contemplated by this Agreement, and in such
connection, whether or not an underwriting agreement is entered into and
whether or not the registration is an Underwritten Registration, the
Company shall:
(A) furnish (or in the case of paragraph (2), use its best
efforts to furnish) to each selling Holder and each underwriter, if
any, upon the effectiveness of the Shelf Registration Statement, and
to each Restricted Broker-Dealer who was an Initial Purchaser and,
upon request, to each other Restricted Broker-Dealer, upon
Consummation of the Exchange Offer:
(1) a certificate, dated the date of Consummation of the
Exchange Offer or the date of effectiveness of the Shelf
Registration Statement, as the case may be, signed on behalf of
the Company by a principal financial or accounting officer of the
Company, confirming, as of the date thereof, the matters set
forth in paragraph (d) of Section 9 of the Purchase Agreement
(but only to the extent then true and correct (with reference
therein to the Offering Documents being deemed references to the
applicable Registration Statement, as amended or supplemented))
and such other similar matters as the Holders, underwriter(s)
and/or Restricted Broker-Dealers may reasonably request; and
(2) an opinion, dated the date of Consummation of the
Exchange Offer or the date of effectiveness of the Shelf
Registration Statement, as the case may be, of counsel for the
Company covering (i) due authorization and enforceability of the
New Notes, and (ii) such other matters of the type customarily
covered in opinions of counsel of an issuer in connection with
similar securities offerings as the Holders, underwriters and/or
Restricted Broker-Dealers may reasonably request;
(B) set forth in full or incorporate by reference in the
underwriting agreement, if any, in connection with any sale or resale
pursuant to any Shelf Registration Statement the indemnification
provisions and procedures of Section 8 hereof with respect to all
parties to be indemnified pursuant to said Section; and
(C) deliver such other documents and certificates as may be
reasonably requested by the selling Holders, the underwriter(s), if
any, and Restricted Broker-Dealers, if any, to evidence compliance
with clause (A) above and with any customary conditions contained in
the underwriting agreement or other agreement entered into by the
Company pursuant to this clause (C).
The above shall be done at each closing under such underwriting or
similar agreement, as and to the extent required thereunder, and if at any
time the representations and warranties of the Company contemplated in
(A)(1) above cease to be true and correct, the Company shall so advise the
underwriter(s), if any, the selling Holders and each Restricted
Broker-Dealer promptly and if requested by such Persons, shall confirm such
advice in writing;
11
(xi) prior to any public offering of Transfer Restricted Securities,
cooperate with the selling Holders, the underwriter(s), if any, and their
respective counsel in connection with the registration and qualification of
the Transfer Restricted Securities under the securities or Blue Sky laws of
such jurisdictions as the selling Holders or underwriter(s), if any, may
request and do any and all other acts or things necessary or advisable to
enable the disposition in such jurisdictions of the Transfer Restricted
Securities covered by the applicable Shelf Registration Statement;
provided, however, that the Company shall not be required to register or
qualify as a foreign corporation where it is not now so qualified or to
take any action that would subject it to the service of process in suits or
to taxation, other than as to matters and transactions relating to the
Shelf Registration Statement, in any jurisdiction where it is not now so
subject;
(xii) issue, upon the request of any Holder of Notes covered by any
Shelf Registration Statement contemplated by this Agreement, New Notes
having an aggregate principal amount equal to the aggregate principal
amount of Notes surrendered to the Company by such Holder in exchange
therefor or being sold by such Holder; such New Notes to be registered in
the name of such Holder or in the name of the purchaser(s) of such Senior
Notes, as the case may be; in return, the Notes held by such Holder shall
be surrendered to the Company for cancellation;
(xiii) in connection with any sale of Transfer Restricted Securities
that will result in such securities no longer being Transfer Restricted
Securities, cooperate with the selling Holders and the underwriter(s), if
any, to facilitate the timely preparation and delivery of certificates
representing Transfer Restricted Securities to be sold and not bearing any
restrictive legends; and to register such Transfer Restricted Securities in
such denominations and such names as the Holders or the underwriter(s), if
any, may request at least two Business Days prior to such sale of Transfer
Restricted Securities;
(xiv) use its best efforts to cause the disposition of the Transfer
Restricted Securities covered by the Registration Statement to be
registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or sellers thereof or
the underwriter(s), if any, to consummate the disposition of such Transfer
Restricted Securities, subject to the proviso contained in clause (xi)
above;
(xv) subject to Section 6(c)(i), if any fact or event contemplated by
Section 6(c)(iii)(D) above shall exist or have occurred, prepare a
supplement or post-effective amendment to the Registration Statement or
related Prospectus or any document incorporated therein by reference or
file any other required document so that, as thereafter delivered to the
purchasers of Transfer Restricted Securities, the Prospectus will not
contain an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(xvi) provide a CUSIP number for all Transfer Restricted Securities
not later than the effective date of a Registration Statement covering such
Transfer Restricted Securities and provide the Trustee under the Indenture
with printed certificates for the Transfer Restricted Securities which are
in a form eligible for deposit with the Depository Trust Company;
(xvii) cooperate and assist in any filings required to be made with
the NASD and in the performance of any due diligence investigation by any
underwriter (including any "qualified independent underwriter") that is
required to be retained in accordance with the rules and regulations of the
NASD, and use its best efforts to cause such Registration Statement to
become
12
effective and approved by such governmental agencies or authorities as may
be necessary to enable the Holders selling Transfer Restricted Securities
to consummate the disposition of such Transfer Restricted Securities;
(xviii) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make generally available to
its security holders with regard to any applicable Registration Statement,
as soon as practicable, a consolidated earnings statement meeting the
requirements of Rule 158 (which need not be audited) covering a
twelve-month period beginning after the effective date of the Registration
Statement (as such term is defined in paragraph (c) of Rule 158 under the
Act);
(xix) cause the Indenture to be qualified under the TIA not later than
the effective date of the first Registration Statement required by this
Agreement and, in connection therewith, cooperate with the Trustee and the
Holders of Senior Notes to effect such changes to the Indenture as may be
required for such Indenture to be so qualified in accordance with the terms
of the TIA; and execute and use its best efforts to cause the Trustee to
execute, all documents that may be required to effect such changes and all
other forms and documents required to be filed with the Commission to
enable such Indenture to be so qualified in a timely manner; and
(xx) provide promptly to each Holder upon request each document filed
with the Commission pursuant to the requirements of Section 13 or Section
15(d) of the Exchange Act.
(d) Restrictions on Holders. Each Holder agrees by acquisition of a
Transfer Restricted Security that, upon receipt of any notice from the Company
of the existence of any fact of the kind described in Section 6(c)(i) or Section
6(c)(iii)(D) hereof, such Holder will forthwith discontinue disposition of
Transfer Restricted Securities pursuant to the applicable Registration Statement
until such Holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 6(c)(xv) hereof, or until it is advised in
writing by the Company that the use of the Prospectus may be resumed, and has
received copies of any additional or supplemental filings that are incorporated
by reference in the Prospectus (the "Advice"). If so directed by the Company,
each Holder will deliver to the Company (at the Company's expense) all copies,
other than permanent file copies then in such Holder's possession, of the
Prospectus covering such Transfer Restricted Securities that was current at the
time of receipt of such notice. In the event the Company shall give any such
notice, the time period regarding the effectiveness of such Registration
Statement set forth in Section 3 or 4 hereof, as applicable, shall be extended
by the number of days during the period from and including the date of the
giving of such notice pursuant to Section 6(c)(i) or Section 6(c)(iii)(D) hereof
to and including the date when each selling Holder covered by such Registration
Statement shall have received the copies of the supplemented or amended
Prospectus contemplated by Section 6(c)(xv) hereof or shall have received the
Advice.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's performance of or compliance
with this Agreement will be borne by the Company, regardless of whether a
Registration Statement becomes effective, including without limitation: (i) all
registration and filing fees and expenses (including filings made by any Initial
Purchaser or Holder with the NASD (and, if applicable, the fees and expenses of
any "qualified independent underwriter") and its counsel in connection therewith
that may be required by the rules and regulations of the NASD); (ii) all fees
and expenses of compliance with
13
federal securities and state Blue Sky or securities laws; (iii) all expenses of
printing (including printing certificates for the New Notes to be issued in the
Exchange Offer and printing of Prospectuses), messenger and delivery services
and telephone; (iv) all fees and disbursements of counsel for the Company and,
in accordance with Section 7(b) below, the Holders of Transfer Restricted
Securities; (v) all application and filing fees in connection with listing the
Senior Notes on a national securities exchange or automated quotation system
pursuant to the requirements hereof; and (vi) all fees and disbursements of
independent certified public accountants of the Company (including the expenses
of any special audit and comfort letters required by or incident to such
performance).
The Company will, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expenses of any annual audit and the
fees and expenses of any Person, including special experts, retained by the
Company.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Company will reimburse the
Holders of Transfer Restricted Securities being tendered in the Exchange Offer
and/or resold pursuant to the "Plan of Distribution" contained in the Exchange
Offer Registration Statement or registered pursuant to the Shelf Registration
Statement, as applicable, for the reasonable fees and disbursements of not more
than one counsel, who shall be chosen by the Holders of a majority in principal
amount of the Transfer Restricted Securities for whose benefit such Registration
Statement is being prepared. Any underwriting discounts or commissions shall be
paid by the selling Holders of Transfer Restricted Securities, pro rata based on
the principal amount thereof held by each selling Holder.
SECTION 8. INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless (i) each Holder
and (ii) each person, if any, who controls (within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act) any Holder (any of the persons
=referred to in this clause (ii) being hereinafter referred to as a "controlling
person") and (iii) the respective officers, directors, partners, employees,
representatives and agents of any Holder or any controlling person (any person
referred to in clause (i), (ii) or (iii) may hereinafter be referred to as an
"Indemnified Holder"), to the fullest extent lawful, from and against any and
all losses, claims, damages, liabilities, judgments, actions and expenses
(including without limitation and as incurred, reimbursement of all reasonable
costs of investigating, preparing, pursuing or defending any claim or action, or
any investigation or proceeding by any governmental agency or body, commenced or
threatened, including the reasonable fees and expenses of counsel to any
Indemnified Holder (following the submission of documentation evidencing such
costs)) directly or indirectly caused by, related to, based upon, arising out of
or in connection with any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement, preliminary prospectus or
Prospectus (or any amendment or supplement thereto), or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except (A) insofar as
such losses, claims, damages, liabilities or expenses are caused by an untrue
statement or omission or alleged untrue statement or omission that is made in
reliance upon and in conformity with information furnished in writing to the
Company by any of the Holders expressly for use therein and (B) insofar as such
losses, claims, damages, liabilities or expenses are caused by an untrue
statement or omission or alleged untrue statement or omission that was contained
or made in a preliminary prospectus and corrected in the
14
Prospectus and (1) any such losses, claims, damages, liabilities or expenses
suffered or incurred by any Indemnified Holder resulted from an action, claim,
or suit by any person who purchased New Notes from any Indemnified Holder, (2)
the Indemnified Holder failed to deliver or provide a copy of the Prospectus to
such person at or prior to the confirmation of the sale of the New Notes and (3)
the Prospectus would have cured the defect giving rise to such losses, claims,
damages, liabilities or expenses.
In case any action or proceeding (including any governmental
investigation) shall be brought or asserted against any of the Indemnified
Holders with respect to which indemnity may be sought against the Company, such
Indemnified Holder (or the Indemnified Holder controlled by such controlling
person) shall promptly notify the Company in writing (provided, that the failure
to give such notice shall not relieve the Company of its obligations pursuant to
this Agreement) and the Company shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to such Indemnified Holder and
payment of all fees and expenses. Any Indemnified Holder shall have the right to
employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Holder unless (i) the employment of such counsel shall have
been specifically authorized in writing by the Company, (ii) the Company shall
have failed to assume the defense and employ counsel or (iii) such Indemnified
Holder reasonably concludes based on the advice of counsel that (A) there may be
one or more legal defenses available to it which are different from or
additional to those available to the Company, the assertion of which would be
adverse to the interests of the Company or any other Indemnified Holder, or (B)
a conflict of interest exists between the Indemnified Person and the Company (in
either such case the Company shall not have the right to assume or to continue
the defense of such action on behalf of such Indemnified Person), it being
understood, however, that the Company shall not, in connection with any one such
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) for all such Indemnified Holders. The Company
shall be liable for any settlement of any such action or proceeding effected
with its prior written consent, which consent will not be unreasonably withheld,
and the Company agrees to indemnify and hold harmless any Indemnified Holder
from and against any loss, claim, damage, liability or expense by reason of any
settlement of any action effected with the written consent of the Company.
Notwithstanding the foregoing sentence, if at any time an Indemnified Holder
shall have requested the Company to reimburse the Indemnified Holder for fees
and expenses of counsel as contemplated by the second sentence of this
paragraph, the Company agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 business days after receipt by the Company of the
aforesaid request and (ii) the Company shall not have reimbursed the Indemnified
Holder in accordance with such request prior to the date of such settlement. The
Company shall not, without the prior written consent of each Indemnified Holder,
settle or compromise or consent to the entry of judgment in or otherwise seek to
terminate any pending or threatened action, claim, litigation or proceeding in
respect of which indemnification or contribution may be sought hereunder
(whether or not any Indemnified Holder is a party thereto), unless such
settlement, compromise, consent or termination includes an unconditional release
of each Indemnified Holder from all liability arising out of such action, claim,
litigation or proceeding.
(b) Each Holder of Transfer Restricted Securities agrees, severally and
not jointly, to indemnify and hold harmless the Company, and its directors,
officers, and any person controlling (within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act) the Company, and the respective officers,
directors, partners, employees, representatives and agents of each such person,
15
to the same extent and subject to the same procedures as the foregoing indemnity
from the Company to each of the Indemnified Holders, but only with respect to
claims and actions based on information furnished in writing by such Holder
expressly for use in any Registration Statement. In case any action or
proceeding shall be brought against the Company or its directors or officers or
any such controlling person in respect of which indemnity may be sought against
a Holder of Transfer Restricted Securities, such Holder shall have the rights
and duties given the Company, and the Company, such directors or officers or
such controlling person shall have the rights and duties given to each Holder by
the preceding paragraph. In no event shall any Holder be liable or responsible
for any amount in excess of the total dollar amount received by such Holder with
respect to its sale of Transfer Restricted Securities pursuant to a Registration
Statement.
(c) If the indemnification provided for in this Section 8 is unavailable
to an indemnified party under Section 8(a) or Section 8(b) hereof (other than by
reason of exceptions provided in those Sections) in respect of any losses,
claims, damages, liabilities or expenses referred to therein, then each
applicable indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative benefits received by the
Company, on the one hand, and the Holders, on the other hand, from their sale of
Transfer Restricted Securities or if such allocation is not permitted by
applicable law, the relative fault of the Company, on the one hand, and of the
Indemnified Holder, on the other hand, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
fault of the Company, on the one hand, and of the Indemnified Holder, on the
other hand, shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
or by the Indemnified Holder and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The Company and each Holder of Transfer Restricted Securities agree that
it would not be just and equitable if contribution pursuant to this Section 8(c)
were determined by pro rata allocation (even if the Holders were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities or expenses referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any documented legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such claim or action, or any investigation or proceeding by any governmental
agency or body, commenced or threatened. Notwithstanding the provisions of this
Section 8, no Holder or its related Indemnified Holders shall be required to
contribute, in the aggregate, any amount in excess of the amount by which the
total received by such Holder with respect to the sale of its Transfer
Restricted Securities pursuant to a Registration Statement exceeds the amount of
any damages which such Holder has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Holders' obligations to
contribute pursuant to this Section 8(c) are several in proportion to the
respective principal amount of Notes held by each of the Holders hereunder and
not joint.
16
SECTION 9. RULE 144A
The Company hereby agrees with each Holder, for so long as any Transfer
Restricted Securities remain outstanding and during any period in which the
Company is not subject to Section 13 or 15(d) of the Securities Exchange Act, to
make available, upon request of any Holder of Transfer Restricted Securities, to
any Holder or beneficial owner of Transfer Restricted Securities in connection
with any sale thereof and any prospective purchaser of such Transfer Restricted
Securities designated by such Holder or beneficial owner, the information
required by Rule 144A(d)(4) under the Act in order to permit resales of such
Transfer Restricted Securities pursuant to Rule 144A.
SECTION 10. UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Registration hereunder
unless such Holder (a) agrees to sell such Holder's Transfer Restricted
Securities on the basis provided in customary underwriting arrangements entered
into in connection therewith and (b) completes and executes all reasonable
questionnaires, powers of attorney, indemnities, underwriting agreements,
lock-up letters and other documents required under the terms of such
underwriting arrangements.
SECTION 11. SELECTION OF UNDERWRITERS
For any Underwritten Offering, the investment banker or investment
bankers and manager or managers for any Underwritten Offering that will
administer such offering will be selected by the Holders of a majority in
aggregate principal amount of the Transfer Restricted Securities included in
such offering; provided, that such investment bankers and managers must be
reasonably satisfactory to the Company. Such investment bankers and managers are
referred to herein as the "underwriters."
SECTION 12. MISCELLANEOUS
(a) Remedies. Each Holder, in addition to being entitled to exercise all
rights provided herein, in the Indenture, the Purchase Agreement or granted by
law, including recovery of liquidated or other damages, will be entitled to
specific performance of its rights under this Agreement. The Company agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by them of the provisions of this Agreement and hereby agree
to waive the defense in any action for specific performance that a remedy at law
would be adequate.
(b) No Inconsistent Agreements. The Company will not, on or after the
date of this Agreement, enter into any agreement with respect to its securities
that is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company's securities under any
agreement in effect on the date hereof.
(c) Adjustments Affecting the Senior Notes. The Company will not take
any action, or voluntarily permit any change to occur, with respect to the
Senior Notes that would materially and adversely affect the ability of the
Holders to Consummate any Exchange Offer.
17
(d) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless (i) in the case of Section 5
hereof and this Section 12(d)(i), the Company has obtained the written consent
of Holders of all outstanding Transfer Restricted Securities and (ii) in the
case of all other provisions hereof, the Company has obtained the written
consent of Holders of a majority of the outstanding principal amount of Transfer
Restricted Securities. Notwithstanding the foregoing, a waiver or consent to
departure from the provisions hereof that relates exclusively to the rights of
Holders whose securities are being tendered pursuant to the Exchange Offer and
that does not affect directly or indirectly the rights of other Holders whose
securities are not being tendered pursuant to such Exchange Offer may be given
by the Holders of a majority of the outstanding principal amount of Transfer
Restricted Securities subject to such Exchange Offer.
(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of the
Registrar under the Indenture, with a copy to the Registrar under the
Indenture; and
(ii) if to the Company:
Rayovac Corporation
601 Rayovac Drive
Madison, Wisconsin 53711-2497
Telecopier No.: (608) 275-4577
Attention: James A. Broderick
With a copy to:
Skadden, Arps, Slate, Meagher & Flom
One Beacon Street, 31st Floor
Boston, Massachusetts 02108
Telecopier No.: (617) 573-4822
Attention: Louis A. Goodman
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next business day, if timely delivered
to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an express assignment, subsequent
Holders of Transfer Restricted Securities; provided, however, that this
Agreement shall not inure to the benefit of or be binding upon a successor or
assign of a Holder unless and to the extent such successor or assign acquired
Transfer Restricted Securities directly from such Holder.
18
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
(j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
19
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
RAYOVAC CORPORATION
By: /s/ James A. Broderick
------------------------------
Name: James A. Broderick
Title: Vice President
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BA SECURITIES, INC.
By DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ Glenn Tongue
--------------------------------
Name: Glenn Tongue
Title: Managing Director
S-1
EXHIBIT 4.4
Execution Copy
===============================================================================
RAYOVAC CORPORATION
CREDIT AGREEMENT
Dated as of September 12, 1996
Arranged by
BA SECURITIES, INC.
and
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
===============================================================================
|| TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS........................................................1
1.1 Certain Defined Terms...............................................1
1.2 Other Interpretive Provisions......................................32
1.3 Accounting Principles..............................................32
ARTICLE II THE CREDITS......................................................33
2.1 Amounts and Terms of Commitments...................................33
(a) The Term A Credit.............................................33
(b) The Term B Credit.............................................33
(c) The Term C Credit.............................................33
(d) The Revolving Credit..........................................33
2.2 Loan Accounts......................................................34
2.3 Procedure for Borrowing............................................34
2.4 Conversion and Continuation Elections..............................35
2.5 Swingline Loans....................................................37
2.6 Termination or Reduction of Revolving Commitments..................39
2.7 Optional Prepayments...............................................40
2.8 Mandatory Prepayments of Loans.....................................41
2.9 Repayment .........................................................43
(a) The Term A Credit.............................................43
(b) The Term B Credit.............................................43
(c) The Term C Credit.............................................44
(d) The Revolving Credit..........................................44
2.10 Interest .........................................................44
2.11 Fees .............................................................45
(a) Arranger and Agency Fees......................................45
(b) Commitment Fees...............................................45
2.12 Computation of Fees and Interest..................................45
2.13 Payments by the Company...........................................46
2.14 Payments by the Lenders to the Administrative Agent...............46
2.15 Sharing of Payments, Etc..........................................47
2.16 Limitation on Offshore Rate Option................................48
ARTICLE III THE LETTERS OF CREDIT...........................................48
3.1 The Letter of Credit Subfacility...................................48
3.2 Issuance, Amendment and Renewal of Letters of Credit...............50
3.3 Risk Participations, Drawings and Reimbursements...................52
3.4 Repayment of Participations........................................54
3.5 Role of the Issuing Lender.........................................54
3.6 Obligations Absolute...............................................55
3.7 Cash Collateral Pledge.............................................56
3.8 Letter of Credit Fees..............................................56
3.9 Uniform Customs and Practice.......................................57
3.10 Non-Dollar Letters of Credit......................................57
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ARTICLE IV TAXES, YIELD PROTECTION AND ILLEGALITY...........................60
4.1 Taxes .............................................................60
4.2 Illegality ........................................................61
4.3 Increased Costs and Reduction of Return............................62
4.4 Funding Losses.....................................................63
4.5 Inability to Determine Rates.......................................64
4.6 Certificates of Lenders............................................64
4.7 Substitution of Lenders............................................64
4.8 Survival ..........................................................65
ARTICLE V CONDITIONS PRECEDENT..............................................65
5.1 Conditions of Initial Credit Extensions............................65
(a) Credit Agreement and Notes....................................65
(b) Resolutions and Incumbency....................................65
(c) Organization Documents; Good Standing.........................66
(d) Legal Opinions................................................66
(e) Payment of Fees...............................................66
(f) Certificate...................................................66
(g) Security Agreement, etc.......................................67
(h) Guaranty......................................................67
(i) Pledge Agreements.............................................67
(j) Real Property.................................................67
(k) Recapitalization Agreement and Other Documents................68
(l) Solvency Certificate..........................................68
(m) Other Documents...............................................68
5.2 Other Conditions to Initial Loan or Letter of Credit...............68
(a) Bridge Notes..................................................68
(b) Recapitalization Transaction..................................68
5.3 Conditions to All Credit Extensions................................68
(a) Notice, Application...........................................69
(b) Continuation of Representations and Warranties................69
(c) No Existing Default...........................................69
ARTICLE VI REPRESENTATIONS AND WARRANTIES...................................69
6.1 Corporate Existence and Power......................................69
6.2 Corporate Authorization; No Contravention..........................70
6.3 Governmental Authorization.........................................70
6.4 Binding Effect.....................................................70
6.5 Litigation ........................................................71
6.6 No Default ........................................................71
6.7 ERISA Compliance...................................................71
6.8 Use of Proceeds; Margin Regulations................................72
6.9 Title to Properties................................................72
6.10 Taxes ............................................................72
6.11 Financial Condition...............................................72
6.12 Regulated Entities................................................73
6.13 No Burdensome Restrictions........................................73
6.14 Copyrights, Patents, Trademarks and Licenses, etc.................73
6.15 Subsidiaries......................................................74
6.16 Insurance ........................................................74
6.17 Solvency, etc.....................................................74
6.18 Recapitalization Transaction, Bridge Notes, etc...................75
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6.19 Real Property......................................................76
6.20 Swap Obligations...................................................76
6.21 Senior Indebtedness................................................76
6.22 Environmental Warranties...........................................76
6.23 Full Disclosure....................................................77
ARTICLE VII AFFIRMATIVE COVENANTS............................................78
7.1 Financial Statements................................................78
7.2 Certificates; Other Information.....................................79
7.3 Notices ............................................................80
7.4 Preservation of Corporate Existence, Etc............................81
7.5 Maintenance of Property.............................................82
7.6 Insurance ..........................................................82
7.7 Payment of Obligations..............................................82
7.8 Compliance with Laws................................................83
7.9 Compliance with ERISA...............................................83
7.10 Inspection of Property and Books and Records.......................83
7.11 Interest Rate Protection...........................................83
7.12 Environmental Covenant.............................................84
7.13 Use of Proceeds....................................................84
7.14 Further Assurances.................................................84
7.15 Clean-Down of Loans................................................86
ARTICLE VIII NEGATIVE COVENANTS..............................................86
8.1 Limitation on Liens.................................................86
8.2 Disposition of Assets...............................................88
8.3 Consolidations and Mergers..........................................89
8.4 Loans and Investments...............................................89
8.5 Limitation on Indebtedness..........................................91
8.6 Transactions with Affiliates........................................92
8.7 Use of Proceeds.....................................................92
8.8 Contingent Obligations..............................................92
8.9 Joint Ventures......................................................93
8.10 Lease Obligations..................................................93
8.11 Minimum Fixed Charge Coverage......................................93
8.12 Minimum EBITDA.....................................................94
8.13 Minimum Adjusted Net Worth.........................................94
8.14 Maximum Leverage Ratio.............................................95
8.15 Maximum Capital Expenditures.......................................95
8.16 Restricted Payments................................................96
8.17 ERISA .............................................................96
8.18 Limitations on Sale and Leaseback Transactions.....................96
8.19 Limitation on Restriction of Subsidiary Dividends
and Distributions..................................................97
8.20 Inconsistent Agreements............................................97
8.21 Change in Business.................................................97
8.22 Amendments to Certain Documents....................................97
8.23 Fiscal Year........................................................97
8.24 Limitation on Issuance of Guaranty Obligations.....................98
8.25 Bridge Note Agreement..............................................98
ARTICLE IX EVENTS OF DEFAULT.................................................98
9.1 Event of Default....................................................98
(a) Non-Payment....................................................98
(b) Representation or Warranty.....................................99
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(c) Specific Defaults..............................................99
(d) Other Defaults.................................................99
(e) Cross-Default..................................................99
(f) Insolvency; Voluntary Proceedings.............................100
(g) Involuntary Proceedings.......................................100
(h) ERISA.........................................................100
(i) Monetary Judgments............................................100
(j) Non-Monetary Judgments........................................101
(k) Change of Control.............................................101
(l) Guarantor Defaults............................................101
(m) Collateral Documents, etc.....................................101
9.2 Remedies ..........................................................101
9.3 Rights Not Exclusive...............................................102
ARTICLE X THE AGENTS........................................................102
10.1 Appointment and Authorization.....................................102
10.2 Delegation of Duties..............................................103
10.3 Liability of Administrative Agent.................................103
10.4 Reliance by Administrative Agent..................................104
10.5 Notice of Default.................................................104
10.6 Credit Decision...................................................105
10.7 Indemnification of Agents.........................................105
10.8 Administrative Agent in Individual Capacity.......................106
10.9 Successor Administrative Agent....................................106
10.10 Withholding Tax..................................................107
10.11 Collateral Matters...............................................108
10.12 The Syndication Agents...........................................109
ARTICLE XI MISCELLANEOUS....................................................109
11.1 Amendments and Waivers............................................109
11.2 Notices ..........................................................111
11.3 No Waiver; Cumulative Remedies....................................112
11.4 Costs and Expenses................................................112
11.5 Company Indemnification...........................................113
11.6 Payments Set Aside................................................113
11.7 Successors and Assigns............................................114
11.8 Assignments, Participations, etc..................................114
11.9 Confidentiality...................................................116
11.10 Setoff ..........................................................116
11.11 Automatic Debits of Fees.........................................117
11.12 Notification of Addresses, Lending Offices, Etc..................117
11.13 Counterparts.....................................................117
11.14 Severability.....................................................117
11.15 No Third Parties Benefited.......................................117
11.16 Governing Law and Jurisdiction...................................118
11.17 Waiver of Jury Trial.............................................118
11.18 Entire Agreement.................................................118
||
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SCHEDULES
Schedule 1.1 Commitments, Total Percentages, Revolving Percentages,
Term A Percentages, Term B Percentages, Term C Percentages
Schedule 5.1 Debt to be Repaid
Schedule 5.1(j) Real Property to be Mortgaged
Schedule 6.5 Litigation
Schedule 6.11 Permitted Liabilities
Schedule 6.15 Subsidiaries and Minority Interests
Schedule 6.16 Insurance Matters
Schedule 6.19 Real Property
Schedule 6.22 Environmental Matters
Schedule 8.4 Permitted Investments
Schedule 8.5(d) Continuing Debt
Schedule 8.5(j) Permitted Letters of Credit
Schedule 8.8 Contingent Obligations
Schedule 11.2 Lending Offices; Addresses for Notices
EXHIBITS
Exhibit A Form of Notice of Borrowing
Exhibit B Form of Notice of Conversion/Continuation
Exhibit C Form of Compliance Certificate
Exhibit D Form of Promissory Note
Exhibit E Form of Security Agreement
Exhibit F Form of Guaranty
Exhibit G Form of Company Pledge Agreement
Exhibit H Form of Subsidiary Pledge Agreement (U.K.)
Exhibit I Form of Solvency Certificate
Exhibit J Form of Opinion of Counsel to the Company and
ROV Holding
Exhibit K-1 Form of Opinion of Local Counsel to the Company
(Wisconsin)
Exhibit K-2 Form of Opinion of Local Counsel to the Company
(North Carolina)
Exhibit K-3 Form of Opinion of Local Counsel to the
Company (U.K.)
Exhibit K-4 Form of Opinion of Local Counsel to the Company
(Wisconsin-Security Interests)
Exhibit L Form of Assignment and Acceptance
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CREDIT AGREEMENT
----------------
This CREDIT AGREEMENT is entered into as of September 12, 1996, among
RAYOVAC CORPORATION, the several financial institutions from time to time party
to this Agreement, BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as
administrative agent for the Lenders, DLJ CAPITAL FUNDING, INC., as
documentation agent for the Lenders, and BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION and DLJ CAPITAL FUNDING, INC., as joint syndication agents
for the Lenders.
WHEREAS, the Lenders have agreed to make available to the Company term
loans and a revolving credit facility with a letter of credit subfacility upon
the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
-----------
1.1 Certain Defined Terms. The following terms have the following meanings:
Acquisition means any transaction or series of related transactions
for the purpose of, or resulting directly or indirectly in, (a) the
acquisition of all or substantially all of the assets of a Person, or of
any business or division of a Person, (b) the acquisition of in excess of
50% of the capital stock, partnership interests, membership interests or
equity of any Person, or otherwise causing any Person to become a
Subsidiary or (c) a merger or consolidation or any other combination with
another Person (other than a Person that is a Subsidiary) provided that the
Company or a Subsidiary is the surviving entity.
Adjusted Working Capital means the excess of:
(a) (i) the consolidated current assets of the Company and its
Subsidiaries less (ii) the amount of cash and cash equivalents included in
such consolidated current assets;
over
(b) (i) consolidated current liabilities of the Company and its
Subsidiaries less (ii) the amount of short-term Indebtedness (including
current maturities of long-term Indebtedness) of the Company and its
Subsidiaries included in such consolidated current liabilities.
Administrative Agent means BofA in its capacity as administrative
agent for the Lenders hereunder, and any successor administrative agent
arising under Section 10.9.
Affiliate means, as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control
with, such Person. A Person shall be deemed to control another Person if
the controlling Person possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies of such other
Person, whether through the ownership of voting securities or membership
interests, by contract, or otherwise. Without limiting the foregoing, any
Person which is an officer, director or shareholder of the Company, or a
member of the immediate family of any such officer, director or
shareholder, shall be deemed to be an Affiliate of the Company.
Agent-Related Persons means BofA and any successor administrative
agent arising under Section 10.9, BAI and any successor Issuing Lender, BAI
and any successor Swingline Lender, together with their respective
Affiliates (including the Arranger), and the officers, directors,
employees, agents and attorneys-in-fact of such Persons and Affiliates.
Agent's Payment Office means the address for payments set forth on
Schedule 11.2 in relation to the Administrative Agent, or such other
address as the Administrative Agent may from time to time specify.
Agents means the Administrative Agent, the Documentation Agent and the
Syndication Agents.
Agreement means this Credit Agreement.
Agreement Currency - see subsection 3.10(f).
Applicable Base Rate Margin means: (a) in the case of any Revolving
Loan or Term A Loan bearing interest based on the Base Rate, (x) initially,
1.50%, and (y) on and after any date specified below on which the
Applicable Base Rate Margin for Revolving Loans and Term A Loans is to be
adjusted, the rate per annum set forth in the table below for the
applicable Loan opposite the applicable Leverage Ratio; (b) in the case of
any Term B Loan bearing interest based on the Base Rate, 2.00%; and (c) in
the case of any Term C Loan bearing interest based on the Base Rate, 2.25%.
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Applicable Base
Rate Margin for
Revolving Loans
Leverage Ratio and Term A Loans
Greater than or equal to 4.0:1.0 1.50%
Greater than or equal to 3.5:1.0 1.25%
but less than 4.0:1.0
Greater than or equal to 3.0:1.0 1.00%
but less than 3.5:1.0
Less than 3.0:1.0 0.75%.
The Applicable Base Rate Margin for Revolving Loans and Term A Loans shall
be adjusted, to the extent applicable, 45 days (or, in the case of the last
calendar quarter of any year, 90 days) after the end of each calendar
quarter, based on the Leverage Ratio as of the last day of such calendar
quarter; it being understood that if the Company fails to deliver the
financial statements required by subsection 7.1(a) or 7.1(b)(ii), as
applicable, and the related Compliance Certificate required by subsection
7.2(b) by the 45th day (or, if applicable, the 90th day) after any calendar
quarter, the Applicable Base Rate Margin shall be 1.50% for any Revolving
Loan or Term A Loan bearing interest based on the Base Rate until such
financial statements and Compliance Certificate are delivered.
Applicable Offshore Rate Margin means: (a) in the case of any
Revolving Loan or Term A Loan bearing interest based on the Offshore Rate,
(x) initially 2.50%, and (y) on and after any date specified below on which
the Applicable Offshore Rate Margin for Revolving Loans and Term A Loans is
to be adjusted, the rate per annum set forth in the table below for the
applicable Loan opposite the applicable Leverage Ratio; (b) in the case of
any Term B Loan bearing interest based on the Offshore Rate, 3.00%; and (c)
in the case of any Term C Loan bearing interest based on the Offshore Rate,
3.25%.
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Applicable
Offshore Rate
Margin for
Revolving Loans
Leverage Ratio and Term A Loans
Greater than or equal to 4.0:1.0 2.50%
Greater than or equal to 3.5:1.0 2.25%
but less than 4.0:1.0
Greater than or equal to 3.0:1.0 2.00%
but less than 3.5:1.0
Less than 3.0:1.0 1.75%.
The Applicable Offshore Rate Margin for Revolving Loans and Term A Loans
shall be adjusted, to the extent applicable, 45 days (or, in the case of
the last calendar quarter of any year, 90 days) after the end of each
calendar quarter, based on the Leverage Ratio as of the last day of such
quarter; it being understood that if the Company fails to deliver the
financial statements required by subsection 7.1(a) or 7.1(b)(ii), as
applicable, and the related Compliance Certificate required by subsection
7.2(b) by the 45th day (or, if applicable, the 90th day) after any calendar
quarter, the Applicable Offshore Rate Margin shall be 2.50% for Revolving
Loans and Term A Loans bearing interest based on the Offshore Rate until
such financial statements and Compliance Certificate are delivered.
Arrangers means BA Securities, Inc., a Delaware corporation, and
Donaldson, Lufkin & Jenrette Securities Corporation, a Delaware
corporation.
Assignee - see subsection 11.8(a).
Assignment and Acceptance - see subsection 11.8(a).
Attorney Costs means and includes all reasonable and documented fees
and disbursements of any law firm or other external counsel and, without
duplication of effort, the allocated cost of internal legal services and
all disbursements of internal counsel.
BAI means Bank of America Illinois, an Illinois banking corporation.
Bankruptcy Code means the Federal Bankruptcy Reform Act of 1978 (11
U.S.C. ss.101, et seq.).
Base Rate means, for any day, the higher of: (a) 0.50% per annum above
the latest Federal Funds Rate; and (b) the rate of interest in effect for
such day as publicly announced from time to time by BAI in Chicago,
Illinois as its "reference rate." (The "reference rate" is a rate set
-4-
by BAI based upon various factors including BAI's costs and desired return,
general economic conditions and other factors, and is used as a reference
point for pricing some loans, which may be priced at, above or below such
announced rate.) Any change in the reference rate announced by BAI shall
take effect at the opening of business on the day specified in the public
announcement of such change.
Base Rate Loan means a Loan that bears interest based on the Base
Rate.
BofA means Bank of America National Trust and Savings Association, a
national banking association.
Borrowing means a borrowing hereunder consisting of (a) Revolving
Loans, Term A Loans, Term B Loans or Term C Loans of the same Type made to
the Company on the same day by the Lenders and, in the case of Offshore
Rate Loans, having the same Interest Period, or (b) a Swingline Loan made
to the Company by the Swingline Lender, in each case pursuant to Article
II.
Borrowing Date means any date on which a Borrowing occurs under
Section 2.3.
Bridge Note Agreement means the Securities Purchase Agreement, dated
as of September 12, 1996, among the Company, BofA and RC Funding, Inc., as
amended from time to time in accordance with Section 8.22.
Bridge Notes means the $100,000,000 Senior Subordinated Increasing
Rate Notes due September 15, 1997 of the Company issued pursuant to the
Bridge Note Agreement.
Business Day means any day other than a Saturday, Sunday or other day
on which commercial banks in New York City, Chicago or San Francisco are
authorized or required by law to close and, if the applicable Business Day
relates to any Offshore Rate Loan, means such a day on which dealings are
carried on in the applicable offshore Dollar interbank market.
Capital Adequacy Regulation means any guideline, request or directive
of any central bank or other Governmental Authority, or any other law, rule
or regulation, whether or not having the force of law, in each case
regarding capital adequacy of any bank or of any Person controlling a bank.
Capital Expenditures means all expenditures which, in accordance with
GAAP, would be required to be capitalized and shown on the consolidated
balance sheet of the Company, but excluding expenditures made in connection
with the replacement, substitution or restoration of assets to the extent
financed (i) from insurance proceeds (or other
-5-
similar recoveries) paid on account of the loss of or damage to the assets
being replaced or restored or (ii) with awards of compensation arising from
the taking by eminent domain or condemnation of the assets being replaced.
Cash Collateralize means to pledge and deposit with or deliver to the
Administrative Agent, for the benefit of the Administrative Agent, the
Issuing Lender and the Lenders, as additional collateral for the L/C
Obligations, cash or deposit account balances pursuant to documentation in
form and substance satisfactory to the Administrative Agent and the Issuing
Lender (which documents are hereby consented to by the Lenders).
Derivatives of such term shall have corresponding meanings. The Company
hereby grants the Administrative Agent, for the benefit of the
Administrative Agent, the Issuing Lender and the Lenders, a security
interest in all such cash and deposit account balances. Cash collateral
shall be maintained in blocked, non-interest bearing deposit accounts at
BAI.
Cash Equivalent Investments shall mean (i) securities issued or
directly and fully guaranteed or insured by the United States of America or
guaranteed by a government that is a member of the OECD ("OECD Country") or
any agency or instrumentality thereof (provided that the full faith and
credit of the United States of America or such OECD Country, as applicable,
is pledged in support thereof) having maturities of not more than three
years from the date of acquisition, (ii) marketable direct obligations
issued by any State of the United States of America or any local government
or other political subdivision thereof rated (at the time of acquisition of
such security) at least AA by Standard & Poor's Ratings Service, a division
of The McGraw-Hill Companies, Inc. ("S&P") or the equivalent thereof by
Moody's Investors Service, Inc. ("Moody's") having maturities of not more
than one year from the date of acquisition, (iii) time deposits,
certificates of deposit and bankers' acceptances of (x) any Lender, (y) any
commercial bank that is a member of the Federal Reserve System or an
applicable central bank of an OECD Country having capital and surplus in
excess of $250,000,000 or (z) any bank whose short-term commercial paper
rating (at the time of acquisition of such security) by S&P is at least A-1
or the equivalent thereof (any such bank, an "Approved Bank"), in each case
with maturities of not more than six months from the date of acquisition,
(iv) commercial paper and variable or fixed rate notes issued by any Lender
or Approved Bank or by the parent company of any Lender or Approved Bank
and commercial paper and variable rate notes issued by, or guaranteed by,
any industrial or financial company with a short-term commercial paper
rating (at the time of acquisition of such security) of at least A-1 or the
equivalent thereof by S&P or at least P-1 or the equivalent thereof by
Moody's, or guaranteed by any industrial company with a long-term unsecured
debt rating (at the time of
-6-
acquisition of such security) of at least AA or the equivalent thereof by
S&P or at least Aa or the equivalent thereof by Moody's and in each case
maturing within one year after the date of acquisition and (v) repurchase
agreements with any Lender or any primary dealer maturing within one year
from the date of acquisition that are fully collateralized by investment
instruments that would otherwise be Cash Equivalent Investments; provided
that the terms of such repurchase agreements comply with the guidelines set
forth in the Federal Financial Institutions Examination Council Supervisory
Policy -- Repurchase Agreements of Depository Institutions With Securities
Dealers and Others, as adopted by the Comptroller of the Currency on
October 31, 1985.
CERCLA means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980.
CERCLIS means the Comprehensive Environmental Response Compensation
Liability Information System List.
Change of Control means (i) the failure of the Purchasers that are
Affiliates of the Thomas H. Lee Company to own, free and clear of all Liens
and encumbrances, 51% of the outstanding shares of voting stock of the
Company on a fully-diluted basis or 51% of the economic value of all equity
interests of the Company on a fully-diluted basis or (ii) while any Bridge
Notes are outstanding, any "Change of Control" as defined in the Bridge
Note Agreement or, while any Rollover Notes are outstanding, any "Change of
Control" as defined in the Rollover Indenture or, while any Qualified Notes
are outstanding, any "Change of Control" as defined in any Qualified
Indenture or any other similar event, regardless of how designated, if the
occurrence of such event would require the Company, pursuant to any
Qualified Indenture, to redeem or repurchase any Qualified Notes prior to
their expressed maturity.
Closing Date means the date on which all conditions precedent set
forth in Sections 5.1 and 5.2 are satisfied or waived by all Lenders in
their sole discretion (or, in the case of subsection 5.1(e), waived by the
Person entitled to receive the applicable payment).
Code means the Internal Revenue Code of 1986.
Collateral Document means the Security Agreement, each Trademark
Security Agreement, each Patent Security Agreement, each Pledge Agreement,
each Mortgage and any other document pursuant to which collateral securing
the liabilities of the Company or any Guarantor under any Loan Document is
granted or pledged to the Administrative Agent for the benefit of itself
and the Lenders.
-7-
Commercial Letter of Credit means any Letter of Credit which is
drawable upon presentation of a sight draft and other documents evidencing
the sale or shipment of goods purchased by the Company in the ordinary
course of business.
Commitment means, as to each Lender, such Lender's Revolving
Commitment, Term A Commitment, Term B Commitment or Term C Commitment, as
applicable.
Common Stock means the common stock, par value $.01 per share, of the
Company.
Company means Rayovac Corporation, a Wisconsin corporation.
Company Pledge Agreement - see subsection 5.1(i).
Compliance Certificate means a certificate substantially in the form
of Exhibit C.
Computation Period means, except as otherwise expressly stated herein,
any period of four consecutive fiscal quarters and in any case ending on
the last day of a fiscal quarter.
Consolidated Net Income means, with respect to the Company and its
Subsidiaries for any period, the net income (or loss) of the Company and
its Subsidiaries for such period.
Contingent Liabilities means, at any time, the maximum estimated
amount of liabilities reasonably likely to result at such time from pending
litigation, asserted and unasserted claims and assessments, guaranties,
uninsured risks and other contingent liabilities of each of the Company and
of each Guarantor after giving effect to the transactions contemplated by
this Agreement (including all fees and expenses related thereto).
Contingent Obligation means, as to any Person, any direct or indirect
liability of such Person, whether or not contingent, with or without
recourse: (a) with respect to any Indebtedness, lease, dividend, letter of
credit or other obligation (the "primary obligation") of another Person
(the "primary obligor"), including any obligation of such Person (i) to
purchase, repurchase or otherwise acquire such primary obligation or any
security therefor, (ii) to advance or provide funds for the payment or
discharge of any primary obligation, or to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net
worth or solvency or any balance sheet item, level of income or financial
condition of the primary obligor, (iii) to purchase property, securities or
services primarily for the purpose of assuring the owner of any primary
obligation of the ability of the primary obligor to make payment of such
-8-
primary obligation, or (iv) otherwise to assure or hold harmless the holder
of any primary obligation against loss in respect thereof (each, a
"Guaranty Obligation"); (b) with respect to any Surety Instrument (other
than any Letter of Credit) issued for the account of such Person or as to
which such Person is otherwise liable for reimbursement of drawings or
payments; (c) to purchase any materials, supplies or other property from,
or to obtain the services of, another Person if the relevant contract or
other related document or obligation requires that payment for such
materials, supplies or other property, or for such services, shall be made
regardless of whether delivery of such materials, supplies or other
property is ever made or tendered, or such services are ever performed or
tendered; or (d) in respect of any Swap Contract. The amount of any
Contingent Obligation shall, (1) in the case of Guaranty Obligations, be
deemed equal to the stated or determinable amount of the primary obligation
in respect of which such Guaranty Obligation is made or, if not stated or
if indeterminable, the maximum reasonably anticipated liability in respect
thereof, (2) in the case of Swap Contracts, be equal to the Swap
Termination Value and (3) in the case of other Contingent Obligations, be
equal to the maximum reasonably anticipated liability in respect thereof.
Continuing Debt - see subsection 8.5(d).
Continuing Debt Reserve means, on any date, the aggregate outstanding
principal amount, or, with respect to Continuing Debt under a line of
credit or similar revolving facility, the maximum amount committed to be
advanced, of all Continuing Debt on such date.
Contractual Obligation means, as to any Person, any provision of any
security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument, document or
agreement to which such Person is a party or by which it or any of its
property is bound.
Conversion/Continuation Date means any date on which, under Section
2.4, the Company (a) converts Loans of one Type to the other Type or (b)
continues as Offshore Rate Loans, but with a new Interest Period, Offshore
Rate Loans having Interest Periods expiring on such date.
Credit Extension means and includes (a) the making of any Loan
hereunder and (b) the Issuance of any Letter of Credit hereunder.
Debt to be Repaid means all Indebtedness listed on Schedule 5.1.
Designated Proceeds - see subsection 2.8(a).
-9-
DLJ means DLJ Capital Funding, Inc., a Delaware corporation.
Documentation Agent means DLJ, in its capacity as documentation agent
for the Lenders.
Dollar Amount means, in relation to any Indebtedness (i) denominated
in Dollars, the amount of such Indebtedness, and (ii) denominated in a
currency other than Dollars, the Dollar Equivalent of the amount of such
Indebtedness on the last day of the immediately preceding calendar month.
Dollar Equivalent means, in relation to an amount denominated in a
currency other than Dollars, the amount of Dollars which could be purchased
with such amount at the prevailing foreign exchange spot rate.
Dollars and $ mean lawful money of the United States.
Dormant Subsidiaries means, so long as either such Person does not
have assets with a fair market value in the aggregate in excess of $100,000
and transacts no business, Minera Vindaluz and Zoe-Phos International;
provided that no Subsidiary may be a Dormant Subsidiary if the Company or
any of its other Subsidiaries provides any credit support thereto or is
liable in any respect for the liabilities thereof.
EBITDA means, for any Computation Period, the sum of
(a) Consolidated Net Income of the Company for such period excluding,
to the extent reflected in determining such Consolidated Net Income,
extraordinary gains and losses for such period,
plus
(b) to the extent deducted in determining Consolidated Net Income,
Interest Expense, income tax expense, depreciation and amortization for
such period.
Effective Amount means, (a) with respect to any Revolving Loans,
Swingline Loans and Term Loans on any date, the aggregate outstanding
principal amount thereof after giving effect to any Borrowings and
prepayments or repayments of Revolving Loans, Swingline Loans and Term
Loans occurring on such date, and (b) with respect to any outstanding L/C
Obligations on any date (i) the amount of such L/C Obligations on such date
after giving effect to any Issuances of Letters of Credit occurring on such
date, (ii) the amount of any undrawn Commercial Letters of Credit which
have expired less than 25 days prior to such date and (iii) any other
changes in the aggregate amount of the L/C Obligations as of such date,
including as a result of any reimbursements of outstanding unpaid drawings
under any
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Letter of Credit or any reduction in the maximum amount available for
drawing under Letters of Credit taking effect on such date.
Eligible Assignee means (i) a commercial bank organized under the laws
of the United States, or any state thereof, and having a combined capital
and surplus of at least $500,000,000; (ii) a commercial bank organized
under the laws of any other country which is a member of the OECD, or a
political subdivision of any such country, and having a combined capital
and surplus of at least $500,000,000, provided that such bank is acting
through a branch or agency located in the United States; (iii) a Person
that is primarily engaged in the business of commercial banking and that is
(A) a Subsidiary of a Lender, (B) a Subsidiary of a Person of which a
Lender is a Subsidiary, or (C) a Person of which a Lender is a Subsidiary;
and (iv) an insurance company, pension fund, mutual fund, commercial
finance company or similar financial institution having a net worth of at
least $250,000,000.
Employment Agreement means the Employment Agreement dated as of
September 12, 1996 between the Company and David A. Jones, as amended from
time to time in accordance with Section 8.22.
Environmental Claims means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability under
any Environmental Law or responsibility for violation of any Environmental
Law, or for release or injury to the environment.
Environmental Laws means CERCLA, the Resource Conservation and
Recovery Act and all other federal, state or local laws, statutes, common
law duties, rules, regulations, ordinances and codes relating to pollution
or protection of public or employee health or the environment, together
with all administrative orders, consent decrees, licenses, authorizations
and permits of any Governmental Authority implementing them.
ERISA means the Employee Retirement Income Security Act of 1974.
ERISA Affiliate means any trade or business (whether or not
incorporated) under common control with the Company within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code
for purposes of provisions relating to Section 412 of the Code).
ERISA Event means: (a) a Reportable Event with respect to a Pension
Plan; (b) a withdrawal by the Company or any ERISA Affiliate from a Pension
Plan subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a
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substantial cessation of operations which is treated as such a withdrawal;
(c) a complete or partial withdrawal by the Company or any ERISA Affiliate
from a Multiemployer Plan or notification that a Multiemployer Plan is in
reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Pension Plan amendment as a termination under Section 4041
or 4041A of ERISA, or the commencement of proceedings by the PBGC to
terminate a Pension Plan or Multiemployer Plan; (e) an event or condition
which might reasonably be expected to constitute grounds under Section 4042
of ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan or Multiemployer Plan; or (f) the imposition
of any liability under Title IV of ERISA, other than PBGC premiums due but
not delinquent under Section 4007 of ERISA, upon the Company or any ERISA
Affiliate.
Escrow Agreement means the Escrow Agreement, dated as of September 12,
1996, among the Company, RC Funding, Inc., BofA and Snoga, Inc., as escrow
agent, as amended from time to time in accordance with Section 8.22.
Event of Default means any of the events or circumstances specified in
Section 9.1.
Excess Cash Flow means, for any period, the remainder of
(a) the sum, without duplication, of
(i) Consolidated Net Income for such period, excluding any
extraordinary gains or losses to the extent reflected in calculating
Consolidated Net Income,
plus
(ii) all depreciation and amortization of assets (including
goodwill and other intangible assets) of the Company and its
Subsidiaries deducted in determining Consolidated Net Income for such
period,
plus
(iii) any net decrease in Adjusted Working Capital during such
period (exclusive of decreases in working capital associated with
asset sales),
plus
(iv) all federal, state, local and foreign income taxes of the
Company and its Subsidiaries deducted in determining Consolidated Net
Income for such period,
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less
(b) the sum, without duplication, of
(i) repayments of principal of Term Loans pursuant to Section
2.9, regularly scheduled principal payments arising with respect to
any other long-term Indebtedness of the Company and its Subsidiaries,
and the portion of any regularly scheduled payments with respect to
capital leases allocable to principal, in each case made during such
period,
plus
(ii) voluntary prepayments of the Term Loans pursuant to Section
2.7 during such period (other than any such voluntary prepayments to
the extent that the same are applied during such period to the
scheduled unpaid principal installments of the Term Loans in forward
order of maturity pursuant to Section 2.7),
plus
(iii) cash payments made in such period with respect to Capital
Expenditures,
plus
(iv) all federal, state, local and foreign income taxes paid by
the Company and its Subsidiaries during such period,
plus
(v) any net increase in Adjusted Working Capital during such
period (exclusive of increases in working capital associated with
asset sales).
Exchange Act means the Securities Exchange Act of 1934.
Excluded Assets has the meaning assigned thereto in the Security
Agreement.
Excluded Taxes - see the definition of "Taxes."
Fair Value means, at any time, the amount at which the assets, in
their entirety, of each of the Company and of each Guarantor would likely
change hands at such time as part of a going concern and for continued use
as part of a going concern between a willing buyer and a willing seller,
within a commercially reasonable period of time, each having reasonable
knowledge of the relevant facts, with neither being under any compulsion to
act.
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Federal Funds Rate means, for any day, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including
any such successor, "H.15(519)") on the preceding Business Day opposite the
caption "Federal Funds (Effective)"; or, if for any relevant day such rate
is not so published on any such preceding Business Day, the rate for such
day will be the arithmetic mean as determined by the Administrative Agent
of the rates for the last transaction in overnight Federal funds arranged
prior to 9:00 a.m. (New York City time) on that day by each of three
leading brokers of Federal funds transactions in New York City selected by
the Administrative Agent.
Fee Letter - see subsection 2.11(a).
Financial Standby Letter of Credit means any Standby Letter of Credit
which any Lender is required under any Requirement of Law (including under
12 CFR Part 3, Appendix A, Section 3, clause (b)) to classify as a
financial letter of credit with respect to its issuance thereof or
participation therein pursuant to this Agreement.
Fixed Charge Coverage Ratio means, for the Computation Period most
recently ended on or before such date, the ratio of (a) EBITDA for such
Computation Period to (b) the sum of (i) Interest Expense for such
Computation Period and (ii) the scheduled installments of principal of the
Term Loans for such Computation Period; provided, however, that with
respect to Computation Periods ending prior to September 30, 1997, EBITDA,
Interest Expense and scheduled installments of principal of the Term Loans
shall be measured from the period from October 1, 1996 through the end of
the Computation Period.
Foreign Subsidiary shall mean each Subsidiary of the Company organized
under the laws of any jurisdiction other than the United States or any
state thereof.
FRB means the Board of Governors of the Federal Reserve System, and
any Governmental Authority succeeding to any of its principal functions.
Funded Debt means all indebtedness of the Company and its Subsidiaries
as determined in accordance with GAAP.
Further Taxes means any and all present or future taxes, levies,
assessments, imposts, duties, deductions, fees, withholdings or similar
charges (including net income taxes and franchise taxes), and all
liabilities with respect thereto, imposed by any jurisdiction on account of
amounts paid or payable pursuant to Section 4.1.
-14-
GAAP means generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants
and statements and pronouncements of the Financial Accounting Standards
Board (or agencies with similar functions of comparable stature and
authority within the U.S. accounting profession), which are applicable to
the circumstances as of the date of determination.
Governmental Authority means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary
or regulatory authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
Guarantor means each Subsidiary that executes the Guaranty on the
Closing Date and each other Person which from time to time executes and
delivers a counterpart of the Guaranty.
Guaranty means the guaranty, substantially in the form of Exhibit F,
which will be executed by ROV Holding on the Closing Date and, if
applicable, from time to time by other Guarantors.
Guaranty Obligation has the meaning specified in the definition of
Contingent Obligation.
Hazardous Material means
(a) any "hazardous substance", as defined by CERCLA;
(b) any "hazardous waste", as defined by the Resource
Conservation and Recovery Act;
(c) any petroleum product; or
(d) any pollutant or contaminant or hazardous, dangerous or toxic
chemical, material or substance within the meaning of any other
Environmental Law.
Honor Date - see subsection 3.3(b).
Indebtedness of any Person means, without duplication: (a) all
indebtedness of such Person for borrowed money; (b) all obligations issued,
undertaken or assumed by such Person as the deferred purchase price of
property or services (other than trade payables entered into and accrued
expenses arising in the ordinary course of business on ordinary terms); (c)
all non-contingent reimbursement or
-15-
payment obligations with respect to Surety Instruments; (d) all obligations
of such Person evidenced by notes, bonds, debentures or similar
instruments; (e) all indebtedness of such Person created or arising under
any conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to property acquired by such Person
(even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of
such property); (f) all obligations of such Person with respect to capital
leases; (g) all indebtedness referred to in clauses (a) through (f) above
secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien upon or in
property (including accounts and contract rights) owned by such Person,
even though such Person has not assumed or become liable for the payment of
such Indebtedness; and (h) all Guaranty Obligations of such Person in
respect of indebtedness or obligations of others of the kinds referred to
in clauses (a) through (g) above.
Indemnified Liabilities - see Section 11.5.
Indemnified Person - see Section 11.5.
Independent Auditor - see subsection 7.1(a).
Insolvency Proceeding means, with respect to any Person, (a) any case,
action or proceeding with respect to such Person before any court or other
Governmental Authority relating to bankruptcy, reorganization, insolvency,
liquidation, receivership, dissolution, winding-up or relief of debtors or
(b) any general assignment for the benefit of creditors, composition,
marshalling of assets for creditors, or other, similar arrangement in
respect of such Person's creditors generally or any substantial portion of
such creditors; in each case undertaken under any U.S. Federal, State or
foreign law, including the Bankruptcy Code.
Interest Expense means for any period the consolidated interest
expense of the Company and its Subsidiaries for such period (including all
imputed interest on capital leases).
Interest Payment Date means (i) as to any Offshore Rate Loan, the last
day of each Interest Period applicable to such Loan and, in the case of any
Offshore Rate Loan with a six-month Interest Period, the three-month
anniversary of the first day of such Interest Period, and (ii) as to any
Base Rate Loan, the last Business Day of each calendar quarter.
Interest Period means, as to any Offshore Rate Loan, the period
commencing on the Borrowing Date of such Loan or on the
Conversion/Continuation Date on which the Loan is
-16-
converted into or continued as an Offshore Rate Loan, and ending one, two,
three or six months thereafter, as selected by the Company in its Notice of
Borrowing or Notice of Conversion/Continuation; provided that:
(i) if any Interest Period would otherwise end on a day that is
not a Business Day, such Interest Period shall be extended to the
following Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month, in which event
such Interest Period shall end on the preceding Business Day;
(ii) any Interest Period that begins on the last Business Day of
a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month at
the end of such Interest Period;
(iii) no Interest Period applicable to a Term A Loan, a Term B
Loan or a Term C Loan or any portion of any thereof shall extend
beyond any date upon which is due any scheduled principal payment in
respect of the Term A Loans, Term B Loans or Term C Loans, as
applicable, unless the aggregate principal amount of Term A Loans,
Term B Loans or Term C Loans, as applicable, represented by Base Rate
Loans, or by Offshore Rate Loans having Interest Periods that will
expire on or before such date, equals or exceeds the amount of such
principal payment; and
(iv) no Interest Period for any Revolving Loan shall extend
beyond the Revolving Termination Date.
IRB Debt means Indebtedness of the Company arising as a result of the
issuance of tax-exempt industrial revenue bonds or similar tax-exempt
public financing.
IRS means the Internal Revenue Service, and any Governmental Authority
succeeding to any of its principal functions under the Code.
Issuance Date - see subsection 3.1(a).
Issue means, with respect to any Letter of Credit, to issue or to
extend the expiry of, or to renew or increase the amount of, such Letter of
Credit; and the terms "Issued," "Issuing" and "Issuance" have corresponding
meanings.
Issuing Lender means BAI in its capacity as issuer of one or more
Letters of Credit hereunder, together with any replacement letter of credit
issuer arising under subsection 10.1(b) or Section 10.9.
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Joint Venture means a corporation, partnership, limited liability
company, joint venture or other similar legal arrangement (whether created
by contract or conducted through a separate legal entity) which is not a
Subsidiary of the Company or any of its Subsidiaries and which is now or
hereafter formed by the Company or any of its Subsidiaries with another
Person in order to conduct a common venture or enterprise with such Person.
Jones Note means the $500,000 Full Recourse Promissory Note, dated
September 12, 1996, made by David A. Jones in favor of the Company.
Judgment Currency - see subsection 3.10(f).
L/C Advance means each Lender's participation in any L/C Borrowing in
accordance with its Revolving Percentage.
L/C Amendment Application means an application form for amendment of
an outstanding standby or commercial documentary letter of credit as shall
at any time be in use at the Issuing Lender, as the Issuing Lender shall
request.
L/C Application means an application form for issuances of a standby
or commercial documentary letter of credit as shall at any time be in use
at the Issuing Lender, as the Issuing Lender shall request.
L/C Borrowing means an extension of credit resulting from a drawing
under any Letter of Credit which shall not have been reimbursed on the date
when made nor converted into a Borrowing of Revolving Loans under
subsection 3.3(c).
L/C Commitment means the commitment of the Issuing Lender to Issue,
and the commitments of the Lenders severally to participate in, Letters of
Credit from time to time Issued or outstanding under Article III, in an
aggregate amount not to exceed on any date the lesser of $10,000,000 and
the amount of the aggregate amount of all Revolving Commitments; it being
understood that the L/C Commitment is a part of the Revolving Commitments,
rather than a separate, independent commitment.
L/C Fee Rate means, at any time, (i) the Applicable Offshore Rate
Margin less 1.00%, in the case of each Commercial Letter of Credit, and
(ii) the Applicable Offshore Rate Margin for Revolving Loans, in the case
of each Financial Standby Letter of Credit and each Non-Financial Standby
Letter of Credit; provided that each of the foregoing rates shall be
increased by 2% at any time an Event of Default exists.
L/C Obligations means at any time the sum of (a) the aggregate undrawn
amount of all Letters of Credit then outstanding, plus (b) the amount of
all unreimbursed
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drawings under all Letters of Credit, including all outstanding L/C
Borrowings.
L/C-Related Documents means the Letters of Credit, the L/C
Applications, the L/C Amendment Applications and any other document
relating to any Letter of Credit, including any of the Issuing Lender's
standard form documents for letter of credit issuances.
Lenders means the several financial institutions from time to time
party to this Agreement. References to the "Lenders" shall include BAI in
its capacity as the Issuing Lender and BAI in its capacity as Swingline
Lender; for purposes of clarification only, to the extent that the
Swingline Lender or the Issuing Lender may have any rights or obligations
in addition to those of the other Lenders due to its status as Swingline
Lender or Issuing Lender, its status as such will be specifically
referenced.
Lending Office means, as to any Lender, the office or offices of such
Lender specified as its "Lending Office" or "Domestic Lending Office" or
"Offshore Lending Office", as the case may be, on Schedule 11.2, or such
other office or offices as such Lender may from time to time specify to the
Company and the Administrative Agent.
Letters of Credit means any letters of credit (whether standby letters
of credit or commercial documentary letters of credit) Issued by the
Issuing Lender pursuant to Article III.
Leverage Ratio means for each Computation Period the ratio of
(i) the aggregate outstanding principal amount of all Funded Debt
as of any date
to
(ii) EBITDA for such Computation Period most recently ended on or
before such date;
provided, however, that with respect to Computation Periods ending prior to
September 30, 1997, EBITDA shall be measured from the period from October
1, 1996 through the end of the Computation Period and annualized as follows
(x) with respect to the Computation Period ending December 31, 1996, EBITDA
during such Computation Period shall be multiplied by four, (y) with
respect to the Computation Period ending March 31, 1997, EBITDA during such
Computation Period shall be multiplied by two and (z) with respect to the
Computation Period ending June 30, 1997, EBITDA during such Computation
Period shall be multiplied by four-thirds.
-19-
Lien means any security interest, mortgage, deed of trust, pledge,
hypothecation, assignment, charge or deposit arrangement, encumbrance, lien
(statutory or other) or preferential arrangement of any kind or nature
whatsoever in respect of any property (including those created by, arising
under or evidenced by any conditional sale or other title retention
agreement, the interest of a lessor under a capital lease, or any financing
lease having substantially the same economic effect as any of the
foregoing, but not including the interest of a lessor under an operating
lease).
Loan means an extension of credit by a Lender to the Company under
Article II or Article III in the form of a Revolving Loan, Term Loan,
Swingline Loan or L/C Advance. Each Revolving Loan and each Term Loan may
be divided into tranches which are Base Rate Loans or Offshore Rate Loans
(each a "Type" of Loan).
Loan Documents means this Agreement, any Notes, the Fee Letter, the
L/C-Related Documents, the Guaranty, the Collateral Documents and all other
documents delivered to the Administrative Agent or any Lender in connection
herewith.
Management Agreement means the Management Agreement, dated as of
September 12, 1996, between Thomas H. Lee Company and the Company, as
amended from time to time in accordance with Section 8.22.
Mandatory Prepayment Event - see subsection 2.8(a).
Margin Stock means "margin stock" as such term is defined in
Regulation G, T, U or X of the FRB.
Material Adverse Effect means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties,
condition (financial or otherwise) or prospects of the Company and its
Subsidiaries taken as a whole; (b) a material impairment of the ability of
the Company or any Guarantor to perform any of its obligations under any
Loan Document; or (c) a material adverse effect upon the legality,
validity, binding effect or enforceability against the Company or any
Guarantor of any Loan Document.
Minera Vindaluz means Minera Vindaluz, S.A. de C.V., a corporation
organized under the laws of Mexico.
Mortgage means a mortgage, leasehold mortgage, deed of trust or
similar document granting a Lien on real property in appropriate form for
filing or recording in the applicable jurisdiction and otherwise reasonably
satisfactory to the Administrative Agent.
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Multiemployer Plan means a "multiemployer plan", within the meaning of
Section 4001(a)(3) of ERISA, with respect to which the Company or any ERISA
Affiliate may have any liability.
Net Cash Proceeds means:
(a) with respect to the sale, transfer, or other disposition by the
Company or any Subsidiary of any asset (including any stock of
any Subsidiary), the aggregate cash proceeds (including cash
proceeds received by way of deferred payment of principal
pursuant to a note, installment receivable or otherwise, but only
as and when received) received by the Company or any Subsidiary
pursuant to such sale, transfer or other disposition, net of (i)
the direct costs relating to such sale, transfer or other
disposition (including, without limitation, sales commissions and
legal, accounting and investment banking fees), (ii) taxes paid
or reasonably estimated by the Company to be payable as a result
thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements) and (iii) amounts
required to be applied to the repayment of any Indebtedness
secured by a Lien on the asset subject to such sale, transfer or
other disposition (other than the Loans); and
(b) with respect to any issuance of equity securities or Other Debt,
the aggregate cash proceeds received by the Company or any
Subsidiary pursuant to such issuance, net of the direct costs
relating to such issuance (including, without limitation, sales
and underwriter's commissions and legal, accounting and
investment banking fees).
Net Worth means the Company's consolidated stockholders' equity.
Non-Dollar Letter of Credit - see Section 3.10.
Non-Financial Standby Letter of Credit means any Standby Letter of
Credit that is not a Financial Standby Letter of Credit.
Note means a promissory note executed by the Company in favor of a
Lender pursuant to subsection 2.2(b), in substantially the form of Exhibit
D.
Notice of Borrowing means a notice in substantially the form of
Exhibit A.
Notice of Conversion/Continuation means a notice in substantially the
form of Exhibit B.
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Obligations means all advances, debts, liabilities, obligations, covenants
and duties arising under any Loan Document owing by the Company to any
Lender, the Administrative Agent, or any Indemnified Person, whether direct
or indirect (including those acquired by assignment), absolute or
contingent, due or to become due, or now existing or hereafter arising.
OECD means the Organization for Economic Cooperation and Development.
Offshore Rate means, for any Interest Period, with respect to Offshore
Rate Loans comprising part of the same Borrowing, the rate of interest per
annum (rounded upward, if necessary, to the next 1/16th of 1%) determined
by the Administrative Agent as follows:
Offshore Rate = IBOR
------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means for any day for any Interest
Period the maximum reserve percentage (expressed as a decimal, rounded
upward, if necessary, to the next 1/100th of 1%) in effect on such day
(whether or not applicable to any Lender) under regulations issued
from time to time by the FRB for determining the maximum reserve
requirement (including any emergency, supplemental or other marginal
reserve requirement) with respect to Eurocurrency funding (currently
referred to as "Eurocurrency liabilities"); and
"IBOR" means the rate of interest per annum determined by the
Administrative Agent as the rate at which Dollar deposits in the
approximate amount of BAI's Offshore Rate Loan for such Interest
Period would be offered by BofA's Grand Cayman Branch, Grand Cayman
B.W.I. (or such other office as may be designated for such purpose by
BofA), to major banks in the offshore dollar interbank market at their
request at approximately 11:00 a.m. (New York City time) two Business
Days prior to the commencement of such Interest Period.
The Offshore Rate shall be adjusted automatically as to all Offshore
Rate Loans then outstanding as of the effective date of any change in the
Eurodollar Reserve Percentage.
Offshore Rate Loan means a Loan that bears interest based on the
Offshore Rate.
Organization Documents means, (a) for any domestic corporation, the
certificate or articles of incorporation, the bylaws, any certificate of
determination or instrument
-22-
relating to the rights of preferred shareholders of such corporation, any
shareholder rights agreement, and all applicable resolutions of the board
of directors (or any committee thereof) of such corporation and (b) for any
foreign corporation, the equivalent documents.
Other Debt means debt securities of the Company and its Subsidiaries,
other than as permitted by Section 8.5.
Other Taxes means any present or future stamp, court or documentary
taxes or any other excise or property taxes, charges or similar levies
which arise from any payment made hereunder or from the execution,
delivery, performance, enforcement or registration of, or otherwise with
respect to, this Agreement or any other Loan Document.
Overnight Rate - see subsection 3.10(g).
Participant - see subsection 11.8(c).
Patent Security Agreement - see subsection 5.1(g).
PBGC means the Pension Benefit Guaranty Corporation, or any
Governmental Authority succeeding to any of its principal functions under
ERISA.
Pension Plan means a pension plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA with respect to which the Company or
any ERISA Affiliate may have any liability.
Permitted Liens - see Section 8.1.
Permitted Swap Obligations means all obligations (contingent or
otherwise) of the Company or any Subsidiary existing or arising under Swap
Contracts, provided that each of the following criteria is satisfied: (a)
such obligations are (or were) entered into by such Person in the ordinary
course of business for the purpose of directly mitigating risks associated
with liabilities, commitments or assets held or reasonably anticipated by
such Person, or changes in the value of securities issued by such Person in
conjunction with a securities repurchase program not otherwise prohibited
hereunder, and not for purposes of speculation or taking a "market view;"
and (b) such Swap Contracts do not contain (i) any provision ("walk-away"
provision) exonerating the non-defaulting party from its obligation to make
payments on outstanding transactions to the defaulting party or (ii) any
provision creating or permitting the declaration of an event of default,
termination event or similar event upon the occurrence of an Event of
Default hereunder (other than an Event of Default under subsection 9.1(a)).
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Person means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust,
unincorporated association, joint venture or Governmental Authority.
Plan means an employee benefit plan (as defined in Section 3(3) of
ERISA) with respect to which the Company may have any liability.
Pledge Agreement means the Company Pledge Agreement and each
Subsidiary Pledge Agreement.
Present Fair Salable Value means, at any time, the amount that could
be obtained at such time by an independent willing seller from an
independent willing buyer if the assets of each of the Company and each
Guarantor are sold with reasonable promptness in an arm's-length
transaction under present conditions for the sale of comparable assets.
Prior Credit Agreement - see Section 5.1.
Proposed Bridge Note Refinancing means (i) any refinancing of the
Bridge Notes by the issuance of Rollover Notes in accordance with Article
VII of the Bridge Note Agreement or (ii) any refinancing of the Bridge
Notes or the Rollover Notes by a Qualified Refinancing or by a private
placement or public offering of Subordinated Debt of the Company in an
aggregate principal amount not to exceed $100,000,000, which shall not
require scheduled payments of principal earlier than September 30, 2006 and
which shall not require or permit cash interest payments to accrue thereon
at a rate in excess of 15.25% per annum.
Public Offering means the offering of equity securities or
Indebtedness registered under the Securities Act of 1933.
Purchasers means Thomas H. Lee Equity Fund III, L.P., Thomas H. Lee
Foreign Fund III, L.P., certain other Affiliates of Thomas H. Lee Company
and David A. Jones, as identified on Exhibit A of the Recapitalization
Agreement.
Pyle Agreements means (a) the Consulting Agreement dated as of
September 12, 1996 between the Company and Thomas F. Pyle, Jr., (b) the
Confidentiality, Non-Competition, No-Solicitation and No-Hire Agreement
dated as of September 12, 1996 between the Company and Thomas F. Pyle, Jr.
and (c) the Confidentiality, Non-Competition, No-Solicitation and No-Hire
Agreement dated as of September 12, 1996 between the Company and Judith
Pyle, in each case as amended from time to time in accordance with Section
8.22.
Qualified Indenture means a trust indenture entered into by the
Company with an indenture trustee with terms and provisions no more
restrictive to the Company than the Rollover Indenture, and with
subordination terms no less
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advantageous to the Lenders than the subordination terms in the Rollover
Indenture, as amended from time to time in accordance with Section 8.22.
Qualified Notes means subordinated notes of the Company in an
aggregate principal amount not to exceed $100,000,000, which shall not
require scheduled payments of principal prior to September 30, 2006, which
shall not require cash interest payments thereon at a rate in excess of
15.25% per annum, and which are issued pursuant to a Qualified Indenture.
Qualified Refinancing means a refinancing of the Bridge Notes or the
Rollover Notes with Qualified Notes.
Rayovac U.K. - see subsection 5.1(i).
Recapitalization Agreement means the Stock Purchase and Redemption
Agreement, dated September 12, 1996, among the Company, the Redemption
Shareholders and the Purchasers, as amended from time to time in accordance
with Section 8.22.
Recapitalization Transaction means the purchase by the Purchasers of
not less than 9,089,581 shares of Common Stock from certain Redemption
Shareholders and the redemption by the Company of 5,807,581 shares of
Common Stock of certain Redemption Shareholders, in each case pursuant to
the Recapitalization Agreement and in each case prior to giving effect to a
5-for-1 stock split to occur with respect to the Common Stock immediately
after the closing of such purchase and redemption, after which the
Purchasers that are Affiliates of the Thomas H. Lee Company shall hold at
least 79% of the combined voting power and value of all classes of stock of
the Company.
Redemption Shareholders means the holders of all shares of stock of
the Company immediately prior to the Recapitalization Transaction, as
identified on Exhibit B to the Recapitalization Agreement.
Release means a "release", as such term is defined in CERCLA.
Replacement Lender - see Section 4.7.
Reportable Event means any of the events set forth in Section 4043(b)
of ERISA or the regulations thereunder, other than any such event for which
the 30-day notice requirement under ERISA has been waived in regulations
issued by the PBGC or administrative pronouncements.
Required Lenders means, at any time, Lenders having an aggregate Total
Percentage of 51% or more.
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Required Revolving Lenders means, at any time, Revolving Lenders
having an aggregate Revolving Percentage of 51% or more.
Required Term A Lenders means, at any time, Term A Lenders having an
aggregate Term A Percentage of 51% or more.
Required Term B Lenders means, at any time, Term B Lenders having an
aggregate Term B Percentage of 51% or more.
Required Term C Lenders means, at any time, Term C Lenders having an
aggregate Term C Percentage of 51% or more.
Requirement of Law means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of
a Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its
property is subject.
Resource Conservation and Recovery Act means the Resource Conservation
and Recovery Act, 42 U.S.C. Section 690, et seq.
Responsible Officer means the chief executive officer or the president
of the Company, or any other officer having substantially the same
authority and responsibility or the chief financial officer or the
treasurer of the Company, or any other officer having substantially the
same authority and responsibility.
Revolving Commitment means, as to any Lender, the commitment of such
Lender to make Revolving Loans pursuant to subsection 2.1(d). The initial
amount of each Revolving Lender's Revolving Commitment is set forth across
from such Lender's name on Schedule 1.1.
Revolving Lender means, at any time, a Lender with a Revolving
Commitment or which then holds any Revolving Loan.
Revolving Loan - see subsection 2.1(d).
Revolving Percentage means, as to any Lender, the percentage which (a)
the amount of such Lender's Revolving Commitment is of (b) the aggregate
amount of all of the Revolving Lenders' Revolving Commitments.
Revolving Termination Date means the earlier to occur of:
(a) September 30, 2002; and
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(b) the date on which the Revolving Commitments terminate in
accordance with the provisions of this Agreement.
Rollover Indenture means the Indenture, dated as of September 12,
1996, among the Company, ROV Holding and Marine Midland Bank, as trustee,
with respect to the Rollover Notes, as amended from time to time in
accordance with Section 8.22.
Rollover Notes means the Senior Subordinated Notes, due September 30,
2005, of the Company to be issued pursuant to the Rollover Indenture in a
principal amount equal to the then outstanding principal amount of the
Bridge Notes at the date of the stated maturity of the Bridge Notes, plus
accrued but unpaid interest thereon at such date, which shall not require
scheduled payments of principal earlier than September 15, 2005 and which
shall not require cash interest payments to accrue thereon at a rate in
excess of 15.25% per annum.
ROV Holding means ROV Holding, Inc., a Delaware corporation and a
Subsidiary.
SEC means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.
Security Agreement - see subsection 5.1(g).
Standby Letter of Credit means any Letter of Credit that is not a
Commercial Letter of Credit.
Stated Liabilities means, at any time, the recorded liabilities
(including Contingent Liabilities that would be recorded in accordance with
GAAP) of each of the Company and of each Guarantor at such time after
giving effect to the transactions contemplated under this Agreement,
determined in accordance with GAAP consistently applied, together with the
amount, without duplication, of all Loans and Contingent Liabilities.
Subordinated Debt means all unsecured Indebtedness of the Company for
money borrowed which is subject to, and is only entitled to the benefits
of, terms and provisions (including maturity, amortization, acceleration,
interest rate, sinking fund, covenant, default and subordination
provisions) satisfactory in form and substance to the Required Lenders, in
each case as evidenced by their written approval thereof (which may be
granted or withheld in their sole discretion), including, without limiting
the foregoing, the Bridge Notes and the Rollover Notes (the terms and
conditions of the Bridge Notes and Rollover Notes are hereby consented to
by the Lenders).
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Subordinated Debt Proceeds means, at any time, the lesser of (a)
$100,000,000 and (b) the lesser of (x) the aggregate original principal
amount of, or (y) the gross proceeds received by the Company upon issuance
of, all outstanding Bridge Notes, Rollover Notes or Qualified Notes of the
Company at such time.
Subsidiary of a Person means any corporation, association,
partnership, limited liability company, joint venture or other business
entity of which more than 50% of the voting stock, membership interests or
other equity interests is owned or controlled directly or indirectly by
such Person, or one or more of the Subsidiaries of such Person, or a
combination thereof. Unless the context otherwise clearly requires,
references herein to a "Subsidiary" refer to a Subsidiary of the Company.
Subsidiary Pledge Agreement means the U.K. Charge and each other
agreement pursuant to which any Subsidiary pledges to the Administrative
Agent shares of stock owned by it or Indebtedness owing to it.
Surety Instruments means all letters of credit (including standby and
commercial), banker's acceptances, bank guaranties, surety bonds and
similar instruments.
Swap Contract means any agreement, whether or not in writing, relating
to any transaction that is a rate swap, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap
or option, bond, note or bill option, interest rate option, forward foreign
exchange transaction, cap, collar or floor transaction, currency swap,
cross-currency rate swap, swaption, currency option or any other, similar
transaction (including any option to enter into any of the foregoing) or
any combination of the foregoing, and, unless the context otherwise clearly
requires, any master agreement relating to or governing any or all of the
foregoing.
Swap Termination Value means, in respect of any one or more Swap
Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Contracts, (a) for any date on or
after the date such Swap Contracts have been closed out and termination
value(s) determined in accordance therewith, such termination value(s), and
(b) for any date prior to the date referenced in clause (a) the amount(s)
determined as the mark-to-market value(s) for such Swap Contracts, as
determined based upon one or more mid-market or other readily available
quotations provided by any recognized dealer in such Swap Contracts (which
may include any Lender).
Swingline Loan has the meaning specified in subsection 2.5(a).
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Syndication Agents means BofA and DLJ, in their capacities as
syndication agents for the Lenders.
Taxes means any and all present or future taxes, levies, assessments,
imposts, duties, deductions, charges or withholdings, fees or similar
charges and all liabilities with respect thereto, excluding, in the case of
each Lender and the Administrative Agent, such taxes (including income
taxes, branch profit taxes or franchise taxes) as are imposed on or
measured by such Lender's or the Administrative Agent's, as the case may
be, net income by the jurisdiction (or any political subdivision thereof)
under the laws of which such Lender or the Administrative Agent, as the
case may be, is organized, maintains a lending office or conducts business
(collectively, "Excluded Taxes").
Term A Commitment means, as to any Lender, the commitment of such
Lender to make a Term A Loan pursuant to subsection 2.1(a). The amount of
each Term A Lender's Term A Commitment is set forth across from such
Lender's name on Schedule 1.1.
Term A Lender means, at any time, a Lender with a Term A Commitment or
which then holds any Term A Loan.
Term A Loan - see subsection 2.1(a).
Term A Percentage means, as to any Lender, the percentage which (a)
the Term A Commitment of such Lender (or, after the making of the Term A
Loans, the principal amount of such Lender's Term A Loan) is of (b) the
aggregate amount of Term A Commitments (or after the making of the Term A
Loans, the aggregate principal amount of all Term A Loans). The initial
Term A Percentage of each Lender is set forth across from such Lender's
name on Schedule 1.1.
Term B Commitment means, as to any Lender, the commitment of such
Lender to make a Term B Loan pursuant to subsection 2.1(b). The amount of
each Term B Lender's Term B Commitment is set forth across from such
Lender's name on Schedule 1.1.
Term B Lender means, at any time, a Lender with a Term B Commitment or
which then holds any Term B Loan.
Term B Loan - see subsection 2.1(b).
Term B Percentage means, as to any Lender, the percentage which (a)
the Term B Commitment of such Lender (or, after the making of the Term B
Loans, the principal amount of such Lender's Term B Loan) is of (b) the
aggregate amount of Term B Commitments (or after the making of the Term B
Loans, the aggregate principal amount of all Term B
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Loans). The initial Term B Percentage of each Lender is set forth across
from such Lender's name on Schedule 1.1.
Term C Commitment means, as to any Lender, the commitment of such
Lender to make a Term C Loan pursuant to subsection 2.1(c). The amount of
each Term C Lender's Term C Commitment is set forth across from such
Lender's name on Schedule 1.1.
Term C Lender means, at any time, a Lender with a Term C Commitment or
which then holds any Term C Loan.
Term C Loan - see subsection 2.1(c).
Term C Percentage means, as to any Lender, the percentage which (a)
the Term C Commitment of such Lender (or, after the making of the Term C
Loans, the principal amount of such Lender's Term C Loan) is of (b) the
aggregate amount of Term C Commitments (or after the making of the Term C
Loans, the aggregate principal amount of all Term C Loans). The initial
Term C Percentage of each Lender is set forth across from such Lender's
name on Schedule 1.1.
Term Loan means a Term A Loan, a Term B Loan or a Term C Loan.
Total Percentage means, as to any Lender, the percentage which (a) the
aggregate amount of such (i) Lender's Revolving Commitment plus (ii) such
Lender's Term A Commitment (or, after the making of the Term A Loans, the
outstanding principal amount of such Lender's Term A Loans) plus (iii) such
Lender's Term B Commitment (or, after the making of the Term B Loans, the
outstanding principal amount of such Lender's Term B Loans) plus (iv) such
Lender's Term C Commitment (or, after the making of the Term C Loans, the
outstanding principal amount of such Lender's Term C Loans) is of (b) the
aggregate amount of (i) the Revolving Commitments of all Lenders plus (ii)
the Term A Commitments of all Lenders (or, after the making of the Term A
Loans, the outstanding principal amount of all Term A Loans) plus (iii) the
Term B Commitments of all Lenders (or, after the making of the Term B
Loans, the outstanding principal amount of all Term B Loans) plus (iv) the
Term C Commitments of all Lenders (or, after the making of the Term C
Loans, the outstanding principal amount of all Term C Loans); provided that
after the Revolving Commitments have been terminated, "Total Percentage"
shall mean as to any Lender the percentage which the aggregate principal
amount of such Lender's Loans is of the aggregate principal amount of all
Loans. The initial Total Percentage of each Lender is set forth opposite
such Lender's name on Schedule 1.1.
Trademark Security Agreement - see subsection 5.1(g).
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Type has the meaning specified in the definition of "Loan."
U.K. Charge - see subsection 5.1(i).
Unfunded Pension Liability means the excess of a Pension Plan's
benefit liabilities under Section 4001(a)(16) of ERISA, over the current
value of such Pension Plan's assets, determined in accordance with the
assumptions used for funding such Pension Plan pursuant to Section 412 of
the Code for the applicable plan year.
United States and U.S. each means the United States of America.
Unmatured Event of Default means any event or circumstance which, with
the giving of notice, the lapse of time, or both, would (if not cured or
otherwise remedied during such time) constitute an Event of Default.
Wholly-Owned Subsidiary means any corporation in which (other than
director's qualifying shares or due to native ownership requirements) 100%
of the capital stock of each class is owned beneficially and of record by
the Company or by one or more other Wholly-Owned Subsidiaries.
Zoe-Phos International means Zoe-Phos International N.V., a
corporation organized under the laws of the Netherlands Antilles.
1.2 Other Interpretive Provisions.
(a) The meanings of defined terms are equally applicable to the singular
and plural forms of the defined terms.
(b) The words "hereof", "herein", "hereunder" and similar words refer to
this Agreement as a whole and not to any particular provision of this Agreement;
and subsection, Section, Schedule and Exhibit references are to this Agreement
unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other writings,
however evidenced.
(ii) The term "including" is not limiting and means "including without
limitation."
(iii) In the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including"; the words
"to" and "until" each mean "to but excluding"; and the word "through" means
"to and including."
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(d) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document and (ii) references to any statute or regulation
are to be construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting the statute or
regulation.
(e) The captions and headings of this Agreement are for convenience of
reference only and shall not affect the interpretation of this Agreement.
(f) This Agreement and the other Loan Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their terms.
1.3 Accounting Principles.
(a) Unless the context otherwise clearly requires, all accounting terms
not expressly defined herein shall be construed, and all financial computations
required under this Agreement shall be made, in accordance with GAAP,
consistently applied; provided that if the Company notifies the Administrative
Agent that the Company wishes to amend any covenant in Article VIII or any
corresponding definition to eliminate the effect of any change in GAAP on the
operation of such covenant (or if the Administrative Agent notifies the Company
that the Required Lenders wish to amend Article VIII or any corresponding
definition for such purpose), then the Company's compliance with such covenant
shall be determined on the basis of GAAP in effect immediately before the
relevant change in GAAP became effective, until either such notice is withdrawn
or such covenant is amended in a manner satisfactory to the Company and the
Required Lenders.
(b) References herein to "fiscal year" and "fiscal quarter" refer to
such fiscal periods of the Company.
ARTICLE II
THE CREDITS
2.1 Amounts and Terms of Commitments. (a) The Term A Credit. Each Term A
Lender severally agrees, on the terms and conditions set forth herein, to make a
single loan to the Company (each such loan, a "Term A Loan") on the Closing Date
in an amount not to exceed such Term A Lender's Term A Percentage of
$55,000,000. Amounts borrowed as Term A Loans which are repaid or prepaid by the
Company may not be reborrowed. The Term A Commitments shall expire concurrently
with the making of the Term A Loans on the Closing Date.
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(b) The Term B Credit. Each Term B Lender severally agrees, on the terms
and conditions set forth herein, to make a single loan to the Company (each such
loan, a "Term B Loan") on the Closing Date in an amount not to exceed such Term
B Lender's Term B Percentage of $25,000,000. Amounts borrowed as Term B Loans
which are repaid or prepaid by the Company may not be reborrowed. The Term B
Commitments shall expire concurrently with the making of the Term B Loans on the
Closing Date.
(c) The Term C Credit. Each Term C Lender severally agrees, on the terms
and conditions set forth herein, to make a single loan to the Company (each such
loan, a "Term C Loan") on the Closing Date in an amount not to exceed such Term
C Lender's Term C Percentage of $25,000,000. Amounts borrowed as Term C Loans
which are repaid or prepaid by the Company may not be reborrowed. The Term C
Commitments shall expire concurrently with the making of the Term C Loans on the
Closing Date.
(d) The Revolving Credit. Each Revolving Lender severally agrees, on the
terms and conditions set forth herein, to make loans to the Company (each such
loan, a "Revolving Loan"), from time to time on any Business Day during the
period from the Closing Date to the Revolving Termination Date, in an aggregate
amount not to exceed at any time outstanding such Revolving Lender's Revolving
Percentage of the aggregate amount of the Revolving Commitments; provided that,
after giving effect to any Borrowing of Revolving Loans, (x) the sum of the
Effective Amount of all Revolving Loans plus the Effective Amount of all
Swingline Loans plus the Effective Amount of all L/C Obligations shall not
exceed (y) the aggregate amount of the Revolving Commitments less the amount of
the Continuing Debt Reserve at the time of such Borrowing; and provided,
further, the amount of all Revolving Loans and Swingline Loans made on the
Closing Date shall not exceed $26,000,000; provided, further, however, that if
all of the proceeds of a Borrowing of Revolving Loans will be used to
permanently reduce the amount of Continuing Debt, such Borrowing may be made if
such Borrowing could otherwise be made under the first proviso to this
subsection (d) without giving effect to the Continuing Debt Reserve. Within the
foregoing limits, and subject to the other terms and conditions hereof, the
Company may borrow under this subsection 2.1(d), prepay under Section 2.7 and
reborrow under this subsection 2.1(d).
2.2 Loan Accounts. (a) The Loans made by each Lender and the Letters of
Credit Issued by the Issuing Lender shall be evidenced by one or more accounts
or records maintained by such Lender or the Issuing Lender, as the case may be,
in the ordinary course of business. The accounts or records maintained by the
Administrative Agent, the Issuing Lender and each Lender shall be conclusive
(absent manifest error) as to the amount of the Loans made by the Lenders to the
Company and the Letters of Credit Issued for the account of the Company, and the
interest and payments thereon. Any failure to record or any error in doing so
shall not, however, limit or otherwise affect the obligation of
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the Company hereunder to pay any amount owing with respect to any
Loan or any Letter of Credit.
(b) Upon the request of any Lender made through the Administrative
Agent, the Loans made by such Lender may be evidenced by one or more Notes in
addition to loan accounts. Each such Lender shall endorse on the schedules
annexed to its Note(s) the date, amount and maturity of each Loan made by it and
the amount of each payment of principal made by the Company with respect
thereto. Each such Lender is irrevocably authorized by the Company to endorse
its Note(s) and each Lender's record shall be conclusive absent manifest error;
provided, however, that the failure of a Lender to make, or an error in making,
a notation thereon with respect to any Loan shall not limit or otherwise affect
the obligations of the Company hereunder or under any Note to such Lender.
2.3 Procedure for Borrowing. (a) Each Borrowing shall be made upon the
Company's irrevocable written notice delivered to the Administrative Agent in
the form of a Notice of Borrowing (which notice must be received by the
Administrative Agent (i) prior to 11:00 a.m. (Chicago time) three Business Days
prior to the requested Borrowing Date, in the case of Offshore Rate Loans and
(ii) prior to 11:00 a.m. (Chicago time) one Business Day prior to the requested
Borrowing Date, in the case of Base Rate Loans), specifying:
(A) the amount of the Borrowing, which shall be in an amount of
$3,000,000 or a higher integral multiple of $100,000;
(B) the requested Borrowing Date, which shall be a Business Day;
(C) the Type of Loans comprising the Borrowing (subject to
Section 2.16); and
(D) in the case of Offshore Rate Loans, the duration of the
Interest Period applicable to such Loans included in such notice.
(b) The Administrative Agent will promptly notify each Lender of its
receipt of any Notice of Borrowing and of the amount of such Lender's share of
the related Borrowing based upon such Lender's Revolving Percentage, Term A
Percentage, Term B Percentage or Term C Percentage, as applicable.
(c) Each Lender will make the amount of its share of each Borrowing
available to the Administrative Agent for the account of the Company at the
Agent's Payment Office by 1:00 p.m. (Chicago time) on the Borrowing Date
requested by the Company in funds immediately available to the Administrative
Agent. The proceeds of all Loans will then be made available to the Company by
the Administrative Agent at such office by crediting the account of the Company
on the books of BAI with the aggregate of
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the amounts made available to the Administrative Agent by the Lenders and in
like funds as received by the Administrative Agent.
(d) After giving effect to any Borrowing, there may not be more than
twelve different Interest Periods in effect.
2.4 Conversion and Continuation Elections. (a) Subject to Section 2.16, the
Company may, upon irrevocable written notice to the Administrative Agent in
accordance with subsection 2.4(b):
(i) elect to convert, on any Business Day, any Base Rate Loans (in an
aggregate amount of $3,000,000 or a higher integral multiple of $100,000)
into Offshore Rate Loans;
(ii) elect to convert, on the last day of the applicable Interest
Period, any Offshore Rate Loans (or any part thereof in an aggregate amount
of $3,000,000 or a higher integral multiple of $100,000) into Base Rate
Loans; or
(iii) elect to continue, as of the last day of the applicable Interest
Period, any Offshore Rate Loans having Interest Periods expiring on such
day (or any part thereof in an aggregate amount of $3,000,000 or a higher
integral multiple of $100,000);
provided that if at any time the aggregate amount of Offshore Rate Loans in
respect of any Borrowing shall have been reduced, by payment, prepayment or
conversion of part thereof, to be less than $3,000,000, such Offshore Rate Loans
shall automatically convert into Base Rate Loans.
(b) The Company shall deliver a Notice of Conversion/Continuation to be
received by the Administrative Agent not later than (i) 11:00 a.m. (Chicago
time) at least three Business Days in advance of the Conversion/Continuation
Date, if the Loans are to be converted into or continued as Offshore Rate Loans
and (ii) not later than 11:00 a.m. (Chicago time) one Business Day prior to the
Conversion/Continuation Date, if the Loans are to be converted into Base Rate
Loans, specifying:
(A) the proposed Conversion/Continuation Date;
(B) the aggregate principal amount of Loans to be converted or
continued;
(C) the Type of Loans resulting from the proposed conversion or
continuation; and
(D) in the case of conversions into Offshore Rate Loans, the
duration of the requested Interest Period.
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(c) If upon the expiration of any Interest Period applicable to Offshore
Rate Loans, the Company has failed to select timely a new Interest Period to be
applicable to such Offshore Rate Loans, the Company shall be deemed to have
elected to convert such Offshore Rate Loans into Base Rate Loans effective as of
the expiration date of such Interest Period.
(d) The Administrative Agent will promptly notify each Lender of its
receipt of a Notice of Conversion/Continuation or, if no timely notice is
provided by the Company, the Administrative Agent will promptly notify each
Lender of the details of any automatic conversion. All conversions and
continuations shall be made ratably according to the respective outstanding
principal amounts of the Loans held by each Lender with respect to which the
notice was given.
(e) Unless the Required Lenders otherwise agree, during the existence of
an Event of Default or Unmatured Event of Default, the Company may not elect to
have a Loan converted into or continued as an Offshore Rate Loan.
(f) After giving effect to any conversion or continuation of Loans,
there may not be more than twelve different Interest Periods in effect.
2.5 Swingline Loans.
(a) Subject to the terms and conditions hereof, the Swingline Lender
may, in its sole discretion (subject to subsection 2.5(b)), make a portion of
the Revolving Commitments available to the Company by making swingline loans
(each such loan, a "Swingline Loan") to the Company on any Business Day during
the period from the Closing Date to the Revolving Termination Date in accordance
with the procedures set forth in this Section 2.5 in an aggregate principal
amount at any one time outstanding not to exceed the lesser of (x) the aggregate
available amount of the Revolving Commitments and (y) $5,000,000,
notwithstanding the fact that such Swingline Loans, when aggregated with the
Swingline Lender's outstanding Revolving Loans, may exceed the Swingline
Lender's Revolving Percentage of the aggregate amount of the Revolving
Commitments; provided that at no time shall the sum of the Effective Amount of
all Swingline Loans, Revolving Loans and L/C Obligations exceed the aggregate
amount of the Revolving Commitments. Subject to the other terms and conditions
hereof, the Company may borrow under this subsection 2.5(a), prepay pursuant to
subsection 2.5(d) and reborrow pursuant to this subsection 2.5(a) from time to
time; provided that the Swingline Lender shall not be obligated to make any
Swingline Loan.
(b) The Company shall provide the Administrative Agent and the Swingline
Lender irrevocable written notice (or notice by a telephone call confirmed
promptly by facsimile) of any Swingline Loan requested hereunder (which notice
must be received by the Swingline Lender and the Administrative Agent prior to
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12:00 p.m. (Chicago time) on the requested Borrowing Date) specifying (i) the
amount to be borrowed, and (ii) the requested Borrowing Date, which must be a
Business Day. Upon receipt of such notice, the Swingline Lender will promptly
confirm with the Administrative Agent (by telephone or in writing) that the
Administrative Agent has received a copy of such notice from the Company and, if
not, the Swingline Lender will provide the Administrative Agent with a copy
thereof. If and only if the Administrative Agent notifies the Swingline Lender
on the proposed Borrowing Date that it may make available to the Company the
amount of the requested Swingline Loan, then, subject to the terms and
conditions hereof, the Swingline Lender may make the amount of the requested
Swingline Loan available to the Company by crediting the account of the Company
on the books of BAI with the amount of such Swingline Loan. The Administrative
Agent will not so notify the Swingline Lender if the Administrative Agent has
knowledge that (A) the limitations set forth in the proviso set forth in the
first sentence of subsection 2.5(a) are being violated or would be violated by
such Swingline Loan or (B) one or more conditions specified in Article V is not
then satisfied. Each Swingline Loan shall be in an aggregate principal amount
equal to $500,000 or a higher integral multiple of $100,000. The Swingline
Lender will promptly notify the Administrative Agent of the amount of each
Swingline Loan.
(c) Principal of and accrued interest on each Swingline Loan shall be
due and payable (i) on demand made by the Swingline Lender at any time upon one
Business Day's prior notice to the Company furnished at or before 10:45 a.m.
(Chicago time), and (ii) in any event on the Revolving Termination Date.
Interest on Swingline Loans shall be for the sole account of the Swingline
Lender (except to the extent that the other Lenders have funded the purchase of
participations therein pursuant to subsection 2.5(e)).
(d) The Company may, from time to time on any Business Day, make a
voluntary prepayment, in whole or in part, of the outstanding principal amount
of any Swingline Loan, without incurring any premium or penalty; provided that
(i) each such voluntary prepayment shall require prior written notice
given to the Administrative Agent and the Swingline Lender no later than
1:00 p.m. (Chicago time) on the day on which the Company intends to make a
voluntary prepayment, and
(ii) each such voluntary prepayment shall be in an amount equal to
$500,000 or a higher integral multiple of $100,000 (or, if less, the
aggregate outstanding principal amount of all Swingline Loans then
outstanding).
Voluntary prepayments of Swingline Loans shall be made by the Company to
the Swingline Lender at such office as the Swingline Lender may designate by
notice to the Company from time
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to time. All such payments shall be made in Dollars and in immediately available
funds no later than 4:00 p.m. (Chicago time) on the date specified by the
Company pursuant to clause (i) above (and any payment received later than such
time shall be deemed to have been received on the next Business Day). The
Swingline Lender will promptly notify the Administrative Agent of the amount of
each prepayment of Swingline Loans.
(e) If (i) any Swingline Loan shall remain outstanding at 11:00 a.m.
(Chicago time) on the Business Day immediately prior to a Business Day on which
Swingline Loans are due and payable pursuant to subsection 2.5(c) and by such
time on such Business Day the Administrative Agent shall have received neither
(A) a Notice of Borrowing delivered pursuant to Section 2.3 requesting that
Revolving Loans be made pursuant to subsection 2.1(d) on such following Business
Day in an amount at least equal to the aggregate principal amount of such
Swingline Loans, nor (B) any other notice indicating the Company's intent to
repay such Swingline Loans with funds obtained from other sources, or (ii) any
Swingline Loans shall remain outstanding during the existence of an Unmatured
Event of Default or Event of Default and the Swingline Lender shall in its sole
discretion notify the Administrative Agent that the Swingline Lender desires
that such Swingline Loans be converted into Revolving Loans, then the
Administrative Agent shall be deemed to have received a Notice of Borrowing from
the Company pursuant to Section 2.3 requesting that Base Rate Loans be made
pursuant to subsection 2.1(d) on the following Business Day in an amount equal
to the aggregate amount of such Swingline Loans, and the procedures set forth in
subsections 2.3(b) and 2.3(c) shall be followed in making such Base Rate Loans;
provided that such Base Rate Loans shall be made notwithstanding the Company's
failure to comply with Section 5.2; and provided, further, that if a Borrowing
of Revolving Loans becomes legally impractical and if so required by the
Swingline Lender at the time such Revolving Loans are required to be made by the
Revolving Lenders in accordance with this subsection 2.5(e), each Revolving
Lender agrees that in lieu of making Revolving Loans as described in this
subsection 2.5(e), such Revolving Lender shall purchase a participation from the
Swingline Lender in the applicable Swingline Loans in an amount equal to such
Revolving Lender's Revolving Percentage of such Swingline Loans, and the
procedures set forth in subsections 2.3(b) and 2.3(c) shall be followed in
connection with the purchases of such participations. The proceeds of such Base
Rate Loans (or participations purchased) shall be delivered by the
Administrative Agent to the Swingline Lender to repay such Swingline Loans (or
as payment for such participations). A copy of each notice given by the
Administrative Agent to the Revolving Lenders pursuant to this subsection 2.5(e)
with respect to the making of Loans, or the purchases of participations, shall
be promptly delivered by the Administrative Agent to the Company. Each Revolving
Lender's obligation in accordance with this Agreement to make the Revolving
Loans, or purchase the participations, as contemplated by this subsection
2.5(e), shall be absolute and unconditional and shall not be affected by any
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circumstance, including (1) any set-off, counterclaim, recoupment, defense or
other right which such Revolving Lender may have against the Swingline Lender,
the Company or any other Person for any reason whatsoever; (2) the occurrence or
continuance of an Unmatured Event of Default, an Event of Default or a Material
Adverse Effect; or (3) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing.
2.6 Termination or Reduction of Revolving Commitments.
(a) The Company may, upon not less than three Business Days' prior
written notice to the Administrative Agent, permanently reduce the Revolving
Commitments to an amount which is not less than the sum of the Effective Amount
of all Revolving Loans plus the Effective Amount of all Swingline Loans plus the
Effective Amount of all L/C Obligations plus the amount of the Continuing Debt
Reserve. Any such reduction shall be in an aggregate amount of $2,000,000 or a
higher integral multiple of $1,000,000. The Company may at any time on like
notice terminate the Revolving Commitments upon payment in full of all Revolving
Loans and Swingline Loans and Cash Collateralization in full of all L/C
Obligations.
(b) In addition, after (and to the extent not applied to) the payment in
full of all Term Loans pursuant to subsection 2.8(a), upon the occurrence of any
Mandatory Prepayment Event, the Revolving Commitments shall be reduced by the
amount of all Designated Proceeds resulting from such Mandatory Prepayment
Event, with each such reduction effective at the time required in subsection
2.8(a) for a prepayment of Term Loans resulting from such Mandatory Prepayment
Event.
(c) Once reduced in accordance with this Section, the Revolving
Commitments may not be increased. Any reduction of the Revolving Commitments
shall be applied to the Revolving Commitment of each Revolving Lender according
to its Revolving Percentage. All accrued commitment fees to, but not including,
the effective date of any termination of the Revolving Commitments shall be paid
on the effective date of such reduction or termination.
2.7 Optional Prepayments.
(a) Subject to Section 4.4, (i) the Company may, from time to time, upon
irrevocable written notice to the Administrative Agent (which notice must be
received by 11:00 a.m. (Chicago time) one Business Day prior to the requested
day of prepayment in the case of Base Rate Loans and 11:00 a.m. (Chicago time)
three Business Days prior to the date of prepayment in the case of Offshore Rate
Loans), prepay any Borrowing of Revolving Loans in whole or in part, without
premium or penalty, in an aggregate amount of $1,000,000 or a higher integral
multiple of $100,000 and (ii) the Company may, from time to time, upon not less
than three Business Days' irrevocable notice to the
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Administrative Agent, prepay any Borrowing of Term Loans in whole or in part,
without premium or penalty, in an aggregate amount of $3,000,000 or a higher
integral multiple of $100,000.
(b) Each notice of prepayment shall specify the date and amount of such
prepayment and the Loans to be prepaid. The Administrative Agent will promptly
notify each Lender of its receipt of any such notice and of such Lender's share
of such prepayment based upon such Lender's Revolving Percentage, in the case of
a prepayment of Revolving Loans, Term A Percentage, in the case of a prepayment
of Term A Loans, Term B Percentage, in the case of a prepayment of Term B Loans,
or Term C Percentage, in the case of a prepayment of Term C Loans. If any such
notice is given by the Company, the Company shall make such prepayment and the
payment amount specified in such notice shall be due and payable on the date
specified therein, together with accrued interest to such date on the amount
prepaid and any amounts required pursuant to Section 4.4. Each prepayment of
Revolving Loans shall be applied to each Revolving Lender's Revolving Loans
according to such Revolving Lender's Revolving Percentage. Each prepayment of
Term Loans shall be applied pro rata to the Term A Loans, Term B Loans and Term
C Loans; provided, that if any Lender holding Term B Loans or Term C Loans so
requests by notice to the Administrative Agent not later than two Business Days
prior to the date of prepayment, the portion of any prepayment which would have
been applied to such Lender's Term B Loans or Term C Loans shall be applied pro
rata to the remaining installments of the Term A Loans of all Lenders; provided,
further, that once the Term A Loans shall have been fully repaid, such remaining
prepayment amounts, if any, shall be applied pro rata to the Term B Loans and
Term C Loans. All such prepayments of the Term Loans shall be applied, at the
Company's election (expressed in writing to the Administrative Agent no later
than one Business Day prior to such prepayment), (x) against one or both of the
next two unpaid principal installments of each of the Term A Loans, Term B Loans
and Term C Loans (subject to the provisos to the immediately preceding
sentence), (y) pro rata to the unpaid installments of each of the Term A Loans,
Term B Loans and Term C Loans or (z) in such combination of the alternatives
expressed in clauses (x) and (y) as the Company shall specify in writing to the
Administrative Agent (it being understood that if the Company fails to give any
notice as to application of such prepayment, such prepayment will be applied as
set forth in clause (y)).
2.8 Mandatory Prepayments of Loans. (a) The Company (or, in the case of
clause (iii), if the Administrative Agent is holding the proceeds of insurance
or condemnation as additional Collateral pursuant to the terms of the Security
Agreement or any Mortgage, the Administrative Agent upon the Company's
instruction) shall make a prepayment of the Term Loans upon the occurrence of
any of the following (each a "Mandatory Prepayment Event") at the following
times and in the following amounts (such amounts being referred to as
"Designated Proceeds"):
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(i) Within 60 days after any sale, transfer or other disposition by
the Company or any Subsidiary of any asset (other than assets described in
clause (ii) below), other than sales of inventory and dispositions of
obsolete, unused, surplus or unnecessary equipment (other than Excluded
Assets), in each case in the ordinary course of business, to a Person other
than the Company or a Subsidiary, in an amount equal to 100% of the Net
Cash Proceeds of such sale, transfer or other disposition; provided, that
the foregoing shall not apply (x) to sales, transfers or other dispositions
of such assets the proceeds of which are used or committed to be used by
the Company for the financing of the replacement of such assets being sold
within 60 days of any such sale, (y) to the extent that the Net Cash
Proceeds of all such sales, transfers or other dispositions in any fiscal
year is less than $500,000 or (z) to any sale of Excluded Assets occurring
on the Closing Date.
(ii) Within 30 days after any sale, transfer or other disposition
(including by way of merger or consolidation) by the Company or any
Subsidiary of any of the capital stock of any of the Company's operating
Subsidiaries to a Person other than the Company or a Subsidiary, in an
amount equal to 100% of the Net Cash Proceeds of such sale.
(iii) Within 90 days after the receipt of any insurance or
condemnation proceeds (or other similar recoveries) by the Company or any
Subsidiary or by the Administrative Agent (to the extent the Administrative
Agent is holding the insurance or condemnation proceeds as additional
Collateral pursuant to Section 6 of the Security Agreement or any provision
of any Mortgage) from any casualty loss incurred by the Company or any
Subsidiary or condemnation of property, in an amount equal to 100% of such
insurance or condemnation proceeds (or other similar recoveries) net of any
collection expenses; provided that no such prepayment shall be required (x)
to the extent such proceeds are used by the Company, or will be so used
within 90 days from the date of receipt of such proceeds for the financing
of the replacement, substitution or restoration of the assets sustaining
such casualty loss or condemnation or (y) to the extent that all such
insurance or condemnation proceeds received in any fiscal year is less than
$500,000.
(iv) Concurrently with the receipt of any Net Cash Proceeds from any
issuance of equity securities of the Company (including a Public Offering,
but excluding any issuance of shares of Common Stock pursuant to any
employee or director stock option program, benefit plan or compensation
program and excluding any such Net Cash
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Proceeds used to redeem or repurchase the Bridge Notes or the Rollover
Notes), in an amount equal to 50% of such Net Cash Proceeds.
(v) Concurrently with the receipt of any Net Cash Proceeds from the
issuance of any Other Debt of the Company or any Subsidiary or any IRB Debt
in an amount equal to 100% of such Net Cash Proceeds.
(vi) Within 90 days after the end of each fiscal year, in an amount
equal to 75% of Excess Cash Flow for such fiscal year; provided that if the
Leverage Ratio as of the end of such fiscal year is less than 3.0:1.0, then
the amount of the required prepayment shall be 50% of Excess Cash Flow.
All prepayments of Term Loans pursuant to this subsection 2.8(a) shall be
applied to the prepayment of the Term Loans pro rata among the Term A Loans,
Term B Loans and Term C Loans, with application to the remaining installments of
each (x) in inverse order of maturity, in the case of prepayments pursuant to
clauses (i), (ii) and (iii) and (y) pro rata, in the case of prepayments
pursuant to clauses (iv), (v) and (vi); provided that if any Lender holding Term
B Loans or Term C Loans so requests, by notice to the Administrative Agent not
later than two Business Days prior to the date upon which such prepayment is
due, the portion of any prepayment which would have been applied to such
Lender's Term B Loans or Term C Loans shall be applied pro rata to the remaining
installments of the Term A Loans of all Lenders; provided, further, that once
the Term A Loans shall have been fully prepaid, such remaining prepayment
amounts, if any, shall be applied pro rata to the Term B Loans and Term C Loans.
(b) If on any date the Effective Amount of L/C Obligations exceeds the
amount of the L/C Commitment, the Company shall Cash Collateralize on such date
the outstanding Letters of Credit in an amount equal to the excess of the L/C
Obligations over the amount of the L/C Commitment. Subject to Section 4.4, if on
any date after giving effect to any Cash Collateralization made on such date
pursuant to the immediately preceding sentence, the Effective Amount of the
Revolving Loans plus the Effective Amount of all Swingline Loans plus the
Effective Amount of all L/C Obligations plus the Continuing Debt Reserve exceeds
the aggregate amount of the Revolving Commitments, the Company shall immediately
prepay the outstanding principal amount of the Revolving Loans, Swingline Loans
and/or L/C Advances in an amount equal to such excess.
2.9 Repayment. (a) The Term A Credit. The Company shall repay the Term A
Loans in quarterly installments on the last day of each fiscal quarter,
commencing on December 31, 1996, in the amount set forth opposite the period
below in which such quarterly date occurs:
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Quarterly
Period Amounts
Closing Date through 9/30/97 $1,000,000
10/1/97 through 9/30/98 $1,500,000
10/1/98 through 9/30/99 $2,000,000
10/1/99 through 9/30/00 $2,500,000
10/1/00 through 9/30/01 $3,000,000
10/1/01 through 9/30/02 $3,750,000.
(b) The Term B Credit. The Company shall repay the Term B Loans in
quarterly installments on the last day of each fiscal quarter, commencing on
December 31, 1996, in the amount set forth opposite the period below in which
such quarterly date occurs:
Quarterly
Period Amounts
Closing Date through 9/30/02 $ 62,500
10/1/02 through 9/30/03 $5,875,000.
(c) The Term C Credit. The Company shall repay the Term C Loans in
quarterly installments on the last day of each fiscal quarter, commencing on
December 31, 1996, in the amount set forth opposite the period below in which
such quarterly date occurs:
Quarterly
Period Amounts
Closing Date through 9/30/03 $ 62,500
10/1/03 through 9/30/04 $5,812,500.
(d) The Revolving Credit. The Company shall pay to the Administrative
Agent, for the account of the Lenders, on the Revolving Termination Date the
aggregate principal amount of all Revolving Loans outstanding on such date.
2.10 Interest. (a) Each Revolving Loan and Term Loan shall bear interest on
the outstanding principal amount thereof from the applicable Borrowing Date at a
rate per annum equal to the Offshore Rate or the Base Rate, as the case may be
(and subject to the Company's right to convert to the other Type of Loans under
Section 2.4), plus the Applicable Offshore Rate Margin or Applicable Base Rate
Margin, as the case may be. Each Swingline Loan shall bear interest on the
outstanding principal amount thereof from the applicable Borrowing Date at a
rate per annum equal to the Base Rate plus the Applicable Base Rate Margin for
Revolving Loans.
(b) Interest on each Loan shall be paid in arrears on each Interest
Payment Date therefor. Interest shall also be paid on the date of any prepayment
of Offshore Rate Loans under Section 2.7 or 2.8 for the portion of the Loans so
prepaid and upon payment (including prepayment) in full thereof.
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(c) Notwithstanding subsection (a) of this Section, during the existence
of any Event of Default, the Company shall pay interest (after as well as before
entry of judgment thereon to the extent permitted by law) on the principal
amount of all outstanding Loans and, to the extent permitted by applicable law,
on any other amount payable hereunder or under any other Loan Document, at a
rate per annum equal to the rate otherwise applicable thereto pursuant to the
terms hereof or such other Loan Document (or, if no such rate is specified, the
Base Rate plus the Applicable Base Rate Margin then in effect for Revolving
Loans) plus 2%. All such interest shall be payable on demand.
(d) Anything herein to the contrary notwithstanding, the obligations of
the Company to any Lender hereunder shall be subject to the limitation that
payments of interest shall not be required for any period for which interest is
computed hereunder to the extent (but only to the extent) that contracting for
or receiving such payment by such Lender would be contrary to the provisions of
any law applicable to such Lender limiting the highest rate of interest that may
be lawfully contracted for, charged or received by such Lender, and in such
event the Company shall pay such Lender interest at the highest rate permitted
by applicable law.
2.11 Fees. In addition to certain fees described in Section 3.8:
(a) Arranger and Agency Fees. The Company shall pay fees to BA
Securities, Inc. and DLJ for their own accounts and agency fees to the
Administrative Agent for the Administrative Agent's own account, in each case as
required by the letter agreement (the "Fee Letter") among the Company, the
Arrangers, DLJ and the Administrative Agent dated August 26, 1996.
(b) Commitment Fees. The Company shall pay to the Administrative Agent
for the account of each Revolving Lender a commitment fee calculated at the rate
of 0.50% per annum on the average daily unused portion of such Revolving
Lender's Revolving Commitment, computed on a quarterly basis in arrears on the
last Business Day of each calendar quarter based upon the daily utilization for
that quarter as calculated by the Administrative Agent. For purposes of
calculating utilization under this subsection, the Revolving Commitments shall
be deemed used to the extent of the Effective Amount of all Revolving Loans then
outstanding (but Swingline Loans shall not constitute usage of any Revolving
Lender's Revolving Commitment) plus the Effective Amount of all L/C Obligations
then outstanding. Such commitment fee shall accrue from the Closing Date to the
Revolving Termination Date and shall be due and payable quarterly in arrears on
the last Business Day of each calendar quarter, with the final payment to be
made on the Revolving Termination Date. The commitment fees provided in this
subsection shall accrue at all times after the Closing Date, including at any
time during which one or more conditions in Article V are not met.
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2.12 Computation of Fees and Interest. (a) All computations of interest for
Base Rate Loans when the Base Rate is determined by BAI's "reference rate" shall
be made on the basis of a year of 365 or 366 days, as the case may be, and
actual days elapsed. All other computations of interest and fees shall be made
on the basis of a 360-day year and actual days elapsed. Interest and fees shall
accrue during each period during which interest or such fees are computed from
the first day thereof to the last day thereof.
(b) Each determination of an interest rate by the Administrative Agent
shall be conclusive and binding on the Company and the Lenders in the absence of
manifest error. The Administrative Agent will, at the request of the Company or
any Lender, deliver to the Company or such Lender, as the case may be, a
statement showing the quotations used by the Administrative Agent in determining
any interest rate and the resulting interest rate.
2.13 Payments by the Company. (a) All payments to be made by the Company
shall be made without set-off, recoupment or counterclaim. Except as otherwise
expressly provided herein, all payments by the Company shall be made to the
Administrative Agent for the account of the Lenders at the Agent's Payment
Office, and shall be made in Dollars and in immediately available funds, no
later than 1:00 p.m. (Chicago time) on the date specified herein. Except as
expressly provided herein, the Administrative Agent will promptly distribute, in
like funds as received, to each Lender its Revolving Percentage of any portion
of such payment related to the Revolving Loans, its Term A Percentage of any
portion of such payment relating to the Term A Loans, its Term B Percentage of
any portion of such payment relating to the Term B Loans or its Term C
Percentage of any portion of such payment relating to the Term C Loans. Any
payment received by the Administrative Agent later than 1:00 p.m. (Chicago time)
shall be deemed to have been received on the following Business Day and any
applicable interest or fee shall continue to accrue.
(b) Whenever any payment is due on a day other than a Business Day, such
payment shall be made on the following Business Day (unless, in the case of an
Offshore Rate Loan, such following Business Day is in another calendar month, in
which case such payment shall be made on the preceding Business Day), and such
extension of time shall in such case be included in the computation of interest
or fees, as the case may be.
(c) Unless the Administrative Agent receives notice from the Company
prior to the date on which any payment is due to the Lenders that the Company
will not make such payment in full as and when required, the Administrative
Agent may assume that the Company has made such payment in full to the
Administrative Agent on such date in immediately available funds and the
Administrative Agent may (but shall not be so required), in reliance upon such
assumption, distribute to each Lender on such due date an amount equal to the
amount then due such Lender. If
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and to the extent the Company has not made such payment in full to the
Administrative Agent, each Lender shall repay to the Administrative Agent on
demand such amount distributed to such Lender, together with interest thereon at
the Federal Funds Rate for each day from the date such amount is distributed to
such Lender until the date repaid.
2.14 Payments by the Lenders to the Administrative Agent. (a) Unless the
Administrative Agent receives notice from a Lender on or prior to the Closing
Date, or, with respect to any Borrowing after the Closing Date, at least one
Business Day prior to the date of such Borrowing, that such Lender will not make
available as and when required hereunder to the Administrative Agent for the
account of the Company the amount of such Lender's Revolving Percentage, Term A
Percentage, Term B Percentage or Term C Percentage, as applicable, of such
Borrowing, the Administrative Agent may assume that each Lender has made such
amount available to the Administrative Agent in immediately available funds on
the Borrowing Date and the Administrative Agent may (but shall not be required
to), in reliance upon such assumption, make available to the Company on such
date a corresponding amount. If and to the extent any Lender shall not have made
its full amount available to the Administrative Agent in immediately available
funds and the Administrative Agent in such circumstances has made available to
the Company such amount, such Lender shall on the Business Day following such
Borrowing Date make such amount available to the Administrative Agent, together
with interest at the Federal Funds Rate for each day during such period. A
notice of the Administrative Agent submitted to any Lender with respect to
amounts owing under this subsection (a) shall be conclusive, absent manifest
error. If such amount is so made available, such payment to the Administrative
Agent shall constitute such Lender's Loan on the date of Borrowing for all
purposes of this Agreement. If such amount is not made available to the
Administrative Agent on the Business Day following the Borrowing Date, the
Administrative Agent will notify the Company of such failure to fund and, upon
demand by the Administrative Agent, the Company shall pay such amount to the
Administrative Agent for the Administrative Agent's account, together with
interest thereon for each day elapsed since the date of such Borrowing, at a
rate per annum equal to the interest rate applicable at the time to the Loans
comprising such Borrowing.
(b) The failure of any Lender to make any Loan on any Borrowing Date
shall not relieve any other Lender of any obligation hereunder to make a Loan on
such Borrowing Date, but no Lender shall be responsible for the failure of any
other Lender to make the Loan to be made by such other Lender on any Borrowing
Date.
2.15 Sharing of Payments, Etc. If, other than as expressly provided
elsewhere herein, any Lender shall obtain on account of the Loans made by it any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) in
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excess of its ratable share of such payment (determined in accordance with the
provisions of this Agreement), such Lender shall immediately (a) notify the
Administrative Agent of such fact and (b) purchase from the other Lenders such
participations in the Loans made by them as shall be necessary to cause such
purchasing Lender to share the excess payment pro rata with each other Lender;
provided, however, that if all or any portion of such excess payment is
thereafter recovered from the purchasing Lender, such purchase shall to that
extent be rescinded and each other Lender shall repay to the purchasing Lender
the purchase price paid therefor, together with an amount equal to such paying
Lender's ratable share (according to the proportion of (i) the amount of such
paying Lender's required repayment to (ii) the total amount so recovered from
the purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered. The Company
agrees that any Lender so purchasing a participation from another Lender may, to
the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off, but subject to Section 11.10) with respect to
such participation as fully as if such Lender were the direct creditor of the
Company in the amount of such participation. The Administrative Agent will keep
records (which shall be conclusive and binding in the absence of manifest error)
of participations purchased under this Section and will in each case notify the
Lenders following any such purchases or repayments.
2.16 Limitation on Offshore Rate Option. Notwithstanding anything to the
contrary herein, until the earlier to occur of (x) October 31, 1996 and (y) the
Arrangers giving notice to the Company that they have completed syndication of
the Loans and Commitments, the Company may not borrow Offshore Rate Loans or
convert Base Rate Loans into Offshore Rate Loans.
ARTICLE III
THE LETTERS OF CREDIT
---------------------
3.1 The Letter of Credit Subfacility. (a) On the terms and conditions set
forth herein: (i) the Issuing Lender agrees, (A) from time to time on any
Business Day during the period from the Closing Date to the Revolving
Termination Date to issue Letters of Credit for the account of the Company, and
to amend or renew Letters of Credit previously issued by it, in accordance with
subsections 3.2(c) and 3.2(d), and (B) to honor properly drawn drafts under the
Letters of Credit issued by it; and (ii) the Revolving Lenders severally agree
to participate in Letters of Credit Issued for the account of the Company;
provided that the Issuing Lender shall not be obligated to Issue, and no
Revolving Lender shall be obligated to participate in, any Letter of Credit if
as of the date of Issuance of such Letter of Credit (the "Issuance Date") (1)
the sum of the Effective Amount of all L/C Obligations plus the Effective Amount
of all Revolving Loans plus the Effective Amount of all Swingline Loans exceeds
the
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aggregate amount of all Revolving Commitments less the Continuing Debt Reserve,
(2) the Effective Amount of all L/C Obligations exceeds the amount of the L/C
Commitment or (3) the sum of the participation of any Revolving Lender in the
Effective Amount of all L/C Obligations plus the outstanding principal amount of
the Revolving Loans of such Revolving Lender shall exceed such Revolving
Lender's Revolving Commitment; provided, however, that if a Standby Letter of
Credit is to be issued to a lender who is committed to make advances on
Continuing Debt or to whom Continuing Debt is owing, and any drawings under such
Letter of Credit will permanently reduce Continuing Debt, such Letter of Credit
may be Issued if such Letter of Credit could otherwise be Issued under clause
(1) above without giving effect to the Continuing Debt Reserve. Within the
foregoing limits, and subject to the other terms and conditions hereof, the
Company's ability to obtain Letters of Credit shall be fully revolving, and,
accordingly, the Company may, during the foregoing period, obtain Letters of
Credit to replace Letters of Credit which have expired or which have been drawn
upon and reimbursed.
(b) The Issuing Lender shall not be under any obligation to Issue any
Letter of Credit if:
(i) any order, judgment or decree of any Governmental Authority or
arbitrator shall by its terms purport to enjoin or restrain the Issuing
Lender from Issuing such Letter of Credit, or any Requirement of Law
applicable to the Issuing Lender or any request or directive (whether or
not having the force of law) from any Governmental Authority with
jurisdiction over the Issuing Lender shall prohibit, or request that the
Issuing Lender refrain from, the Issuance of letters of credit generally or
such Letter of Credit in particular or shall impose upon the Issuing Lender
with respect to such Letter of Credit any restriction, reserve or capital
requirement (for which the Issuing Lender is not otherwise compensated
hereunder) not in effect on the Closing Date, or shall impose upon the
Issuing Lender any unreimbursed loss, cost or expense which was not
applicable on the Closing Date and which the Issuing Lender in good faith
deems material to it;
(ii) the Issuing Lender has received written notice from any Lender,
the Administrative Agent or the Company, on or prior to the Business Day
prior to the requested date of Issuance of such Letter of Credit, that one
or more of the applicable conditions contained in Article V is not then
satisfied;
(iii) the expiry date of such Letter of Credit is after the Revolving
Termination Date, or, in the case of a Commercial Letter of Credit, the
expiry date of such Letter of Credit is less than 25 days prior to the
Revolving Termination Date, unless all of the Lenders have approved such
expiry date in writing;
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(iv) such Letter of Credit does not provide for drafts, or is not
otherwise in form and substance acceptable to the Issuing Lender, or the
Issuance of such Letter of Credit shall violate any applicable policies of
the Issuing Lender; or
(v) such Letter of Credit is denominated in a currency other than
Dollars.
3.2 Issuance, Amendment and Renewal of Letters of Credit.
(a) Each Letter of Credit shall be issued upon the irrevocable written
request of the Company received by the Issuing Lender and the Administrative
Agent at least four Business Days (or such shorter time as the Issuing Lender
and the Administrative Agent may agree in a particular instance in their sole
discretion) prior to the proposed date of issuance. Each such request for
issuance of a Letter of Credit shall be by facsimile, confirmed immediately in
an original writing, in the form of an L/C Application, and shall specify in
form and detail satisfactory to the Issuing Lender: (i) the face amount of the
Letter of Credit; (ii) the expiry date of the Letter of Credit; (iii) the name
and address of the beneficiary thereof; (iv) the documents to be presented by
the beneficiary of the Letter of Credit in case of any drawing thereunder; (v)
the full text of any certificate to be presented by the beneficiary in case of
any drawing thereunder; (vi) in the case of a Standby Letter of Credit, whether
such Letter of Credit is a Financial Standby Letter of Credit or a Non-Financial
Standby Letter of Credit; and (vii) such other matters as the Issuing Lender may
require.
(b) At least two Business Days prior to the Issuance of any Letter of
Credit, the Issuing Lender will confirm with the Administrative Agent (by
telephone or in writing) that the Administrative Agent has received a copy of
the L/C Application or L/C Amendment Application from the Company and, if not,
the Issuing Lender will provide the Administrative Agent with a copy thereof. If
and only if the Administrative Agent notifies the Issuing Lender on or before
the Business Day immediately preceding the proposed date of Issuance of a Letter
of Credit that the Issuing Lender may Issue such Letter of Credit, then, subject
to the terms and conditions hereof, the Issuing Lender shall, on the requested
date, Issue such Letter of Credit for the account of the Company in accordance
with the Issuing Lender's usual and customary business practices. The
Administrative Agent shall not give such notice if the Administrative Agent has
knowledge that (A) such Issuance is not then permitted under subsection 3.1(a)
as a result of the limitations set forth in clause (1) or (2) thereof or (B) the
Issuing Lender has received a notice described in subsection 3.1(b)(ii). The
Administrative Agent will promptly notify the Lenders of any Letter of Credit
Issuance hereunder.
(c) From time to time while a Letter of Credit is outstanding and prior
to the Revolving Termination Date, the Issuing Lender will, upon the written
request of the Company
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received by the Issuing Lender (with a copy sent by the Company to the
Administrative Agent) at least four Business Days (or such shorter time as the
Issuing Lender and the Administrative Agent may agree in a particular instance
in their sole discretion) prior to the proposed date of amendment, amend any
Letter of Credit issued by it. Each such request for amendment of a Letter of
Credit shall be made by facsimile, confirmed immediately in an original writing,
made in the form of an L/C Amendment Application and shall specify in form and
detail satisfactory to the Issuing Lender: (i) the Letter of Credit to be
amended; (ii) the proposed date of amendment of such Letter of Credit (which
shall be a Business Day); (iii) the nature of the proposed amendment; and (iv)
such other matters as the Issuing Lender may require. The Issuing Lender shall
not have any obligation to amend any Letter of Credit if: (A) the Issuing Lender
would have no obligation at such time to Issue such Letter of Credit in its
amended form under the terms of this Agreement; or (B) the beneficiary of such
Letter of Credit does not accept the proposed amendment to such Letter of
Credit.
(d) The Issuing Lender and the Lenders agree that, while a Letter of
Credit is outstanding and prior to the Revolving Termination Date, at the option
of the Company and upon the written request of the Company received by the
Issuing Lender (with a copy sent by the Company to the Administrative Agent) at
least four Business Days (or such shorter time as the Issuing Lender and the
Administrative Agent may agree in a particular instance in their sole
discretion) prior to the proposed date of notification of renewal, the Issuing
Lender shall be entitled, with the approval of the Administrative Agent, to
authorize the automatic renewal of any Letter of Credit issued by it. Each such
request for renewal of a Letter of Credit shall be made by facsimile, confirmed
immediately in an original writing, in the form of an L/C Amendment Application,
and shall specify in form and detail satisfactory to the Issuing Lender: (i) the
Letter of Credit to be renewed; (ii) the proposed date of notification of
renewal of such Letter of Credit (which shall be a Business Day); (iii) the
revised expiry date of such Letter of Credit (which, unless all Lenders
otherwise consent in writing, shall be prior to the Revolving Termination Date);
and (iv) such other matters as the Issuing Lender may require. The Issuing
Lender shall not be under any obligation to renew any Letter of Credit if: (A)
the Issuing Lender would have no obligation at such time to issue or amend such
Letter of Credit in its renewed form under the terms of this Agreement; or (B)
the beneficiary of such Letter of Credit does not accept the proposed renewal of
such Letter of Credit. If any outstanding Letter of Credit shall provide that it
shall be automatically renewed unless the beneficiary thereof receives notice
from the Issuing Lender that such Letter of Credit shall not be renewed, and if
at the time of renewal the Issuing Lender would be entitled to authorize the
automatic renewal of such Letter of Credit in accordance with this subsection
3.2(d) upon the request of the Company but the Issuing Lender shall not have
received any L/C Amendment Application from the Company with respect to such
renewal or other written
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direction by the Company with respect thereto, the Issuing Lender shall
nonetheless be permitted to allow such Letter of Credit to renew, subject to the
approval of the Administrative Agent, and the Company and the Lenders hereby
authorize such renewal, and, accordingly, the Issuing Lender shall be deemed to
have received an L/C Amendment Application from the Company requesting such
renewal.
(e) The Issuing Lender may, at its election (or as required by the
Administrative Agent at the direction of the Required Lenders), deliver any
notices of termination or other communications to any Letter of Credit
beneficiary or transferee, and take any other action as necessary or
appropriate, at any time and from time to time, in order to cause the expiry
date of such Letter of Credit to be a date not later than the Revolving
Termination Date.
(f) This Agreement shall control in the event of any conflict with any
L/C-Related Document (other than any Letter of Credit).
(g) The Issuing Lender will deliver to the Administrative Agent,
concurrently or promptly following its delivery of a Letter of Credit, or
amendment to or renewal of a Letter of Credit, to an advising bank or a
beneficiary, a true and complete copy of each such Letter of Credit or amendment
to or renewal of a Letter of Credit.
3.3 Risk Participations, Drawings and Reimbursements.
(a) Immediately upon the Issuance of each Letter of Credit, each
Revolving Lender shall be deemed to, and hereby irrevocably and unconditionally
agrees to, purchase from the Issuing Lender a participation in such Letter of
Credit and each drawing thereunder in an amount equal to the product of (i) such
Revolving Lender's Revolving Percentage times (ii) the maximum amount available
to be drawn under such Letter of Credit and the amount of such drawing,
respectively.
(b) In the event of any request for a drawing under a Letter of Credit
by the beneficiary or transferee thereof, the Issuing Lender will promptly
notify the Company and the Administrative Agent. The Company shall reimburse the
Issuing Lender prior to 10:30 a.m. (Chicago time), on each date that any amount
is paid by the Issuing Lender under any Letter of Credit (each such date, an
"Honor Date") in an amount equal to the amount so paid by the Issuing Lender;
provided, to the extent that the Issuing Lender accepts a drawing under a Letter
of Credit after 10:30 a.m. (Chicago time), the Company will not be obligated to
reimburse the Issuing Lender until the next Business Day and the "Honor Date"
for such Letter of Credit shall be such next Business Day. If the Company fails
to reimburse the Issuing Lender for the full amount of any drawing under any
Letter of Credit by 10:30 a.m. (Chicago time) on the Honor Date, the Issuing
Lender will promptly notify the Administrative Agent and
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the Administrative Agent will promptly notify each Revolving Lender thereof, and
the Company shall be deemed to have requested that Base Rate Loans be made by
the Revolving Lenders to be disbursed on the Honor Date under such Letter of
Credit, subject to the amount of the unutilized portion of the Revolving
Commitments and subject to the conditions set forth in Section 5.3 other than
Section 5.3(a). Any notice given by the Issuing Lender or the Administrative
Agent pursuant to this subsection 3.3(b) may be oral if immediately confirmed in
writing (including by facsimile); provided that the lack of such an immediate
confirmation shall not affect the conclusiveness or binding effect of such
notice.
(c) Each Revolving Lender shall upon any notice pursuant to subsection
3.3(b) make available to the Administrative Agent for the account of the Issuing
Lender an amount in Dollars and in immediately available funds equal to its
Revolving Percentage of the amount of the drawing, whereupon the participating
Revolving Lenders shall (subject to subsection 3.3(d)) each be deemed to have
made a Revolving Loan consisting of a Base Rate Loan to the Company in such
amount. If any Revolving Lender so notified fails to make available to the
Administrative Agent for the account of the Issuing Lender the amount of such
Revolving Lender's Revolving Percentage of the amount of such drawing by no
later than 1:00 p.m. (Chicago time) on the Honor Date, then interest shall
accrue on such Revolving Lender's obligation to make such payment, from the
Honor Date to the date such Revolving Lender makes such payment, at a rate per
annum equal to the Federal Funds Rate in effect from time to time during such
period. The Administrative Agent will promptly give notice of the occurrence of
the Honor Date, but failure of the Administrative Agent to give any such notice
on the Honor Date or in sufficient time to enable any Revolving Lender to effect
such payment on such date shall not relieve such Revolving Lender from its
obligations under this Section 3.3.
(d) With respect to any unreimbursed drawing that is not converted into
Revolving Loans consisting of Base Rate Loans in whole or in part, because of
the Company's failure to satisfy the conditions set forth in Section 5.3 (other
than Section 5.3(a), which need not be satisfied) or for any other reason, the
Company shall be deemed to have incurred from the Issuing Lender an L/C
Borrowing in the amount of such drawing, which L/C Borrowing shall be due and
payable on demand (together with interest) and shall bear interest at a rate per
annum equal to the Base Rate plus the Applicable Base Rate Margin then in effect
for Revolving Loans plus 2% per annum, and each Revolving Lender's payment to
the Issuing Lender pursuant to subsection 3.3(c) shall be deemed payment in
respect of its participation in such L/C Borrowing and shall constitute an L/C
Advance from such Revolving Lender in satisfaction of its participation
obligation under this Section 3.3.
(e) Each Revolving Lender's obligation in accordance with this Agreement
to make Revolving Loans or L/C Advances, as
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contemplated by this Section 3.3, as a result of a drawing under a Letter of
Credit, shall be absolute and unconditional and without recourse to the Issuing
Lender and shall not be affected by any circumstance, including (i) any set-off,
counterclaim, recoupment, defense or other right which such Revolving Lender may
have against the Issuing Lender, the Company or any other Person for any reason
whatsoever, (ii) the occurrence or continuance of an Event of Default, an
Unmatured Event of Default or a Material Adverse Effect or (iii) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing; provided that each Revolving Lender's obligation to make
Revolving Loans under this Section 3.3 is subject to the conditions set forth in
Section 5.3.
3.4 Repayment of Participations. (a) Upon (and only upon) receipt by
the Administrative Agent for the account of the Issuing Lender of immediately
available funds from the Company (i) in reimbursement of any payment made by the
Issuing Lender under a Letter of Credit with respect to which any Revolving
Lender has paid the Administrative Agent for the account of the Issuing Lender
for such Revolving Lender's participation in such Letter of Credit pursuant to
Section 3.3 or (ii) in payment of interest thereon, the Administrative Agent
will pay to each Revolving Lender, in like funds as those received by the
Administrative Agent for the account of the Issuing Lender, the amount of such
Revolving Lender's Revolving Percentage of such funds, and the Issuing Lender
shall receive the amount of the Revolving Percentage of such funds of any
Revolving Lender that did not so pay the Administrative Agent for the account of
the Issuing Lender.
(b) If the Administrative Agent or the Issuing Lender is required at any
time to return to the Company, or to a trustee, receiver, liquidator or
custodian, or to any official in any Insolvency Proceeding, any portion of any
payment made by the Company to the Administrative Agent for the account of the
Issuing Lender pursuant to subsection 3.4(a) in reimbursement of a payment made
under a Letter of Credit or interest or fee thereon, each Revolving Lender
shall, on demand of the Administrative Agent, forthwith return to the
Administrative Agent or the Issuing Lender the amount of its Revolving
Percentage of any amount so returned by the Administrative Agent or the Issuing
Lender plus interest thereon from the date such demand is made to the date such
amount is returned by such Revolving Lender to the Administrative Agent or the
Issuing Lender, at a rate per annum equal to the Federal Funds Rate in effect
from time to time.
3.5 Role of the Issuing Lender. (a) Each Lender and the Company agree
that, in paying any drawing under a Letter of Credit, the Issuing Lender shall
not have any responsibility to obtain any document (other than any sight draft
and certificate expressly required by such Letter of Credit) or to ascertain or
inquire as to the validity or accuracy of any such document or
-53-
the authority of the Person executing or delivering any such
document.
(b) No Agent-Related Person, Issuing Lender nor any of their respective
correspondents, participants or assignees shall be liable to any Lender for: (i)
any action taken or omitted in connection herewith at the request or with the
approval of the Lenders (including the Required Lenders, as applicable); (ii)
any action taken or omitted in the absence of gross negligence or willful
misconduct; or (iii) the due execution, effectiveness, validity or
enforceability of any L/C-Related Document.
(c) The Company hereby assumes all risks of the acts or omissions of any
beneficiary or transferee with respect to its use of any Letter of Credit;
provided that this assumption is not intended to, and shall not, preclude the
Company's pursuing such rights and remedies as it may have against the
beneficiary or transferee at law or under this Agreement or any other agreement.
No Agent-Related Person, Issuing Lender nor any of their respective
correspondents, participants or assignees shall be liable or responsible for any
of the matters described in clauses (i) through (vii) of Section 3.6; provided
that, anything in such clauses to the contrary notwithstanding, the Company may
have a claim against the Issuing Lender, and the Issuing Lender may be liable to
the Company, to the extent, but only to the extent, of any direct, as opposed to
consequential or exemplary, damages suffered by the Company which the Company
proves were caused by the Issuing Lender's willful misconduct or gross
negligence or the Issuing Lender's willful or grossly negligent failure to pay
under any Letter of Credit after the presentation to it by the beneficiary of a
sight draft and certificate(s) strictly complying with the terms and conditions
of such Letter of Credit. In furtherance and not in limitation of the foregoing:
(i) the Issuing Lender may accept documents that appear on their face to be in
order, without responsibility for further investigation, regardless of any
notice or information to the contrary; and (ii) the Issuing Lender shall not be
responsible for the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign a Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or in part, which may prove
to be invalid or ineffective for any reason.
3.6 Obligations Absolute. The obligations of the Company under this
Agreement and any L/C-Related Document to reimburse the Issuing Lender for a
drawing under a Letter of Credit, and to repay any L/C Borrowing and any drawing
under a Letter of Credit converted into Revolving Loans, shall be unconditional
and irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement and each such other L/C-Related Document under all circumstances,
including the following:
(i) any lack of validity or enforceability of this Agreement or any
L/C-Related Document;
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(ii) any change in the time, manner or place of payment of, or in any
other term of, all or any of the obligations of the Company in respect of
any Letter of Credit or any other amendment or waiver of or any consent to
departure from all or any of the L/C-Related Documents;
(iii) the existence of any claim, set-off, defense or other right that
the Company may have at any time against any beneficiary or any transferee
of any Letter of Credit (or any Person for whom any such beneficiary or any
such transferee may be acting), the Issuing Lender or any other Person,
whether in connection with this Agreement, the transactions contemplated
hereby or by the L/C-Related Documents or any unrelated transaction;
(iv) any draft, demand, certificate or other document presented under
any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect or any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under any
Letter of Credit;
(v) any payment by the Issuing Lender under any Letter of Credit
against presentation of a draft or certificate that does not strictly
comply with the terms of such Letter of Credit; or any payment made by the
Issuing Lender under any Letter of Credit to any Person purporting to be a
trustee in bankruptcy, debtor-in-possession, assignee for the benefit of
creditors, liquidator, receiver or other representative of or successor to
any beneficiary or any transferee of any Letter of Credit, including any
arising in connection with any Insolvency Proceeding;
(vi) any exchange, release or non-perfection of any collateral, or any
release or amendment or waiver of or consent to departure from any
guarantee, for all or any of the obligations of the Company in respect of
any Letter of Credit; or
(vii) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, including any other circumstance that
might otherwise constitute a defense available to, or a discharge of, the
Company or a guarantor.
3.7 Cash Collateral Pledge. If any Letter of Credit remains outstanding
and partially or wholly undrawn as of the Revolving Termination Date, then the
Company shall immediately Cash Collateralize the L/C Obligations in an amount
equal to the maximum amount then available to be drawn under all Letters of
Credit.
3.8 Letter of Credit Fees. (a) The Company shall pay to
the Administrative Agent for the account of each Revolving Lender
-55-
a letter of credit fee with respect to each Letter of Credit equal to the L/C
Fee Rate per annum of the average daily maximum amount available to be drawn on
such Letter of Credit, computed on a quarterly basis in arrears on the last
Business Day of each calendar quarter. Such letter of credit fee shall be due
and payable quarterly in arrears on the last Business Day of each calendar
quarter during which Letters of Credit are outstanding, commencing on the first
such quarterly date to occur after the Closing Date, through the Revolving
Termination Date (or such later date upon which all outstanding Letters of
Credit shall expire or be fully drawn), with the final payment to be made on the
Revolving Termination Date (or such later date).
(b) The Company shall pay to the Issuing Lender a letter of credit
fronting fee for each Letter of Credit Issued equal to 0.25% per annum of the
average daily maximum amount available to be drawn on such Letter of Credit,
computed on the last Business Day of each calendar quarter and on the Revolving
Termination Date (or such later date on which such Letter of Credit shall expire
or be fully drawn).
(c) The letter of credit fees payable under subsection 3.8(a) and the
fronting fees payable under subsection 3.8(b) shall be due and payable quarterly
in arrears on the last Business Day of each calendar quarter during which
Letters of Credit are outstanding, commencing on the first such quarterly date
to occur after the Closing Date, through the Revolving Termination Date (or such
later date upon which all outstanding Letters of Credit shall expire or be fully
drawn), with the final payment to be made on the Revolving Termination Date (or
such later date). For purposes of calculating the fees payable under subsection
3.8(a) and subsection 3.8(b), any undrawn Commercial Letters of Credit should be
considered outstanding and available to be drawn upon for 25 days after their
expiry date.
(d) The Company shall pay to the Issuing Lender from time to time on
demand the normal issuance, presentation, amendment and other processing fees,
and other standard costs and charges, of the Issuing Lender relating to letters
of credit as from time to time in effect.
3.9 Uniform Customs and Practice. The Uniform Customs and Practice for
Documentary Credits as published by the International Chamber of Commerce most
recently at the time of issuance of any Letter of Credit shall (unless otherwise
expressly provided in such Letter of Credit) apply to each Letter of Credit.
3.10 Non-Dollar Letters of Credit. The Company, the Administrative
Agent, the Issuing Lender and the Lenders (i) agree that the Issuing Lender may
(in its sole discretion) issue Letters of Credit ("Non-Dollar Letters of
Credit") in currencies other than Dollars and (ii) further agree as follows with
respect to such Non-Dollar Letters of Credit:
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(a) The Company agrees that its reimbursement obligation under
subsection 3.3(b) and any resulting L/C Borrowing, in each case in respect of a
drawing under any Non-Dollar Letter of Credit, (a) shall be payable in Dollars
at the Dollar Equivalent of such obligation in the currency in which such
Non-Dollar Letter of Credit was issued (determined on the date of payment) and
(b) shall bear interest at a rate per annum equal to the sum of the Overnight
Rate plus the Applicable Offshore Rate Margin for Revolving Loans plus 3% for
each day from and including the Honor Date to but excluding the date such
obligation is paid in full (it being understood that any payment received after
10:30 a.m., Chicago time, on any day shall be deemed received on the following
Business Day).
(b) Each Lender agrees that its obligation to make Revolving Loans under
subsection 3.3(b) and to make L/C Advances for any unpaid reimbursement
obligation or L/C Borrowing in respect of a drawing under any Non-Dollar Letter
of Credit shall be payable in Dollars at the Dollar Equivalent of such
obligation in the currency in which such Non-Dollar Letter of Credit was issued
(calculated on the date of payment) (and any such amount which is not paid when
due shall bear interest at a rate per annum equal to the Overnight Rate plus,
beginning on the third Business Day after such amount was due, the Applicable
Offshore Rate Margin for Revolving Loans).
(c) For purposes of determining whether there is availability for the
Company to request, continue or convert any Loan, or request, extend or increase
the face amount of any Letter of Credit, the Dollar Equivalent of the Effective
Amount of each Non-Dollar Letter of Credit shall be calculated on the date such
Loan is to be made, continued or converted or such Letter of Credit is to be
issued, extended or increased.
(d) For purposes of determining (i) the amount of the unused portion of
the Revolving Commitments under subsection 2.11(b), (ii) the letter of credit
fee under subsection 3.8(a) and (iii) the letter of credit fronting fee under
subsection 3.8(b), the Dollar Equivalent of the Effective Amount of any
Non-Dollar Letter of Credit shall be determined on each of (1) the date of an
issuance, extension or change in the face amount of such Non-Dollar Letter of
Credit, (2) the date of any payment by the Issuing Lender in respect of a
drawing under such Non-Dollar Letter of Credit, (3) the last day of each
calendar month and (4) each day on which the aggregate amount of the Revolving
Commitments and/or L/C Commitment is reduced.
(e) If, on the last day of any calendar month or any day on which the
aggregate amount of the Revolving Commitments and/or L/C Commitment is reduced,
the sum of the Effective Amount of all Revolving Loans plus the Effective
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Amount of all Letters of Credit plus the Effective Amount of all Swingline Loans
(valuing the Effective Amount of, and all reimbursement obligations and L/C
Borrowings of the Company in respect of, any Non-Dollar Letter of Credit at the
Dollar Equivalent thereof as of such day) would exceed the aggregate amount of
the Revolving Commitments, then the Company will immediately eliminate such
excess by prepaying Revolving Loans and/or Swingline Loans and/or causing one or
more Letters of Credit to be reduced or terminated.
(f) If, for the purposes of obtaining judgment in any court, it is
necessary to convert a sum due in respect of any Non-Dollar Letter of Credit in
one currency into another currency, the rate of exchange used shall be that at
which in accordance with normal banking procedures the Issuing Lender could
purchase the first currency with such other currency on the Business Day
preceding that on which final judgment is given. The obligation of the Company
in respect of any such sum due from it to the Administrative Agent, the Issuing
Lender or any Lender hereunder shall, notwithstanding any judgment in a currency
(the "Judgment Currency") other than that in which such sum is denominated in
accordance with the applicable provisions of the applicable Non-Dollar Letter of
Credit (the "Agreement Currency"), be discharged only to the extent that on the
Business Day following receipt by the Issuing Lender of any sum adjudged to be
so due in the Judgment Currency, the Issuing Lender may in accordance with
normal banking procedures purchase the Agreement Currency with the Judgment
Currency. If the amount of the Agreement Currency so purchased is less than the
sum originally due to the Issuing Lender in the Agreement Currency, the Company
agrees, as a separate obligation and notwithstanding any such judgment, to
indemnify the Administrative Agent, the Issuing Lender or the Lender to whom
such obligation was owing against such loss. If the amount of the Agreement
Currency so purchased is greater than the sum originally due to the Issuing
Lender in such currency, the Issuing Lender agrees to return the amount of any
excess to the Company (or to any other Person who may be entitled thereto under
applicable law).
(g) For purposes of this Section, "Overnight Rate" means, for any day,
the rate of interest per annum at which overnight deposits in the applicable
currency, in an amount approximately equal to the amount with respect to which
such rate is being determined, would be offered for such day by the London
Branch of BofA to major banks in the London or other applicable offshore
interbank market. The Overnight Rate for any day which is not a Business Day (or
on which dealings are not carried on in the applicable offshore interbank
market) shall be the Overnight Rate for the immediately preceding Business Day.
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ARTICLE IV
TAXES, YIELD PROTECTION AND ILLEGALITY
--------------------------------------
4.1 Taxes. (a) Any and all payments by the Company to each Lender or the
Administrative Agent under this Agreement and any other Loan Document shall be
made free and clear of, and without deduction or withholding for, any Taxes. In
addition, the Company shall pay all Other Taxes.
(b) The Company agrees to indemnify and hold harmless each Lender and
the Administrative Agent for the full amount of Taxes, Other Taxes and Further
Taxes paid by such Lender in the amount necessary to preserve the after-tax
yield such Lender would have received if such Taxes, Other Taxes or Further
Taxes had not been imposed, and any liability (including penalties, interest,
additions to tax and reasonable out-of-pocket expenses) arising therefrom or
with respect thereto, whether or not such Taxes, Other Taxes or Further Taxes
were correctly or legally asserted; provided, however, that no participant of
any Lender shall be entitled to receive any greater payment under this
subsection 4.1(b) than such Lender would have been entitled to receive with
respect to the rights participated; and provided further that the Company shall
not indemnify any Lender (or participant thereof) or the Administrative Agent
for Taxes, Other Taxes, Further Taxes, penalties, additions to tax, interest and
expenses arising as a result of any of their own willful misconduct or gross
negligence. Payment under this subsection 4.1(b) shall be made within 30 days
from the date such Lender or the Administrative Agent (as the case may be) makes
written demand therefor, including with such demand an identification of the
Taxes, Other Taxes or Further Taxes (together with the amounts thereof) with
respect to which such demand for indemnification is being made.
(c) If the Company shall be required by law to deduct or withhold any
Taxes, Other Taxes or Further Taxes from or in respect of any sum payable
hereunder to any Lender or the Administrative Agent, then:
(i) the sum payable shall be increased as necessary so that, after
making all required deductions and withholdings (including deductions and
withholdings applicable to additional sums payable under this Section),
such Lender or the Administrative Agent, as the case may be, receives and
retains an amount equal to the sum it would have received and retained had
no such deductions or withholdings been made;
(ii) the Company shall make such deductions and withholdings; and
(iii) the Company shall pay the full amount deducted or withheld to
the relevant taxing authority or other authority in accordance with
applicable law.
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(d) Within 10 days after the date the Company receives any receipt for
the payment of Taxes, Other Taxes or Further Taxes, the Company shall furnish to
each Lender and the Administrative Agent the original or a certified copy of
such receipt evidencing payment thereof, or other evidence of payment
satisfactory to such Lender or the Administrative Agent.
(e) If the Company is required to pay additional amounts to any Lender
or the Administrative Agent pursuant to subsection (b) of this Section or
Section 4.3, then such Lender shall use reasonable efforts (consistent with
legal and regulatory restrictions) to change the jurisdiction of its Lending
Office so as to reduce or eliminate any such additional payment by the Company
which may thereafter accrue, if such change in the sole judgment of such Lender
is not otherwise disadvantageous to such Lender.
(f) If a Lender (or participant thereof) or the Administrative Agent
shall become aware that it is entitled to receive a refund (including interest
and penalties, if any) in respect of Taxes, Other Taxes or Further Taxes as to
which it has been indemnified by the Company pursuant to this Section 4.1, it
shall promptly notify the Company in writing of the availability of such refund
(including interest and penalties, if any) and shall, within 30 days after
receipt of a request by the Company, apply for such refund. If any Lender (or
participant thereof) or the Administrative Agent receives a refund (including
interest and penalties, if any) in respect of any Taxes, Other Taxes or Further
Taxes as to which it has been indemnified by the Company pursuant to this
Section 4.1, it shall promptly notify the Company of the receipt of such refund
and shall, within 15 days of receipt, repay such refund (to the extent of
amounts that have been paid by the Company under this Section 4.1 with respect
to such refund and not previously reimbursed) to the Company, net of all
reasonable out-of-pocket expenses of such Lender or the Administrative Agent and
without any interest (other than the interest, if any, included in such refund).
4.2 Illegality. (a) After the date hereof, if any Lender determines that
the introduction of any Requirement of Law, or any change in any Requirement of
Law, or in the interpretation or administration of any Requirement of Law, has
made it unlawful, or that any central bank or other Governmental Authority has
asserted that it is unlawful, for such Lender or its applicable Lending Office
to make Offshore Rate Loans, then, on notice thereof by the Lender to the
Company through the Administrative Agent, any obligation of such Lender to make
Offshore Rate Loans shall be suspended until such Lender notifies the
Administrative Agent and the Company that the circumstances giving rise to such
determination no longer exist.
(b) After the date hereof, if a Lender determines that it is unlawful to
maintain any Offshore Rate Loan, the Company shall, upon its receipt of notice
of such fact and demand from such Lender (with a copy to the Administrative
Agent), prepay in
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full such Offshore Rate Loan, together with interest accrued thereon and any
amount required under Section 4.4, either on the last day of the Interest Period
thereof, if such Lender may lawfully continue to maintain such Offshore Rate
Loan to such day, or on such earlier date on which such Lender may no longer
lawfully continue to maintain such Offshore Rate Loan (as determined by such
Lender). If the Company is required to so prepay any Offshore Rate Loan, then
concurrently with such prepayment, the Company shall borrow from the affected
Lender, in the amount of such repayment, a Base Rate Loan.
(c) If the obligation of any Lender to make or maintain Offshore Rate
Loans has been terminated or suspended pursuant to subsection (a) or (b) above,
all Loans which would otherwise be made by such Lender as Offshore Rate Loans
shall be instead Base Rate Loans.
(d) Before giving any notice to the Administrative Agent or demand upon
the Company under this Section, the affected Lender shall designate a different
Lending Office with respect to its Offshore Rate Loans if such designation will
avoid the need for giving such notice or making such demand and will not, in the
judgment of such Lender, be illegal or otherwise disadvantageous to such Lender.
4.3 Increased Costs and Reduction of Return. (a) After the date hereof,
if any Lender determines that, due to either (i) the introduction of or any
change (other than any change by way of imposition of or increase in reserve
requirements included in the calculation of the Offshore Rate) in or in the
interpretation of any law or regulation or (ii) compliance by such Lender with
any guideline or request from any central bank or other Governmental Authority
(whether or not having the force of law), there shall be any increase in the
cost to such Lender of agreeing to make or making, funding or maintaining any
Offshore Rate Loan or participating in Letters of Credit or, in the case of the
Issuing Lender, any increase in the cost to the Issuing Lender of agreeing to
issue, issuing or maintaining any Letter of Credit or of agreeing to make or
making, funding or maintaining any unpaid drawing under any Letter of Credit,
then the Company shall be liable for, and shall from time to time, upon demand
(with a copy of such demand to be sent to the Administrative Agent), pay to the
Administrative Agent for the account of such Lender, additional amounts as are
sufficient to compensate such Lender for such increased costs.
(b) After the date hereof, if any Lender shall have determined that (i)
the introduction of any Capital Adequacy Regulation, (ii) any change in any
Capital Adequacy Regulation, (iii) any change in the interpretation or
administration of any Capital Adequacy Regulation by any central bank or other
Governmental Authority charged with the interpretation or administration
thereof, or (iv) compliance by such Lender (or its Lending Office) or any
corporation controlling such Lender with any Capital Adequacy Regulation,
affects or would affect the
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amount of capital required or expected to be maintained by such Lender or any
corporation controlling such Lender and (taking into consideration such Lender's
or such corporation's policies with respect to capital adequacy and such
Lender's desired return on capital) determines that the amount of such capital
is increased as a consequence of any of its Commitments, Loans, credits or
obligations under this Agreement, then, upon demand of such Lender to the
Company through the Administrative Agent, the Company shall pay to such Lender,
from time to time as specified by such Lender, additional amounts sufficient to
compensate such Lender for such increase.
(c) This Section 4.3 shall not require the Company to reimburse the
Administrative Agent or any Lender for any Taxes which are otherwise covered by
the indemnity set forth in Section 4.1 or any Excluded Taxes.
4.4 Funding Losses. The Company shall reimburse each Lender and hold
each Lender harmless from any loss or expense which such Lender may sustain or
incur as a consequence of:
(a) the failure of the Company to make on a timely basis any payment of
principal of any Offshore Rate Loan;
(b) the failure of the Company to borrow, continue or convert a Loan
after the Company has given (or is deemed to have given) a Notice of Borrowing
or a Notice of Conversion/ Continuation;
(c) the failure of the Company to make any prepayment in accordance with
any notice delivered under Section 2.7;
(d) the prepayment (including pursuant to Section 2.8) or other payment
(including after acceleration thereof) of an Offshore Rate Loan on a day that is
not the last day of the relevant Interest Period; or
(e) the automatic conversion under subsection 2.4(a) of any Offshore
Rate Loan to a Base Rate Loan on a day that is not the last day of the relevant
Interest Period;
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its Offshore Rate Loans or from fees payable
to terminate the deposits from which such funds were obtained. For purposes of
calculating amounts payable by the Company to the Lenders under this Section and
under subsection 4.3(a), each Offshore Rate Loan made by a Lender (and each
related reserve, special deposit or similar requirement) shall be conclusively
deemed to have been funded at the IBOR used in determining the Offshore Rate for
such Offshore Rate Loan by a matching deposit or other borrowing in the
interbank eurodollar market for a comparable amount and for a comparable period,
whether or not such Offshore Rate Loan is in fact so funded.
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4.5 Inability to Determine Rates. If the Administrative Agent determines
that for any reason adequate and reasonable means do not exist for determining
the Offshore Rate for any requested Interest Period with respect to a proposed
Offshore Rate Loan, or the Required Lenders determine (and notify the
Administrative Agent) that the Offshore Rate applicable pursuant to subsection
2.10(a) for any requested Interest Period with respect to a proposed Offshore
Rate Loan does not adequately and fairly reflect the cost to such Lenders of
funding such Loan, the Administrative Agent will promptly so notify the Company
and each Lender. Thereafter, the obligation of the Lenders to make or maintain
Offshore Rate Loans hereunder shall be suspended until the Administrative Agent,
with the consent of the Required Lenders, revokes such notice in writing. Upon
receipt of such notice, the Company may revoke any Notice of Borrowing or Notice
of Conversion/Continuation then submitted by it. If the Company does not revoke
such Notice, the Lenders shall make, convert or continue the Loans, as proposed
by the Company, in the amount specified in the applicable notice submitted by
the Company, but such Loans shall be made, converted or continued as Base Rate
Loans instead of Offshore Rate Loans.
4.6 Certificates of Lenders. Any Lender claiming reimbursement or
compensation under this Article IV shall deliver to the Company (with a copy to
the Administrative Agent) a certificate setting forth in reasonable detail the
basis for such claim and a calculation of the amount payable to such Lender and
such certificate shall be conclusive and binding on the Company in the absence
of manifest error.
4.7 Substitution of Lenders. In the event the Company becomes obligated
to pay additional amounts to any Lender pursuant to Sections 4.1(b) or (c) or
Section 4.3, or if it becomes illegal for any Lender to continue to fund or to
make Offshore Rate Loans pursuant to Section 4.2, as a result of any condition
described in any such Section, then, unless such Lender has theretofore taken
steps to remove or cure, and has removed or cured, the conditions creating the
cause for such obligation to pay such additional amounts or for such illegality,
the Company may designate another Lender which is acceptable to the
Administrative Agent, the Issuing Lender and the Swingline Lender in their sole
discretion (such Lender being herein called a "Replacement Lender") to purchase
the Loans of such Lender and such Lender's rights hereunder, without recourse to
or warranty by, or expense to, such Lender for a purchase price equal to the
outstanding principal amount of the Loans payable to such Lender plus any
accrued but unpaid interest on such Loans and accrued but unpaid commitment fees
in respect of such Lender's Commitments and any other amounts payable to such
Lender under this Agreement, and to assume all the obligations of such Lender
hereunder, and, upon such purchase, such Lender shall no longer be a party
hereto or have any rights hereunder and shall be relieved from all obligations
to the Company hereunder, and the Replacement Lender shall succeed to the rights
and obligations of such Lender hereunder.
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4.8 Survival. The agreements and obligations of the Company in this
Article IV shall survive the payment of all other Obligations.
ARTICLE V
CONDITIONS PRECEDENT
--------------------
5.1 Conditions of Initial Credit Extensions. The obligation of each
Lender to make its initial Credit Extension is subject to the conditions (in
addition to the conditions set forth in Sections 5.2 and 5.3) that (i) the
Company shall have submitted evidence reasonably satisfactory to the Agents that
all Debt to be Repaid has been (or concurrently with the initial Borrowing will
be) paid in full, that all agreements and instruments governing the Debt to be
Repaid (including the Second Amended and Restated Credit Agreement, dated April
2, 1996, among the Company, NationsBank of North Carolina, N.A., as co-agent,
and The First National Bank of Chicago, as agent, and other parties thereto (the
"Prior Credit Agreement")) and that all Liens securing such Debt to be Repaid
have been (or concurrently with the initial Borrowing will be) terminated and
(ii) the Administrative Agent shall have received on or before September 30,
1996 all of the following, in form and substance satisfactory to each Agent and
each Lender, and (except for the Notes) in sufficient copies for the
Administrative Agent and each Lender:
(a) Credit Agreement and Notes. This Agreement and the Notes (if any)
executed by each party thereto.
(b) Resolutions and Incumbency.
(i) Copies of resolutions of the board of directors of the Company and
each Guarantor authorizing the transactions contemplated hereby, certified
as of the Closing Date by the Secretary or an Assistant Secretary of such
Person; and
(ii) A certificate of the Secretary or an Assistant Secretary of the
Company and each Guarantor certifying the names and true signatures of the
officers of such Person authorized to execute, deliver and perform this
Agreement and all other Loan Documents to be delivered by it hereunder.
(c) Organization Documents; Good Standing. Each of the following
documents:
(i) for the Company and each Guarantor, the articles or certificate of
incorporation and the bylaws of each such Person, as the case may be, as in
effect on the Closing Date, certified by the Secretary or Treasurer of such
Person, as of the Closing Date; and
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(ii) a good standing certificate for the Company and each Guarantor
from the Secretary of State (or similar applicable Governmental Authority)
of the jurisdiction of its organization.
(d) Legal Opinions.
(i) An opinion of Skadden, Arps, Slate, Meagher & Flom, counsel to the
Company and ROV Holding, substantially in the form of Exhibit J, and
(ii) Opinions of local counsel to the Company and/or ROV Holding in
Wisconsin, North Carolina and the United Kingdom, substantially in the
forms of Exhibits K-1 through K-4 hereto.
(e) Payment of Fees. Evidence of payment by the Company of all accrued
and unpaid fees, costs and expenses to the extent then due and payable on the
Closing Date, together with Attorney Costs of the Agents and the Arrangers to
the extent invoiced prior to or on the Closing Date, plus such additional
amounts of Attorney Costs as shall constitute the Agents' reasonable estimate of
Attorney Costs incurred or to be incurred by them or the Arrangers through the
closing proceedings (provided that such estimate shall not thereafter preclude
final settling of accounts between the Company and the Agents), including any
such costs, fees and expenses arising under or referenced in Section 2.11 or
11.4.
(f) Certificate. A certificate signed by a Responsible Officer, dated as
of the Closing Date, stating that:
(i) the representations and warranties contained in Article VI are
true and correct on and as of such date, as though made on and as of such
date;
(ii) no Event of Default or Unmatured Event of Default exists or will
result from the initial Credit Extension; and
(iii) no event or circumstance has occurred since June 30, 1996 that
has resulted, or would reasonably be expected to result, in a Material
Adverse Effect.
(g) Security Agreement, etc. A security agreement, substantially in the
form of Exhibit E (the "Security Agreement"), executed by the Company and each
Subsidiary (other than a Foreign Subsidiary), together with: (1) evidence,
satisfactory to the Agents, that all filings and recordings necessary to perfect
the Lien granted to the Administrative Agent (for the benefit of itself and the
Lenders) on any collateral granted under the Security Agreement have been duly
made (or will be duly made contemporaneously with the initial Credit Extension
on the Closing Date) and are in full force and effect; (2) a trademark security
agreement, substantially in the form attached
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to the Security Agreement (each, a "Trademark Security Agreement"), issued by
the Company and (3) a patent security agreement, substantially in the form
attached to the Security Agreement (each, a "Patent Security Agreement"), issued
by the Company.
(h) Guaranty. The Guaranty executed by each Subsidiary (other than a
Foreign Subsidiary).
(i) Pledge Agreements. A pledge agreement, substantially in the form of
Exhibit G, issued by the Company (the "Company Pledge Agreement") with respect
to its pledge of 65% of the stock of ROV Holding and all intercompany
Indebtedness owing to the Company; and a Deed of Charge and Memorandum of
Deposit substantially in the form of Exhibit H (the "U.K. Charge"), issued by
ROV Holding with respect to its pledge of 65% of the stock of its Subsidiary
Rayovac (U.K.) Limited, a corporation organized under the laws of England
("Rayovac, U.K."), and all intercompany Indebtedness owing to ROV Holding; in
each case together with the stock certificates (if any) to be pledged thereunder
and undated stock powers, or other instruments of transfer in form and substance
satisfactory to the Agents, duly executed in blank and all intercompany notes
(if any) to be pledged thereunder, duly endorsed to the order of the
Administrative Agent.
(j) Real Property. With respect to each parcel of real property owned or
leased by the Company or any Subsidiary and listed on Schedule 5.1(j), a duly
executed Mortgage providing for a fully perfected Lien, in favor of the
Administrative Agent for the benefit of the Agents and the Lenders, in all
right, title and interest of the Company and each Subsidiary to the real
property subject to such Mortgage, superior in right to any Lien (other than
Permitted Liens), existing or future, which the Company or any Subsidiary or any
creditors thereof or purchasers therefrom, or any other Person, may have against
such real property, together with:
(i) an ALTA (or other form acceptable to the Administrative Agent and
the Required Lenders) mortgagee policy of title insurance or a binder
issued by a title insurance company satisfactory to the Administrative
Agent and the Required Lenders insuring (or undertaking to insure, in the
case of a binder) that the Mortgage creates and constitutes a valid first
mortgage Lien against such real property in favor of the Administrative
Agent, subject only to exceptions acceptable to the Administrative Agent
and the Required Lenders, with such endorsements and affirmative insurance
as the Administrative Agent or the Required Lenders may reasonably request;
(ii) copies of all documents of record concerning such parcel as shown
on the commitment for the ALTA Loan Title Insurance Policy referred to
above; and
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(iii) original or certified copies of all insurance policies required
to be maintained with respect to such real property by this Agreement, any
Mortgage or any other Loan Document.
(k) Recapitalization Agreement and Other Documents. A copy, certified as
true and correct by the Secretary or the Treasurer of the Company, of each of
(a) the Recapitalization Agreement (including all exhibits and schedules
thereto), (b) the Bridge Note Agreement, (c) the Rollover Indenture, (d) the
Escrow Agreement, (e) the Management Agreement, (f) the Pyle Agreements, (g) the
Employment Agreement and (h) the Jones Note.
(l) Solvency Certificate. A Solvency Certificate, substantially in the
form of Exhibit I, executed by the chief financial officer of the Company.
(m) Other Documents. Such other approvals, opinions, documents or
materials as any Agent or any Lender may reasonably request.
5.2 Other Conditions to Initial Loan or Letter of Credit. The obligation
of each Lender to make its initial Credit Extension is, in addition to the
conditions precedent specified in Sections 5.1 and 5.3, subject to the following
conditions precedent or (in the case of subsection 5.2(b)) concurrent:
(a) Bridge Notes. The Company shall have issued the Bridge Notes on
terms and conditions satisfactory to the Agents for gross proceeds of not less
than $100,000,000.
(b) Recapitalization Transaction. The Agents shall have received
evidence, reasonably satisfactory to the Agents, that the Recapitalization
Transaction has been completed on terms and conditions satisfactory to the
Agents.
5.3 Conditions to All Credit Extensions. The obligation of each Lender
to make any Loan to be made by it and the obligation of the Issuing Lender to
Issue any Letter of Credit is subject to the satisfaction of the following
conditions precedent on the relevant Borrowing Date or Issuance Date:
(a) Notice, Application. In the case of any Loan, the Administrative
Agent shall have received a Notice of Borrowing and, in the case of any Issuance
of any Letter of Credit, the Issuing Lender and the Administrative Agent shall
have received an L/C Application or L/C Amendment Application, as required under
Section 3.2.
(b) Continuation of Representations and Warranties. The representations
and warranties in Article VI shall be true and correct in all material respects
on and as of such Borrowing Date or Issuance Date with the same effect as if
made on and as of such Borrowing Date or Issuance Date (except to the extent
such representations and warranties expressly refer to an earlier
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date, in which case they shall be true and correct as of such earlier date).
(c) No Existing Default. No Event of Default or Unmatured Event of
Default shall exist or shall result from such Borrowing or Issuance.
Each Notice of Borrowing and L/C Application or L/C Amendment Application
submitted by the Company hereunder shall constitute a representation and
warranty by the Company hereunder, as of the date of such notice and as of the
applicable Borrowing Date or Issuance Date, that the conditions in this Section
5.3 are satisfied.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
------------------------------
The Company represents and warrants to each Agent and each Lender that:
6.1 Corporate Existence and Power. The Company and each of its
Subsidiaries (other than any Dormant Subsidiary):
(a) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation;
(b) has the power and authority and all governmental licenses,
authorizations, consents and approvals (i) to own its assets and to carry on its
business and (ii) to execute, deliver and perform its obligations under the Loan
Documents;
(c) is duly qualified as a foreign corporation and is licensed and in
good standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such qualification
or license; and
(d) is in compliance with all Requirements of Law;
except, in each case referred to in clause (b)(i), (c) or (d), to the extent
that the failure to do so would not reasonably be expected to have a Material
Adverse Effect.
6.2 Corporate Authorization; No Contravention. The execution and
delivery by the Company of this Agreement and each other Loan Document to which
it is a party, the Borrowings hereunder, the execution and delivery by each
Guarantor of each Loan Document to which it is a party and the performance by
each of the Company and each Guarantor of its obligations under each Loan
Document to which it is a party (i) are within the corporate powers of the
Company and each Guarantor, as applicable, (ii) have been duly authorized by all
necessary corporate action on
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the part of the Company and each Guarantor (including any necessary shareholder
action) and (iii) do not and will not:
(a) contravene the terms of any of the Organization Documents of the
Company or any Guarantor;
(b) conflict with or result in a breach or contravention of, or the
creation of any Lien under, any document evidencing any Contractual Obligation
to which the Company or any Guarantor is a party or any order, injunction, writ
or decree of any Governmental Authority to which the Company, any Guarantor or
any of their properties are subject; or
(c) violate any Requirement of Law.
6.3 Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, (i) the Company
of this Agreement or any other Loan Document to which it is a party or (ii) any
Guarantor with respect to each Loan Document to which it is a party, except, in
each case, for filings required to perfect Liens in favor of the Administrative
Agent granted under the Loan Documents.
6.4 Binding Effect. This Agreement and each other Loan Document to which
the Company is a party constitutes the legal, valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency, or
similar laws affecting the enforcement of creditors' rights generally or by
equitable principles relating to enforceability; and with respect to each
Guarantor, each Loan Document to which such Guarantor is a party constitutes the
legal, valid and binding obligation of such Guarantor, enforceable against such
Guarantor in accordance with its terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, or similar laws affecting the enforcement
of creditors' rights generally and by equitable principles relating to
enforceability.
6.5 Litigation. Except as specifically disclosed in Schedule 6.5, there
are no actions, suits, proceedings, claims or disputes pending or, to the best
knowledge of the Company, threatened or contemplated, at law, in equity, in
arbitration or before any Governmental Authority, against the Company or any
Subsidiary or any of their respective properties which: (a) purport to affect or
pertain to this Agreement or any other Loan Document, or any of the transactions
contemplated hereby or thereby; or (b) would reasonably be expected to have a
Material Adverse Effect. No injunction, writ, temporary restraining order or
other order of any nature has been issued by any court or other Governmental
Authority purporting to enjoin or restrain the execution, delivery or
performance of this Agreement or any other
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Loan Document, or directing that the transactions provided for herein or therein
not be consummated as herein or therein provided.
6.6 No Default. No Event of Default or Unmatured Event of Default exists
or would result from the incurring of any Obligations by the Company. As of the
Closing Date, neither the Company nor any Subsidiary is in default under or with
respect to any Contractual Obligation in any respect which, individually or
together with all such defaults, would reasonably be expected to have a Material
Adverse Effect, or that would, if such default had occurred after the Closing
Date, create an Event of Default under subsection 9.1(e).
6.7 ERISA Compliance.
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other federal or state law. Each
Plan which is intended to qualify under Section 401(a) of the Code has received
a favorable determination letter from the IRS and, to the best knowledge of the
Company, nothing has occurred which would cause the loss of such qualification.
The Company and each ERISA Affiliate has made all required contributions to any
Plan subject to Section 412 of the Code, and no application for a funding waiver
or an extension of any amortization period pursuant to Section 412 of the Code
has been made with respect to any Plan.
(b) There are no pending or, to the best knowledge of the Company,
threatened claims, actions or lawsuits, or actions by any Governmental
Authority, with respect to any Plan which has resulted or would reasonably be
expected to result in a Material Adverse Effect. There has been no prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any Plan which has resulted or would reasonably be expected to result in a
Material Adverse Effect.
(c) (i) No ERISA Event has occurred or is reasonably expected to occur
that would reasonably be expected to have a Material Adverse Effect; (ii) no
contribution failure has occurred with respect to a Pension Plan sufficient to
give rise to a Lien under Section 302(f) of ERISA; (iii) neither the Company nor
any ERISA Affiliate has incurred, or reasonably expects to incur, any liability
to the PBGC under Title IV of ERISA with respect to any Pension Plan; (iv)
neither the Company nor any ERISA Affiliate has incurred, or reasonably expects
to incur, any liability (and no event has occurred which, with the giving of
notice under Section 4219 of ERISA, would result in such liability) under
Section 4201 or 4243 of ERISA with respect to any Multiemployer Plan that would
reasonably be expected to have a Material Adverse Effect; and (v) neither the
Company nor any ERISA Affiliate has engaged in a transaction that could be
subject to Section 4069 or 4212(c) of ERISA.
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6.8 Use of Proceeds; Margin Regulations. The proceeds of the Loans are
to be used solely for the purposes set forth in and permitted by Sections 7.13
and 8.7. Neither the Company nor any Subsidiary is generally engaged in the
business of purchasing or selling Margin Stock or extending credit for the
purpose of purchasing or carrying Margin Stock.
6.9 Title to Properties. Each of the Company and each Subsidiary has
good record and marketable title in fee simple to, or a valid leasehold interest
in, all real property necessary or used in the ordinary conduct of its
businesses, except for such defects in title as would not, individually or in
the aggregate, have a Material Adverse Effect. Each of the Company and each
Subsidiary has good title to all their other respective material properties and
assets (except for those assets disposed of not in violation of this Agreement
and the other Loan Documents). As of the Closing Date, the property of the
Company and its Subsidiaries is subject to no Liens, other than Permitted Liens.
6.10 Taxes. The Company and its Subsidiaries have filed all Federal and
State income tax returns and all other material tax returns and reports required
to be filed, and have paid all Federal and State income taxes and all other
material taxes, assessments, fees and other governmental charges levied or
imposed upon them or their properties, income or assets otherwise due and
payable, except those which are being contested in good faith by appropriate
proceedings and for which adequate reserves have been provided in accordance
with GAAP. There is no written, and, to the best of the Company's knowledge,
there is no oral, proposed tax assessment against the Company or any Subsidiary
that would, if made, have a Material Adverse Effect.
6.11 Financial Condition. (a) The audited consolidated financial
statements of the Company dated June 30, 1994, June 30, 1995 and June 30, 1996,
and the related consolidated statements of income or operations, shareholders'
equity and cash flows for the fiscal periods ended on such dates:
(i) were prepared in accordance with GAAP consistently applied
throughout the periods covered thereby, except as otherwise expressly noted
therein;
(ii) present fairly the financial condition of the Company and its
Subsidiaries as of the dates thereof and results of operations for the
periods covered thereby; and
(iii) except as specifically disclosed in Schedule 6.11, show all
material indebtedness and other liabilities, direct or contingent, of the
Company and its Subsidiaries as of the date thereof, including liabilities
for taxes, material commitments and Contingent Obligations.
(b) The Company has furnished to each Agent and each Lender an estimated
pro forma balance sheet of the Company and its Subsidiaries as of September 30,
1996 (giving effect to the
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Recapitalization Transaction, the refinancing of the Debt to be Repaid, the
incurrence of the Obligations and the Bridge Notes and the consummation of all
other transactions contemplated to occur on such date), prepared by Coopers &
Lybrand L.L.P. and certified as true and correct in all material respects by the
Chief Financial Officer of the Company.
(c) The Company has furnished to each Agent and each Lender financial
projections dated the Closing Date and covering the period from September 30,
1996 to September 30, 2004. Such projections were prepared by the Company and
its Subsidiaries in good faith on the basis of information and assumptions that
the Company and its senior management believed to be reasonable as of the date
of such projections and such assumptions are reasonable as of the Closing Date
(it being understood that projections are subject to significant uncertainties
and contingencies, many of which are beyond the Company's control, and that no
assurance can be given that the projections will be realized).
(d) Since June 30, 1996 there has been no Material Adverse Effect.
6.12 Regulated Entities. None of the Company or any Subsidiary is an
"investment company" within the meaning of the Investment Company Act of 1940.
None of the Company or any Subsidiary is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, the Interstate
Commerce Act, any state public utilities code, or any other Federal or state
statute or regulation limiting its ability to incur Indebtedness.
6.13 No Burdensome Restrictions. Neither the Company nor any Subsidiary
is a party to or bound by any Contractual Obligation or subject to any
restriction in any Organization Document or any Requirement of Law which would
reasonably be expected to have a Material Adverse Effect.
6.14 Copyrights, Patents, Trademarks and Licenses, etc. The Company and
its Subsidiaries own or are licensed or otherwise have the right to use all of
the patents, trademarks, service marks, trade names, copyrights and other
similar rights that are reasonably necessary for the operation of their
respective businesses, without conflict with the rights of any other Person. To
the best knowledge of the Company, no slogan or other advertising device,
product, process, method, substance, part or other material now employed, or now
contemplated to be employed, by the Company or any Subsidiary infringes upon any
valid rights held by any other Person. Except as specifically disclosed in
Schedule 6.5, no claim or litigation regarding any of the foregoing is pending
or threatened against the Company or any Subsidiary, and no patent, invention,
device, application, principle or any statute, law, rule, regulation, standard
or code, relating in each case to intellectual property, is, to the knowledge of
the Company, pending or proposed, which, in either
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case, would reasonably be expected to have a Material Adverse Effect.
6.15 Subsidiaries. As of the Closing Date, the Company has no
Subsidiaries other than those specifically disclosed in part (a) of Schedule
6.15 hereto and has no equity investments in any other corporation or entity
other than those specifically disclosed in part (b) of Schedule 6.15. As of the
Closing Date, neither of Minera Vindaluz or Zoe-Phos International has assets
with a fair market value in excess of $100,000 or conducts any business. As of
the Closing Date, none of the Company or any of its Subsidiaries provides any
credit support to, or is liable in any manner for any liabilities of, Minera
Vindaluz or Zoe-Phos International.
6.16 Insurance. Except as specifically disclosed in Schedule 6.16, the
properties of the Company and its Subsidiaries are insured with financially
sound and reputable insurance companies not Affiliates of the Company (other
than Wrenford Insurance Company Limited), in such amounts, with such deductibles
and covering such risks as are customarily carried by companies engaged in
similar businesses and owning similar properties in localities where the Company
or such Subsidiary operates.
6.17 Solvency, etc. On the Closing Date (or, in the case of any Person
that becomes a Guarantor after the Closing Date, on the date such Person becomes
a Guarantor), and immediately prior to and after giving effect to the Issuance
of each Letter of Credit and each Borrowing hereunder and the use of the
proceeds thereof, (a) each of the Company and each Guarantor will not have an
unreasonably small capital (meaning that for the period from the date of
determination through September 30, 2004, each of the Company and each
Guarantor, after consummation of the transactions contemplated by this
Agreement, is a going concern and has sufficient capital to ensure that it will
be able to pay its debts and liabilities as they mature and continue to be a
going concern in the business in which such entities are engaged and proposed to
be engaged for such period), (b) each of the Company's and each Guarantor's
assets will exceed its liabilities, (c) each of the Company and each Guarantor
will be solvent, will be able to pay its Stated Liabilities as they mature
(meaning that each of the Company and such Guarantor will have sufficient assets
and cash flow to pay their respective Stated Liabilities as those liabilities
mature or otherwise become payable in the normal course of business) and (d)
both the Fair Value and Present Fair Saleable Value of the assets of the Company
and each Guarantor exceeds the Stated Liabilities, respectively, of each of the
Company and each Guarantor.
6.18 Recapitalization Transaction, Bridge Notes, etc.
(a) Concurrent with the initial Credit Extension, the Recapitalization
Transaction has been consummated in
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accordance with the terms of the Recapitalization Agreement, without waiver of
any of the conditions thereof.
(b) The Recapitalization Transaction and the issuance and sale of the
Bridge Notes complied with all Requirements of Law (including the Securities Act
of 1933), and all necessary governmental, regulatory, shareholder and other
consents and approvals required for the consummation of the Recapitalization
Transaction and the issuance and sale of the Bridge Notes were, prior to the
consummation thereof, duly obtained and in full force and effect. All applicable
waiting periods with respect to the Recapitalization Transaction and the
issuance and sale of the Bridge Notes have expired without any action being
taken by any competent Governmental Authority which restrains, prevents or
imposes material adverse conditions upon the consummation of any such
transaction.
(c) The execution and delivery of the Recapitalization Agreement, the
consummation of the Recapitalization Transaction and the issuance and sale of
the Bridge Notes did not violate any Requirement of Law, or result in a breach
of, or constitute a default under, any Contractual Obligation affecting the
Company or any of its Subsidiaries.
(d) There does not exist any judgment, order or injunction prohibiting
or imposing material adverse conditions upon the consummation of the
Recapitalization Transaction and the issuance and sale of the Bridge Notes.
(e) All of the representations and warranties of the Company and, to the
best of the Company's knowledge, the Redemption Shareholders contained in the
Recapitalization Agreement are true and correct in all material respects as of
the date hereof.
(f) All of the representations and warranties of the Company set forth
in the Bridge Note Agreement are true and correct in all material respects as of
the date hereof.
6.19 Real Property. Set forth on Schedule 6.19 is a complete and
accurate list, as of the date of this Agreement, of the address and legal
description of any real property owned or leased by the Company or any
Subsidiary, together with, in the case of leased property, the last known name
and mailing address of the lessor of such property.
6.20 Swap Obligations. Neither the Company nor any of its Subsidiaries
has incurred any outstanding obligations under any Swap Contracts, other than
Permitted Swap Obligations. The Company has undertaken its own independent
assessment of its consolidated assets, liabilities and commitments and has
considered appropriate means of mitigating and managing risks associated with
such matters and has not relied on any swap
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counterparty or any Affiliate of any swap counterparty in determining whether to
enter into any Swap Contract.
6.21 Senior Indebtedness. The Company's obligation to pay the
Obligations, including interest thereon and all fees, costs, expenses and
indemnities related thereto, constitute "Designated Senior Debt" of the Company
as such term is defined in each of the Bridge Note Agreement and the Rollover
Indenture. The Guaranty Obligations of each Subsidiary party to the guaranty of
each of the Bridge Notes and the Rollover Notes are subordinated to the prior
payment in full in cash of such Subsidiary's Guaranty Obligations under the
Guaranty. The Company acknowledges that the Lenders and the Administrative Agent
have entered into this Agreement, and have extended Commitments, in reliance
upon the subordination provisions in the Bridge Notes and the Rollover Indenture
and in the Subsidiary guaranties thereof. If any Qualified Notes are
outstanding, the foregoing representation and warranty shall be deemed made with
respect to Qualified Notes and the related Qualified Indenture to the same
extent made with respect to Rollover Notes and the Rollover Indenture.
6.22 Environmental Warranties. Except as set forth in Schedule 6.22:
(a) all facilities and property (including underlying groundwater) owned
or leased by the Company or any of its Subsidiaries are in compliance with all
Environmental Laws, except for such non-compliance as would not reasonably be
expected to result in a Material Adverse Effect;
(b) there are no pending or threatened Environmental Claims, except for
such Environmental Claims that are not reasonably likely, either singly or in
the aggregate, to result in a Material Adverse Effect;
(c) there have been no Releases of Hazardous Materials at, on or under
any property now or, to the best of the Company's knowledge, previously owned or
leased by the Company or any of its Subsidiaries that, singly or in the
aggregate, have, or may reasonably be expected to have, a Material Adverse
Effect;
(d) the Company and its Subsidiaries have been issued and are in
compliance with all permits, certificates, approvals, licenses and other
authorizations relating to environmental matters and necessary or desirable for
their businesses, except to the extent that the failure to have or comply with
such permits, certificates, approvals, licenses and other authorizations
relating to environmental matters would not be reasonably likely to have a
Material Adverse Effect;
(e) no property now or, to the best of the Company's knowledge,
previously owned or leased by the Company or any
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of its Subsidiaries is listed or proposed for listing (with respect to owned
property only) on the National Priorities List pursuant to CERCLA, or, to the
best of the Company's knowledge, is on the CERCLIS or on any similar state list
of sites requiring investigation or clean-up, except, in each case, for any such
listing that, singly or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect; and
(f) to the best of the Company's knowledge, neither the Company nor any
Subsidiary of the Company has directly transported or directly arranged for the
transportation of any Hazardous Material to any location which is listed or
proposed for listing on the National Priorities List pursuant to CERCLA, or
which is the subject of federal, state or local enforcement actions or other
investigations which may lead to Environmental Claims against the Company or
such Subsidiary except, in each case, to the extent that the foregoing would not
reasonably be expected to have a Material Adverse Effect.
6.23 Full Disclosure. None of the representations or warranties made by
the Company or any Subsidiary in the Loan Documents as of the date such
representations and warranties are made or deemed made and none of the written
statements contained in any exhibit, report, statement or certificate furnished
by or on behalf of the Company or any Subsidiary in connection with the Loan
Documents, considering each of the foregoing taken as a whole and in the context
in which it was made and together with all other representations, warranties and
written statements taken as a whole theretofore furnished by the Company and its
Subsidiaries to the Administrative Agent and the Lenders in connection with the
Loan Documents, contains any untrue statement of a material fact or omits any
material fact required to be stated therein or necessary to make such
representation, warranty or written statement, in light of the circumstances
under which it is made, not misleading as of the time when made or delivered;
provided that the Company's representation and warranty as to any forecast,
projection or other statement regarding future performance, future financial
results or other future development is limited to the fact that such forecast,
projection or statement was prepared in good faith on the basis of information
and assumptions that the Company believed to be reasonable as of the date such
material was provided (it being understood that projections are subject to
significant uncertainties and contingencies, many of which are beyond the
Company's control, and that no assurance can be given that the projections will
be realized).
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ARTICLE VII
AFFIRMATIVE COVENANTS
---------------------
So long as any Lender shall have any Commitment hereunder, or any Loan
or other Obligation shall remain unpaid or unsatisfied, or any Letter of Credit
shall remain outstanding, unless the Required Lenders waive compliance in
writing:
7.1 Financial Statements. The Company shall deliver to the
Administrative Agent, in form and detail satisfactory to the Required Lenders:
(a) as soon as available, but not later than 90 days after the end of
each fiscal year, a copy of the audited consolidated balance sheet of the
Company and its Subsidiaries as at the end of such year and the related
consolidated statements of income or operations, shareholders' equity and cash
flows for such year, setting forth in each case in comparative form the figures
for the previous fiscal year, and accompanied by the opinion of a
nationally-recognized independent public accounting firm (the "Independent
Auditor"), which report (x) shall state that such consolidated financial
statements present fairly the consolidated financial position of the Company and
its Subsidiaries for the periods indicated in conformity with GAAP applied on a
basis consistent with prior years and (y) shall not be qualified or limited
because of a restricted or limited examination by the Independent Auditor of any
material portion of the Company's or any Subsidiary's (other than a Dormant
Subsidiary's) records;
(b) Promptly when available, and in any event within 30 days after the
end of each month that is not the end of a fiscal quarter, and within 45 days
after the end of each month that is the end of a fiscal quarter (other than the
last month of each fiscal year), (i) balance sheets of the Company and each
Subsidiary as of the end of such month, and the related statements of income,
shareholders' equity and cash flows for such month and for the period beginning
with the first day of the applicable fiscal year and ending on the last day of
such month, including a comparison with the corresponding month and period of
the previous fiscal year and a comparison with the budget for such month and for
such period of the current fiscal year, together with a certificate of the chief
executive officer or the chief financial officer of the Company that each such
statement fairly presents the financial condition and results of operations of
the Company and its Subsidiaries (subject to normal year-end audit adjustments)
and has been prepared in accordance with the management policies consistently
applied and (ii) if such month is the end of a fiscal quarter, a copy of the
unaudited consolidated balance sheet of the Company and its Subsidiaries as of
the end of such quarter and the related consolidated statements of income,
shareholders' equity and cash flows for the period commencing on the first day
and ending on the last day of such quarter, together with a certificate of the
chief executive
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officer or the chief financial officer of the Company that each such statement
fairly presents the financial condition and results of operations (subject to
normal year-end audit adjustments) of the Company and its Subsidiaries and has
been prepared in accordance with GAAP consistently applied;
(c) Not later than 60 days after the end of each fiscal year, a copy of
the projections of the Company of the consolidated operating budget and cash
flow budget of the Company and its Subsidiaries for the succeeding fiscal year,
such projections to be accompanied by a certificate of the chief financial
officer of the Company to the effect that (i) such projections were prepared by
the Company in good faith, (ii) the Company has a reasonable basis for the
assumptions contained in such projections and (iii) such projections have been
prepared according to such assumptions; and
(d) As soon as available but not later than November 30, 1996, the
unaudited consolidated balance sheet of the Company and its Subsidiaries as of
September 30, 1996 (giving effect to the Recapitalization Transaction, the
refinancing of the Debt to be Repaid, the incurrence of the Obligations and the
Indebtedness represented by the Bridge Notes and the consummation of all other
transactions contemplated to occur on such date) prepared by the Company in
accordance with GAAP.
7.2 Certificates; Other Information. The Company shall furnish to the
Administrative Agent:
(a) concurrently with the delivery of the financial statements referred
to in subsection 7.1(a), a certificate of the Independent Auditor stating that
in making the examination necessary therefor no knowledge was obtained of any
Event of Default or Unmatured Event of Default, except as specified in such
certificate;
(b) concurrently with the delivery of the financial statements referred
to in subsection 7.1(a) and each set of quarterly statements referred to in
subsection 7.1(b)(ii), a Compliance Certificate executed by a Responsible
Officer;
(c) promptly, copies of all financial statements and reports that the
Company sends to its shareholders, and copies of all financial statements and
regular, periodic or special reports (including Forms 10K, 10Q and 8K) that the
Company or any Subsidiary may make to, or file with, the SEC;
(d) promptly from time to time, any notices (including without
limitation notices of default or acceleration thereunder) received from any
holder or trustee of, under or with respect to any Subordinated Debt of the
Company;
(e) promptly, upon request by the Administrative Agent or any Lender at
any time, a calculation of the Continuing Debt Reserve as in effect at any time,
with such supporting
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documentation in respect thereof as the Administrative Agent or
such Lender may reasonably request;
(f) forthwith upon any Qualified Refinancing, a copy of the related
Qualified Indenture, certified as true and correct by the Secretary or an
Assistant Secretary of the Company; and
(g) promptly, such additional information regarding the business,
financial or corporate affairs of the Company or any Subsidiary as the
Administrative Agent, at the request of any Lender, may from time to time
reasonably request.
7.3 Notices. Promptly upon a Responsible Officer obtaining knowledge
thereof, the Company shall notify the Administrative Agent (and the
Administrative Agent will promptly distribute such notice to the Lenders) of:
(a) the occurrence of any Event of Default or Unmatured Event of
Default;
(b) any matter that has resulted or would reasonably be expected to
result in a Material Adverse Effect, including, if applicable, (i) any breach or
non-performance of, or any default under, a Contractual Obligation of the
Company or any Subsidiary, (ii) any dispute, litigation, investigation,
proceeding or suspension between the Company or any Subsidiary and any
Governmental Authority or (iii) the commencement of, or any material development
in, any litigation or proceeding affecting the Company or any Subsidiary;
(c) the occurrence of any of the following events affecting the Company
or any ERISA Affiliate (but in no event more than ten days after such event,
provided that the Company shall notify the Administrative Agent (which shall
promptly inform each Lender thereof) not less than ten days before the
occurrence of any event described in clause (ii) below), and deliver to the
Administrative Agent (which shall promptly deliver to each Lender a copy
thereof) a copy of any notice with respect to such event that is filed with a
Governmental Authority and any notice delivered by a Governmental Authority to
the Company or any ERISA Affiliate with respect to such event:
(i) an ERISA Event;
(ii) a contribution failure with respect to a Pension Plan
sufficient to give rise to a Lien under Section 302(f) of ERISA;
(iii) a material increase in Unfunded Pension Liabilities;
(iv) the adoption of, or the commencement of contributions to,
any Plan subject to Section 412 of the Code by the Company or any
ERISA Affiliate; or
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(v) the adoption of any amendment to a Plan subject to Section
412 of the Code, if such amendment results in a material increase in
contributions or Unfunded Pension Liabilities;
(d) any material change in accounting policies or financial reporting
practices by the Company or any of its consolidated Subsidiaries;
(e) any Mandatory Prepayment Event;
(f) any proposed payment of or on Subordinated Debt prior to the making
thereof; and
(g) upon the request from time to time of the Administrative Agent, the
Swap Termination Values, together with a description of the method by which such
values were determined, relating to any then-outstanding Swap Contracts to which
the Company or any of its Subsidiaries is party.
Each notice under this Section shall be accompanied by a written
statement by a Responsible Officer setting forth details of the occurrence
referred to therein and stating what action the Company or any affected
Subsidiary proposes to take with respect thereto and at what time. Each notice
under subsection 7.3(a) shall describe with particularity any and all clauses or
provisions of this Agreement or any other Loan Document that have been breached
or violated.
7.4 Preservation of Corporate Existence, Etc. The Company shall, and
shall cause each Subsidiary (other than a Dormant Subsidiary) to:
(a) preserve and maintain in full force and effect its corporate
existence and good standing under the laws of its state or jurisdiction of
incorporation except a Subsidiary need not be in compliance with the foregoing
to the extent such Subsidiary is sold pursuant to Section 8.2 or merged or
consolidated unto another Person pursuant to Section 8.3;
(b) preserve and maintain in full force and effect all governmental
rights, privileges, qualifications, permits, licenses and franchises, in each
case which are material and which are necessary or desirable in the normal
conduct of its business except in connection with transactions permitted by
Section 8.3 and dispositions of assets permitted by Section 8.2; and
(c) preserve or renew all of its registered patents, copyrights,
trademarks, trade names and service marks, the non-preservation of which would
reasonably be expected to have a Material Adverse Effect.
7.5 Maintenance of Property. The Company shall, and shall cause each
Subsidiary (other than a Dormant Subsidiary) to,
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maintain and preserve all property material to the normal conduct of its
business in good working order and condition, ordinary wear and tear excepted,
other than obsolete, worn out or surplus equipment; provided, however, that
nothing in this Section 7.5 shall prevent the Company or any of its Subsidiaries
from discontinuing the operation and the maintenance of any of its properties or
any Dormant Subsidiary if such discontinuance is, in the opinion of the Board of
Directors or senior management of the Company, desirable in the conduct of its
business and not disadvantageous in any material respect to the Lenders.
7.6 Insurance. The Company shall, and shall cause each Subsidiary (other
than a Dormant Subsidiary) to, maintain with financially sound and reputable
independent insurers or with Wrenford Insurance Company Limited, insurance with
respect to its properties and business against loss or damage of the kinds
customarily insured against by Persons engaged in the same or similar business,
of such types and in such amounts as are customarily carried under similar
circumstances by such other Persons.
7.7 Payment of Obligations. The Company shall, and shall cause each
Subsidiary to, pay and discharge as the same shall become due and payable all of
its material obligations and liabilities, including:
(a) all material tax liabilities, assessments and governmental charges
or levies upon it or its properties or assets unless the same are being
contested in good faith by appropriate proceedings and adequate reserves in
accordance with GAAP are being maintained by the Company or such Subsidiary; and
(b) all lawful claims which, if unpaid, would by law become a Lien upon
its property.
7.8 Compliance with Laws. The Company shall, and shall cause each
Subsidiary to, comply in all material respects with all material Requirements of
Law of any Governmental Authority having jurisdiction over it or its business
(including the Federal Fair Labor Standards Act), except such as may be
contested in good faith or as to which a bona fide dispute may exist.
7.9 Compliance with ERISA. The Company shall, and shall cause each of
its ERISA Affiliates to: (a) maintain each Plan in compliance in all material
respects with the applicable provisions of ERISA, the Code and other federal or
state law; (b) cause each Plan which is qualified under Section 401(a) of the
Code to maintain such qualification; and (c) make all required contributions to
any Plan subject to Section 412 of the Code.
7.10 Inspection of Property and Books and Records. The Company shall,
and shall cause each Subsidiary to, maintain proper books of record and account,
in which full, true and
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correct entries in conformity with GAAP consistently applied shall be made of
all financial transactions and matters involving the assets and business of the
Company and such Subsidiary. The Company shall permit, and shall cause each
Subsidiary to permit, representatives and independent contractors of the
Administrative Agent or any Lender (a) to visit and inspect any of their
respective properties, to examine their respective corporate, financial and
operating records, and to make copies thereof or abstracts therefrom, and to
discuss their respective affairs, finances and accounts with their respective
directors, officers, and independent public accountants and (b) to inspect any
of their inventory and equipment, to perform appraisals of any of their
equipment, and to inspect, audit, check and make copies and/or extracts from the
books, records, computer data and records, computer programs, journals, orders,
receipts, correspondence and other data relating to inventory, accounts
receivable, contract rights, general intangibles, equipment and any other
collateral, or relating to any other transactions between the parties hereto; at
such reasonable times during normal business hours and as often as may be
reasonably desired, upon reasonable advance notice to the Company; provided,
however, that when an Event of Default exists, the Administrative Agent or any
Lender may do any of the foregoing without advance notice. After the occurrence
and during the continuance of any Event of Default, any such inspection shall be
at the Company's expense.
7.11 Interest Rate Protection. The Company shall, not later than 90 days
after the Closing Date, enter into one or more Permitted Swap Obligations, each
with a term of at least three years, on an ISDA standard form with one or more
Lenders or Affiliates thereof or with counterparties reasonably acceptable to
the Agents with respect to not less than $62,500,000 of the principal amount of
the Term Loans in form and substance satisfactory to the Agents.
7.12 Environmental Covenant. The Company will, and will cause each of
its Subsidiaries to,
(a) use and operate all of its facilities and properties in material
compliance with all Environmental Laws, keep all necessary permits, approvals,
certificates, licenses and other authorizations relating to environmental
matters in effect and remain in material compliance therewith, and handle all
Hazardous Materials in material compliance with all applicable Environmental
Laws;
(b) promptly notify the Administrative Agent and provide copies of all
written Environmental Claims, and shall act in a diligent and prudent fashion to
address such Environmental Claims, including Environmental Claims that allege
that the Company or any of its Subsidiaries is not in compliance with
Environmental Laws; and
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(c) provide such information and certifications which the Administrative
Agent may reasonably request from time to time to evidence compliance with this
Section 7.12.
7.13 Use of Proceeds. The Company shall use the proceeds of the Loans
and the Letters of Credit (i) to finance the Recapitalization Transaction, (ii)
to repay Debt to be Repaid, (iii) to pay up to $3,750,000 of fees and expenses
related to the issuance of the Bridge Notes and the Loans and (iv) for working
capital and other general corporate purposes not in contravention of any
Requirement of Law or of any Loan Document.
7.14 Further Assurances. (a) The Company shall, and shall cause each
Subsidiary to, execute, acknowledge, deliver, record, re-record, file, re-file,
register and re-register, any and all such further acts, deeds, conveyances,
security agreement, mortgages, assignments, estoppel certificates, financing
statements and continuations thereof, termination statements, notices of
assignment, transfers, certificates, assurances and other instruments the
Administrative Agent or the Required Lenders, as the case may be, may reasonably
request from time to time in order (a) to ensure that (i) the obligations of the
Company hereunder and under the other Loan Documents are secured by
substantially all assets of the Company (provided, that unless otherwise
reasonably required by the Required Lenders, the pledge of the capital stock of
a Foreign Subsidiary shall be limited to 65% of the outstanding capital stock of
such Subsidiary and, so long as ROV Holding owns no substantial business assets
other than stock of Foreign Subsidiaries, the pledge of stock of ROV Holding
shall be limited to 65% of the outstanding capital stock of ROV Holding) other
than stock of Dormant Subsidiaries and guaranteed, pursuant to the Guaranty, by
all Subsidiaries (other than Foreign Subsidiaries and Dormant Subsidiaries)
(including, promptly upon the acquisition or creation thereof, any Subsidiary
created or acquired after the date hereof) and (ii) the obligations of each
Subsidiary under the Guaranty are secured by substantially all of the assets of
such Subsidiary other than stock of Dormant Subsidiaries (provided, that unless
reasonably required by the Required Lenders, the pledge of the capital stock of
a Foreign Subsidiary shall be limited to 65% of the outstanding capital stock of
such Subsidiary), (b) to perfect and maintain the validity, effectiveness and
priority of any of the Collateral Documents and the Liens intended to be created
thereby and (c) to better assure, convey, grant, assign, transfer, preserve,
protect and confirm to the Administrative Agent and the Lenders the rights
granted or now or hereafter intended to be granted to the Administrative Agent
and the Lenders under any Loan Documents or under any other document executed in
connection therewith. Contemporaneously with the execution and delivery of any
document referred to above, the Company shall, and shall cause each Subsidiary
to, deliver all resolutions, opinions and corporate documents as the
Administrative Agent or the Required Lenders may reasonably request to confirm
the enforceability of such document and the perfection of the security interest
created thereby, if applicable.
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(b) As soon as practicable, but in any event within 60 days following
the Closing Date, the Company shall cause ROV Holding to (i) pledge to the
Administrative Agent, pursuant to documentation in form and substance
satisfactory to the Administrative Agent, 65% of the capital stock of ROV
Holding's Subsidiaries Rayovac Far East Limited, a corporation organized under
the laws of Hong Kong, Rayovac Canada Inc., a corporation organized under the
laws of Canada, and Ray-O-Vac Europe B.V., a corporation organized under the
laws of the Netherlands, (ii) in connection with such pledges, deliver to the
Administrative Agent such certificates and opinions of counsel as requested by
the Administrative Agent and (iii) deliver to the Administrative Agent the stock
certificates (if any) to be pledged thereunder, together with undated stock
powers duly executed in blank.
(c) In the event that any Subsidiary that on the date hereof is a
Dormant Subsidiary ceases to be a Dormant Subsidiary, the Company shall promptly
pledge or cause to be pledged, pursuant to documentation in form and substance
satisfactory to the Administrative Agent, (i) 65% of the stock of such
Subsidiary to be pledged to the Administrative Agent (so long as such Subsidiary
is not owned by a Foreign Subsidiary) pursuant to documentation in form and
substance satisfactory to the Administrative Agent, (ii) in connection with such
pledge, deliver or cause to be delivered to the Administrative Agent such
certificates and opinions of counsel as requested by the Administrative Agent
and (iii) deliver or cause to be delivered to the Administrative Agent the stock
certificates (if any) to be pledged thereunder, together with undated stock
powers duly executed in blank.
(d) If the Company shall not have sold its real property located at 922
South Main Street, Covington, Tennessee on or before 180 days after the Closing
Date, the Company shall deliver to the Administrative Agent a duly executed
Mortgage with respect to such property providing for a fully perfected Lien, in
favor of the Administrative Agent for the benefit of the Agents and the Lenders,
in all right, title and interest of the Company in such property, superior in
right to any Lien (other than Permitted Liens), existing or future, which the
Company or any creditors thereof or purchasers therefrom, or any other Person,
may have against such property, together with documents of the type specified in
Section 5.1(j) with respect to such property.
(e) Within 30 days after the Closing Date, the Company shall cause each
financial institution at which the Company or any Subsidiary (other than a
Foreign Subsidiary) maintains any lockbox, deposit account or other similar
account to deliver to the Administrative Agent and the Company a writing, in
form and substance satisfactory to the Administrative Agent, acknowledging and
consenting to the security interest of the Administrative Agent in such lockbox
or account and all cash, checks, drafts and other instruments or writings for
the payment of money from time to time therein, confirming such financial
institution's agreement to follow the instructions of the Administrative Agent
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with respect to all such cash, checks, drafts and other instruments or writings
for the payment of money following the occurrence of any Event of Default or
Unmatured Event of Default of the type specified in Section 9.1(f) or (g) and
waiving all rights of setoff and banker's lien on all items held in any such
lockbox or account.
7.15 Clean-Down of Loans. The Company agrees to cause the aggregate
outstanding principal amount of the Revolving Loans, for at least 30 consecutive
days in each fiscal year set forth below, to be equal to or less than the amount
set forth across from such fiscal year below:
Fiscal Year Amount
ending 9/30/97 $10,000,000
ending 9/30/98 $5,000,000
each fiscal year thereafter $0.
ARTICLE VIII
NEGATIVE COVENANTS
------------------
So long as any Lender shall have any Commitment hereunder, or any Loan
or other Obligation shall remain unpaid or unsatisfied, or any Letter of Credit
shall remain outstanding, unless the Required Lenders waive compliance in
writing:
8.1 Limitation on Liens. The Company shall not, and shall not permit any
Subsidiary to, directly or indirectly, make, create, incur, assume or suffer to
exist any Lien upon or with respect to any part of its property, whether now
owned or hereafter acquired, other than the following ("Permitted Liens"):
(a) any Lien existing on property of the Company or any Subsidiary on
the Closing Date and set forth on Schedule 8.1 securing Indebtedness outstanding
on such date;
(b) any Lien created under any Loan Document;
(c) Liens for taxes, fees, assessments or other governmental charges
which are not delinquent or remain payable without penalty, or to the extent
that non-payment thereof is permitted by Section 7.7, provided that no notice of
lien has been filed or recorded under the Code;
(d) carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's or other similar Liens arising in the ordinary course of business
which are not delinquent or which are being contested in good faith and by
appropriate proceedings, which proceedings have the effect of preventing the
forfeiture or sale of the property subject thereto;
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(e) Liens (other than any Lien imposed by ERISA) consisting of pledges
or deposits required in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other social security
legislation;
(f) Liens on property of the Company or any Subsidiary securing (i) the
non-delinquent performance of bids, trade contracts (other than for borrowed
money), leases, statutory obligations, (ii) surety bonds (excluding appeal bonds
and other bonds posted in connection with court proceedings or judgments) and
(iii) other non-delinquent obligations of a like nature, in each case, incurred
in the ordinary course of business; provided that all such Liens in the
aggregate would not (even if enforced) cause a Material Adverse Effect;
(g) Liens consisting of judgment or judicial attachment Liens and Liens
securing contingent obligations on appeal bonds and other bonds posted in
connection with court proceedings or judgments, provided that the enforcement of
such Liens is effectively stayed and all such Liens in the aggregate at any time
outstanding for the Company and its Subsidiaries do not exceed $3,000,000;
(h) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the property subject thereto or interfere
with the ordinary conduct of the businesses of the Company and its Subsidiaries
taken as a whole;
(i) purchase money security interests on any property acquired by the
Company or any Subsidiary in the ordinary course of business, securing
Indebtedness incurred or assumed for the purpose of financing all or any part of
the cost of acquiring such property, provided that (i) any such Lien attaches to
such property concurrently with or within 90 days after the acquisition thereof,
(ii) such Lien attaches solely to the property so acquired in such transaction,
(iii) the principal amount of the Indebtedness secured thereby does not exceed
100% of the cost of such property and (iv) the principal amount of the
Indebtedness secured by all such purchase money security interests shall not at
any time exceed $5,000,000;
(j) Liens securing obligations in respect of capital leases on assets
subject to such leases, provided that such capital leases are otherwise
permitted hereunder;
(k) Liens arising solely by virtue of any statutory or common law
provision relating to banker's liens, rights of set-off or similar rights and
remedies as to deposit accounts or other funds maintained with a creditor
depository institution, provided that (i) such deposit account is not a
dedicated cash collateral account and is not subject to restrictions against
access by the Company in excess of those set forth by regulations
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promulgated by the FRB and (ii) such deposit account is not intended by the
Company or any Subsidiary to provide collateral to the depository institution;
(l) extensions, renewals and replacements of Liens referred to in
clauses (a) through (k) above; provided that any such extension, renewal or
replacement Lien is limited to the property or assets covered by the Lien
extended, renewed or replaced and does not secure any Indebtedness in addition
to that secured immediately prior to such extension, renewal or replacement;
(m) Liens relating to IRB Debt permitted by subsection 8.5(k) covering
only those capital improvements financed by such IRB Debt; and
(n) Liens securing other Indebtedness of the Company and its
Subsidiaries not expressly permitted by clauses (a) through (m) above; provided
that the aggregate amount of the Indebtedness secured by Liens permitted
pursuant to this clause (n) does not exceed $3,000,000 in the aggregate;
provided that no Lien (other than as set forth in clause (b) above) may attach
to any Excluded Assets.
8.2 Disposition of Assets. The Company shall not, and shall not permit
any Subsidiary to, directly or indirectly, sell, assign, lease, convey, transfer
or otherwise dispose of (whether in one or a series of transactions) any
property (including accounts and notes receivable, with or without recourse) or
enter into any agreement to do any of the foregoing, except:
(a) dispositions of inventory, or used, worn-out or surplus equipment,
all in the ordinary course of business;
(b) the sale of equipment to the extent that such equipment is exchanged
for credit against the purchase price of similar replacement equipment, or the
proceeds of such sale are reasonably promptly applied to the purchase price of
such replacement equipment;
(c) dispositions not otherwise permitted hereunder (including the
disposition of all of the capital stock of any operating Subsidiary and
including a disposition pursuant to a sale and lease-back transaction) which are
made for fair market value if the fair market value of all assets so disposed of
by the Company and its Subsidiaries under this clause (c) does not exceed
$5,000,000 in the aggregate; provided that (i) at the time of any disposition,
no Event of Default or Unmatured Event of Default shall exist or will result
from such disposition, (ii) at least 90% of the consideration received by the
Company or such Subsidiary from such disposition is in cash or Cash Equivalent
Investments and (iii) the proceeds thereof are applied as provided in subsection
2.8(a);
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(d) mergers expressly permitted by Section 8.3 or transfers by any
Wholly-Owned Subsidiary of the Company of its assets upon its liquidation to the
Company or any of its Wholly- Owned Subsidiaries; and
(e) in addition to any other disposition permitted by this Section 8.2,
the sale or disposition of any assets (including the disposition of all of the
capital stock of any operating Subsidiary and including a disposition pursuant
to a sale and lease-back transaction) if the fair market value of all assets so
disposed of by the Company and its Subsidiaries under this clause (e) does not
exceed $1,000,000 in the aggregate; provided that (i) at the time of any
disposition, no Event of Default or Unmatured Event of Default shall exist or
will result from such disposition and (ii) the proceeds thereof are applied as
provided in subsection 2.8(a).
8.3 Consolidations and Mergers. The Company shall not, and shall not
permit any Subsidiary to, merge or consolidate with or into any other Person,
except that any Subsidiary may merge with the Company (provided that the Company
shall be the continuing or surviving corporation) or with any one or more
Wholly-Owned Subsidiaries (provided that a Wholly-Owned Subsidiary shall be the
continuing or surviving corporation).
8.4 Loans and Investments. The Company shall not, and shall not permit
any Subsidiary to, purchase or acquire, or make any commitment to purchase or
acquire, any capital stock, equity interest or other obligations or securities
of, or any interest in, any other Person, or make or commit to make any
Acquisition, or make or commit to make any advance, loan, extension of credit or
capital contribution to or any other investment in, any other Person, except
for:
(a) investments in Cash Equivalent Investments;
(b) extensions of credit in the nature of accounts receivable or notes
receivable arising from the sale or lease of goods or services in the ordinary
course of business;
(c) investments by the Company in its Wholly-Owned Subsidiaries or by
any Subsidiary in any Wholly-Owned Subsidiary, in the form of contributions to
capital or loans or advances; provided that, immediately before and after giving
effect to such investment, no Event of Default or Unmatured Event of Default
shall have occurred and be continuing and the aggregate amount invested in
Foreign Subsidiaries after the Closing Date shall not exceed $2,000,000;
(d) loans or advances made by any Subsidiary to the Company;
(e) loans and advances to employees in the ordinary course of business
(such as travel advances and including the
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Jones Note) in an aggregate amount not at any time exceeding $1,000,000;
(f) investments by the Company and its Subsidiaries in Joint Ventures in
the form of contributions of capital, loans, advances or Contingent Obligations;
provided that, immediately before and after giving effect to such investment,
(x) no Event of Default or Unmatured Event of Default shall have occurred and be
continuing, including without limitation pursuant to Section 8.9, and (y) the
aggregate amount of all investments pursuant to this clause (f) shall not exceed
$2,000,000 in the aggregate (with all such investments valued at the time of
investment at the cash amount thereof, if in cash, the fair market value thereof
as determined by the board of directors of the Company, if in property, and at
the maximum amount thereof if in Contingent Obligations);
(g) investments constituting Permitted Swap Obligations or payments or
advances under Swap Contracts relating to Permitted Swap Obligations;
(h) other investments in an aggregate amount not exceeding $5,000,000
during the term of this Agreement (with all such investments valued at the time
of investment at the cash amount thereof, if in cash, the fair market value
thereof as determined by the board of directors of the Company, if in property,
and at the maximum amount thereof if in Contingent Obligations); and
(i) investments existing on the Closing Date and set forth on Schedule
8.4.
8.5 Limitation on Indebtedness. The Company shall not, and shall not
permit any Subsidiary to, create, incur, assume, suffer to exist, or otherwise
become or remain directly or indirectly liable with respect to, any
Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement and the Guaranty;
(b) the Bridge Notes and any Subordinated Debt that represents the
Proposed Bridge Note Refinancing and related Guaranty Obligations by
Subsidiaries of the Company (provided that the Company may not pay cash interest
on any Subordinated Debt that represents the Bridge Note Refinancing at a rate
per annum greater than 15.25% on the lesser of the gross proceeds received by
the Company therefrom or the original principal amount thereof);
(c) Indebtedness consisting of Contingent Obligations permitted pursuant
to Section 8.8;
(d) Indebtedness existing, or drawable pursuant to commitments existing,
on the Closing Date, in each case as set forth in Schedule 8.5(d), and
extensions, renewals or
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replacements of such Indebtedness to the extent that the principal amount (with
respect to term debt) or maximum commitment (with respect to lines of credit or
revolving facilities) of such Indebtedness is not increased (collectively,
"Continuing Debt");
(e) Indebtedness of Subsidiaries to the Company or Wholly-Owned
Subsidiaries; provided, that the aggregate amount of all such Indebtedness of
Foreign Subsidiaries and other investments by the Company and its Subsidiaries
in Foreign Subsidiaries shall not exceed $2,000,000;
(f) Indebtedness secured by Liens permitted by subsection 8.1(i);
(g) Indebtedness incurred in connection with leases permitted pursuant
to Section 8.10;
(h) Indebtedness of the Company or any Subsidiary of the Company in
connection with guaranties resulting from endorsement of negotiable instruments
in the ordinary course of business;
(i) surety bonds and appeal bonds required in the ordinary course of
business or in connection with the enforcement of rights or claims of the
Company or in connection with judgments that do not result in an Unmatured Event
of Default or an Event of Default;
(j) reimbursement obligations in respect of letters of credit listed on
Schedule 8.5(j), provided that such letters of credit are terminated or replaced
by Letters of Credit within 10 days after the Closing Date;
(k) IRB Debt in a principal amount not to exceed $8,000,000 at any one
time outstanding; and
(l) other Indebtedness in an aggregate amount not at any time exceeding
$5,000,000.
It is understood that any Indebtedness borrowed in a foreign currency shall
continue to be permitted under this Section, notwithstanding any fluctuation in
the Dollar Amount of such Indebtedness, as long as the outstanding principal
balance of such Indebtedness (denominated in its original currency) does not
exceed the maximum amount of such Indebtedness (denominated in such currency)
permitted to be outstanding on the date such Indebtedness was incurred.
8.6 Transactions with Affiliates. The Company shall not, and shall not
permit any Subsidiary to, enter into any transaction with any Affiliate of the
Company (other than a Subsidiary), except upon fair and reasonable terms no less
favorable to the Company or such Subsidiary than would be obtainable in a
comparable arm's-length transaction with a Person
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not an Affiliate of the Company; provided, that the Management Agreement, the
Pyle Agreements, the Jones Note and the Employment Agreement shall not violate
this Section.
8.7 Use of Proceeds. The Company shall not, and shall not permit any
Subsidiary to, use any portion of the proceeds of any Loan or any Letter of
Credit, directly or indirectly, (i) to purchase or carry Margin Stock, (ii) to
repay or otherwise refinance indebtedness of the Company or others incurred to
purchase or carry Margin Stock, (iii) to extend credit for the purpose of
purchasing or carrying any Margin Stock or (iv) acquire any security in any
transaction that is subject to Section 13 or 14 of the Exchange Act.
8.8 Contingent Obligations. The Company shall not, and shall not permit
any Subsidiary to, create, incur, assume or suffer to exist any Contingent
Obligation except:
(a) endorsements for collection or deposit in the ordinary course of
business;
(b) Permitted Swap Obligations;
(c) Contingent Obligations of the Company and its Subsidiaries existing
as of the Closing Date and listed in Schedule 8.8 and Guaranty Obligations by
the Company relating to Indebtedness of Wholly-Owned Subsidiaries, provided,
that all Contingent Obligations permitted by this subsection 8.8(c) shall not
exceed $10,000,000 at any one time;
(d) Contingent Obligations arising under the Loan Documents; and
(e) Contingent Obligations with respect to Joint Ventures to the extent
permitted by Section 8.9.
8.9 Joint Ventures. The Company shall not, and shall not permit any
Subsidiary to, enter into any Joint Venture, except that the Company or any
Subsidiary may enter into any Joint Venture so long as the aggregate amount
invested by the Company and its Subsidiaries in all Joint Ventures in any form
(including without limitation by capital contribution, incurrence of
Indebtedness by any such Joint Venture to the Company or any Subsidiary or the
incurrence of Contingent Obligations by the Company or any Subsidiary with
respect to any such Joint Venture), during the term of this Agreement does not
exceed $2,000,000; provided, however, that for purposes of determining the
aggregate amount invested in Joint Ventures hereunder (x) any return of
principal or equity received in cash on any amount invested hereunder and (y)
the fair market value of any other property received in exchange for any amount
invested hereunder shall be deducted.
8.10 Lease Obligations. The Company shall not, and shall not permit any
Subsidiary to, create or suffer to exist any
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obligations for the payment of rent for any property under lease or agreement to
lease, except for:
(a) leases of the Company and its Subsidiaries in existence on the
Closing Date and any renewal, extension or refinancing thereof;
(b) operating leases entered into by the Company or any Subsidiary after
the Closing Date in the ordinary course of business; and
(c) capital leases entered into by the Company to finance the
acquisition of equipment; provided that no Event of Default or Unmatured Event
of Default has occurred and is continuing or will result from the incurrence of
the obligations of the Company contemplated thereby.
8.11 Minimum Fixed Charge Coverage. The Company will not permit the
Fixed Charge Coverage Ratio for any Computation Period to be less than the ratio
set forth below opposite the period in which such Computation Period ends:
Period Ratio
=================================================================
12/31/96 - 12/31/97 1.55:1.0
- - -----------------------------------------------------------------
03/31/98 - 12/31/98 1.65:1.0
- - -----------------------------------------------------------------
03/31/99 - 12/31/99 1.75:1.0
- - -----------------------------------------------------------------
03/31/00 - 12/31/00 1.85:1.0
- - -----------------------------------------------------------------
03/31/01 - 12/31/01 1.95:1.0
- - -----------------------------------------------------------------
03/31/02 and thereafter 2.00:1.0.
=================================================================
8.12 Minimum EBITDA. The Company will not permit EBITDA for any
Computation Period to be less than the amount set forth below opposite the
period in which such Computation Period ends:
Period EBITDA
===================================================================
12/31/96 - 12/31/97 $40,000,000
- - -------------------------------------------------------------------
03/31/98 - 09/30/98 $45,000,000
- - -------------------------------------------------------------------
12/31/98 - 06/30/99 $50,000,000
- - -------------------------------------------------------------------
09/30/99 - 12/31/99 $55,000,000
- - -------------------------------------------------------------------
03/31/00 - 12/31/00 $60,000,000
- - -------------------------------------------------------------------
03/31/01 - 12/31/01 $65,000,000
- - -------------------------------------------------------------------
03/31/02 - 12/31/02 $70,000,000
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- - --------------------------------------------------------------------
03/31/03 - 12/31/03 $75,000,000
- - --------------------------------------------------------------------
03/31/04 and thereafter $80,000,000;
====================================================================
provided, however, that with respect to Computation Periods ending prior to
September 30, 1997, EBITDA shall be measured from the period from October 1,
1996 through the end of the Computation Period and annualized as follows (x)
with respect to the Computation Period ending December 31, 1996, EBITDA during
such Computation Period shall be multiplied by four, (y) with respect to the
Computation Period ending March 31, 1997, EBITDA during such Computation Period
shall be multiplied by two and (z) with respect to the Computation Period ending
June 30, 1997, EBITDA during such Computation Period shall be multiplied by
four-thirds.
8.13 Minimum Adjusted Net Worth. The Company will not permit at any time
from and after October 1, 1996 (i) the Net Worth of the Company at such time
plus Subordinated Debt Proceeds at such time to be less than (ii) (a) its Net
Worth on September 30, 1996, plus (b) $95,000,000, plus (c) 75% of cumulative
Consolidated Net Income for the period beginning on October 1, 1996 and ending
on the date of calculation (provided that if Consolidated Net Income is less
than zero for any fiscal year, or for the completed portion of the then-current
fiscal year, Consolidated Net Income for such fiscal year or portion shall be
deemed to be zero).
8.14 Maximum Leverage Ratio. The Company will not permit the Leverage
Ratio for any Computation Period to exceed the ratio set forth below opposite
the period in which such Computation Period ends:
Period Ratio
====================================================================
12/31/96 6.00:1.0
- - --------------------------------------------------------------------
03/31/97 - 12/31/97 5.25:1.0
- - --------------------------------------------------------------------
03/31/98 - 12/31/98 4.50:1.0
- - --------------------------------------------------------------------
03/31/99 - 12/31/99 4.00:1.0
- - --------------------------------------------------------------------
03/31/00 - 12/31/00 3.50:1.0
- - --------------------------------------------------------------------
03/31/01 and thereafter 3.00:1.0.
====================================================================
8.15 Maximum Capital Expenditures. The Company will not permit the
aggregate amount of all Capital Expenditures made by the Company and its
Subsidiaries for any fiscal year to exceed the amount set forth below opposite
such fiscal year:
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Fiscal Year Amount
====================================================================
ending 9/30/97 $17,000,000
- - --------------------------------------------------------------------
ending 9/30/98 $17,000,000
- - --------------------------------------------------------------------
ending 9/30/99 $18,000,000
- - --------------------------------------------------------------------
ending 9/30/00 $19,000,000
- - --------------------------------------------------------------------
ending 9/30/01 $20,000,000
- - --------------------------------------------------------------------
ending 9/30/02 $21,000,000
- - --------------------------------------------------------------------
ending 9/30/03 $22,000,000
- - --------------------------------------------------------------------
ending 9/30/04 $23,000,000;
====================================================================
provided, however, that to the extent Capital Expenditures actually made in any
fiscal year are less than the amount permitted to be made in such fiscal year
(without giving effect to any carryforward), the lesser of (x) the amount of the
difference and (y) 50% of the amount of Capital Expenditures permitted to be
made in the next succeeding fiscal year as set forth in the schedule above may
be carried forward and used to make Capital Expenditures in such next succeeding
fiscal year.
8.16 Restricted Payments. The Company shall not, and shall not permit
any Subsidiary to, (i) declare or make any dividend payment or other
distribution of assets, properties, cash, rights, obligations or securities on
account of any shares of any class of its capital stock, or purchase, redeem or
otherwise acquire for value any shares of its capital stock or any warrants,
rights or options to acquire such shares, now or hereafter outstanding, or (ii)
make any redemptions, prepayments, defeasances or repurchases of any
Subordinated Debt except that:
(a) any Subsidiary may declare and pay dividends to the Company or a
Wholly-Owned Subsidiary;
(b) the Company may declare and make dividend payments or other
distributions payable solely in Common Stock;
(c) the Bridge Notes may be exchanged for the Rollover Notes pursuant to
the terms of the Bridge Note Agreement and the Bridge Notes or the Rollover
Notes may be repaid using the Net Cash Proceeds of the Proposed Bridge Note
Refinancing;
(d) the Company or any of its Subsidiaries may purchase Common Stock or
options with respect to Common Stock held by employees or management of the
Company or any of its Subsidiaries in connection with the termination of
employment of any such employees or management, provided that any such payments
do not exceed $2,000,000 in the aggregate; and
(e) upon the initial Public Offering of the Company, the Company may
repurchase or redeem Bridge Notes, Rollover Notes or other Subordinated Debt
incurred to refinance the Bridge Notes
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or Rollover Notes (including Qualified Notes) with the Net Cash Proceeds of such
initial Public Offering; provided that no more than $35,000,000 principal amount
of Subordinated Debt (other than the Bridge Notes or Rollover Notes) may be
repurchased or redeemed pursuant to this clause (e).
8.17 ERISA. The Company shall not, and shall not permit any of its ERISA
Affiliates to: (a) engage in a prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan which has resulted or
would reasonably be expected to result in liability of the Company in an
aggregate amount in excess of $1,000,000 at any time; or (b) engage in a
transaction that could be subject to Section 4069 or 4212(c) of ERISA.
8.18 Limitations on Sale and Leaseback Transactions. The Company shall
not, and shall not permit any Subsidiary to, enter into any arrangement with any
Person providing for the leasing by the Company or any Subsidiary of any real or
personal property, which property is or has been sold or transferred by the
Company or any Subsidiary to such Person in contemplation of taking back a lease
thereof in an aggregate amount in excess of $5,000,000.
8.19 Limitation on Restriction of Subsidiary Dividends and
Distributions. The Company will not, and will not permit any Subsidiary to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any encumbrance or restriction on the ability of any Subsidiary to (a)
pay dividends or make other distributions on its capital stock owned by the
Company or any Subsidiary, or pay any Indebtedness owed to the Company or any
Subsidiary, (b) make loans or advances to the Company or (c) transfer any of its
assets or properties to the Company, except for such encumbrances or
restrictions existing by reason of or under (i) applicable law, (ii) this
Agreement and the other Loan Documents and (iii) prior to the termination
thereof on the Closing Date, the Prior Credit Agreement.
8.20 Inconsistent Agreements. The Company will not, and will not permit
any Subsidiary to, enter into any agreement containing any provision which would
be violated or breached by any borrowing by the Company hereunder or by the
performance by the Company or any Subsidiary of their respective obligations
hereunder or under any other Loan Document. The Company will not, and will not
permit any of its Subsidiaries to, enter into any agreement (other than this
Agreement and the other Loan Documents) prohibiting the creation or assumption
of any Lien upon its properties, revenues or assets, whether now owned or
hereafter acquired, or the ability of the Company and its Subsidiaries to amend
or modify this Agreement or any other Loan Document.
8.21 Change in Business. The Company shall not, and shall not permit any
Subsidiary to, engage in any business other than those lines of business carried
on by the Company and its Subsidiaries on the date hereof, any business or
activities that
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are substantially similar, related or incidental thereto and reasonable
extensions of product lines of the Company in existence on the date hereof.
8.22 Amendments to Certain Documents. The Company shall not make or
agree to any amendment to or modification of, or waive any of its rights under,
any of the terms of (a) the Recapitalization Agreement, (b) the Bridge Note
Agreement, (c) the Rollover Indenture, (d) the Escrow Agreement, (e) the
Management Agreement, (f) the Pyle Agreements, (g) the Employment Agreement or
(h) any Qualified Indenture, unless any such amendment is not adverse in any
respect to the Lenders.
8.23 Fiscal Year. The Company shall not, and shall not permit any
Subsidiary to, change the fiscal year of the Company or of any Subsidiary;
provided, that the foregoing shall not prohibit the Company from changing the
end of its fiscal year from June 30 to September 30 in connection with the
Recapitalization Transaction.
8.24 Limitation on Issuance of Guaranty Obligations. The Company will
not permit any Subsidiary to create, incur, assume, suffer to exist, or
otherwise become or remain directly or indirectly liable with respect to any
Guaranty Obligation or such Subsidiary relating to any Indebtedness of the
Company unless
(i) such Subsidiary, if it is not already a party to the Guaranty,
simultaneously executes and delivers to the Administrative Agent a
counterpart to the Guaranty, together with such supporting documentation as
the Administrative Agent may reasonably request, notwithstanding Section
7.14,
(ii) if such Indebtedness is by its terms subordinated to the
Obligations, any such assumption, guaranty or other liability of such
Subsidiary with respect to such Indebtedness shall be subordinated, in form
and substance satisfactory to the Administrative Agent, to such
Subsidiary's Guaranty Obligation with respect to the Obligations to the
same extent as such Indebtedness is subordinated to the Obligations
(provided that such Subsidiary's Guaranty Obligation of such Indebtedness
of the Company shall be subordinated to the full amount of such
Subsidiary's Guaranty Obligation under the Guaranty without giving effect
to any reduction thereto necessary to render the Guaranty Obligation of
such Subsidiary thereunder not voidable under applicable law relating to
fraudulent conveyance or fraudulent transfer), and
(iii) such Subsidiary waives and will not in any manner whatsoever
claim or take the benefit or advantage of, any right of reimbursement,
indemnity or subrogation or any other rights against the Company or any
other Subsidiary as a result of any payment by such Subsidiary under such
Guaranty Obligation.
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8.25 Bridge Note Agreement. For so long as any Bridge Notes are
outstanding, to the extent that the covenants contained in the Bridge Note
Agreement are more restrictive than the covenants herein contained, all such
covenants of the Bridge Note Agreement, as in effect on the Closing Date, are
incorporated herein by reference.
ARTICLE IX
EVENTS OF DEFAULT
-----------------
9.1 Event of Default. Any of the following shall constitute an "Event of
Default":
(a) Non-Payment. The Company fails to pay, when and as required to be
paid herein, any amount of principal of any Loan or of any L/C Obligation, or,
within three Business Days after the same becomes due, any amount of interest or
any fees or other amounts payable hereunder or under any other Loan Document.
(b) Representation or Warranty. Any representation or warranty by the
Company or any Subsidiary made or deemed made herein or in any other Loan
Document, or which is contained in any certificate, document or financial or
other statement by the Company, any Subsidiary or any Responsible Officer
furnished at any time under this Agreement or any other Loan Document, is
incorrect in any material respect on or as of the date made or deemed made.
(c) Specific Defaults. The Company fails to perform or observe any term,
covenant or agreement contained in any of Section 7.3 or Article VIII.
(d) Other Defaults. The Company or any Guarantor party thereto fails to
perform or observe any other term or covenant contained in this Agreement or any
other Loan Document, and such default shall continue unremedied for a period of
30 days after the earlier of (i) the date upon which a Responsible Officer knew
or reasonably should have known of such failure or (ii) the date upon which
written notice thereof is given to the Company by the Administrative Agent or
any Lender.
(e) Cross-Default. (i) The Company or any Guarantor (A) fails to make
any payment in respect of any Indebtedness or Contingent Obligation (other than
in respect of Swap Contracts) having an aggregate principal amount (including
undrawn committed or available amounts and including amounts owing to all
creditors under any combined or syndicated credit arrangement) of more than
$1,000,000 when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise but subject to any applicable grace period)
or (B) fails to perform or observe any other condition or covenant, or any other
event shall occur or condition shall exist, under any agreement or instrument
relating to any such Indebtedness or Contingent Obligation, if the effect
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of such failure, event or condition is to cause, or to permit the holder or
holders of such Indebtedness or beneficiary or beneficiaries of such
Indebtedness (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause, such Indebtedness to be declared to be
due and payable prior to its stated maturity, or such Contingent Obligation to
become payable, or cash collateral in respect thereof to be demanded or (ii)
there occurs under any Swap Contract an Early Termination Date (as defined in
such Swap Contract) resulting from (A) any event of default under such Swap
Contract as to which the Company or any Subsidiary is the Defaulting Party (as
defined in such Swap Contract) or (B) any Termination Event (as so defined) as
to which the Company or any Subsidiary is an Affected Party (as so defined),
and, in either event, the Swap Termination Value owed by the Company or such
Subsidiary as a result thereof is greater than $1,000,000.
(f) Insolvency; Voluntary Proceedings. The Company or any Subsidiary
(other than a Dormant Subsidiary): (i) ceases or fails to be solvent, or
generally fails to pay, or admits in writing its inability to pay, its debts as
they become due; (ii) voluntarily ceases to conduct its business in the ordinary
course; (iii) commences any Insolvency Proceeding with respect to itself; or
(iv) takes any action to effectuate or authorize any of the foregoing.
(g) Involuntary Proceedings. (i) Any involuntary Insolvency Proceeding
is commenced or filed against the Company or any Subsidiary (other than a
Dormant Subsidiary), or any writ, judgment, warrant of attachment, warrant of
execution or similar process is issued or levied against a substantial part of
the Company's or any Subsidiary's properties, and such proceeding or petition
shall not be dismissed, or such writ, judgment, warrant of attachment, warrant
of execution or similar process shall not be released, vacated or fully bonded
within 60 days after commencement, filing or levy; (ii) the Company or any
Subsidiary (other than a Dormant Subsidiary) admits the material allegations of
a petition against it in any Insolvency Proceeding, or an order for relief (or
similar order under non-U.S. law) is ordered in any Insolvency Proceeding; or
(iii) the Company or any Subsidiary (other than a Dormant Subsidiary) acquiesces
in the appointment of a receiver, trustee, custodian, conservator, liquidator,
mortgagee in possession (or agent therefor) or other similar Person for itself
or a substantial portion of its property or business.
(h) ERISA. (i) One or more ERISA Events shall occur with respect to a
Pension Plan or Multiemployer Plan which has resulted or could reasonably be
expected to result in liability of the Company under Title IV of ERISA to the
Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of
$2,000,000; (ii) a contribution failure shall have occurred with respect to a
Pension Plan sufficient to give rise to a Lien under Section 302(f) of ERISA;
(iii) the aggregate amount of Unfunded Pension Liability among all Pension Plans
at any time
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exceeds $2,000,000; or (iv) the Company or any ERISA Affiliate shall fail to pay
when due, after the expiration of any applicable grace period, one or more
installment payments with respect to its withdrawal liability under Section 4201
of ERISA under a Multiemployer Plan which results in an aggregate withdrawal
liability in excess of $2,000,000.
(i) Monetary Judgments. One or more judgments, orders, decrees or
arbitration awards is entered against the Company or any Subsidiary involving in
the aggregate a liability (to the extent not covered by independent third-party
insurance as to which the insurer does not dispute coverage), as to any single
or related series of transactions, incidents or conditions, of $3,000,000 or
more, and the same shall remain undischarged, unvacated and unstayed pending
appeal for a period of 30 days after the entry thereof, or the Company or any
Subsidiary shall enter into any agreement to settle or compromise any pending or
threatened litigation (to the extent not covered by independent third party
insurance as to which the insurer does not dispute coverage), as to any single
or related series of claims, involving payment by the Company or any Subsidiary
of $3,000,000 or more.
(j) Non-Monetary Judgments. Any non-monetary judgment, order or decree
is entered against the Company or any Subsidiary which has or would reasonably
be expected to have a Material Adverse Effect, and there shall be any period of
30 consecutive days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not be in effect.
(k) Change of Control. Any Change of Control occurs.
(l) Guarantor Defaults. The Guaranty shall cease to be in full force and
effect with respect to any Guarantor (other than as expressly permitted
hereunder), any Guarantor shall fail to comply with or to perform any applicable
provision of the Guaranty, or any Guarantor (or any Person acting by, through or
on behalf of such Guarantor) shall contest in any manner the validity, binding
nature or enforceability of the Guaranty with respect to such Guarantor.
(m) Collateral Documents, etc. Any Collateral Document shall cease to be
in full force and effect with respect to the Company or any Guarantor (other
than as expressly permitted hereunder), the Company or any Guarantor shall fail
to comply with or to perform any applicable provision of any Collateral
Document, or the Company or any Guarantor (or any Person acting by, through or
on behalf of the Company or any Guarantor) shall contest in any manner the
validity, binding nature or enforceability of any Collateral Document.
9.2 Remedies. If any Event of Default occurs, the Administrative Agent
shall, at the request of, or may, with the consent of, the Required Lenders do
any or all of the following:
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(a) declare the commitment of each Lender to make Loans and any
obligation of the Issuing Lender to Issue Letters of Credit to be terminated,
whereupon such commitments and obligations shall be terminated;
(b) declare an amount equal to the maximum aggregate amount that is or
at any time thereafter may become available for drawing under any outstanding
Letter of Credit (whether or not any beneficiary shall have presented, or shall
be entitled at such time to present, the drafts or other documents required to
draw under such Letter of Credit) to be immediately due and payable, and declare
the unpaid principal amount of all outstanding Loans, all interest accrued and
unpaid thereon, and all other amounts owing or payable hereunder or under any
other Loan Document to be immediately due and payable, without presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived by the Company; and
(c) exercise on behalf of itself and the Lenders all rights and remedies
available to it and the Lenders under the Loan Documents or applicable law;
provided, however, that upon the occurrence of any Event of Default specified in
subsection 9.1(f) or (g), the obligation of each Lender to make Loans and the
obligation of the Issuing Lender to Issue Letters of Credit shall automatically
terminate and the unpaid principal amount of all outstanding Loans and all
interest and other amounts as aforesaid shall automatically become due and
payable without further act of the Administrative Agent, the Issuing Lender or
any other Lender.
9.3 Rights Not Exclusive. The rights provided for in this Agreement and
the other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other instrument, document or agreement now existing or hereafter arising.
ARTICLE X
THE AGENTS
----------
10.1 Appointment and Authorization. (a) Each Lender hereby irrevocably
(subject to Section 10.9) appoints, designates and authorizes the Administrative
Agent to take such action on its behalf under the provisions of this Agreement
and each other Loan Document and to exercise such powers and perform such duties
as are expressly delegated to it by the terms of this Agreement or any other
Loan Document, together with such powers as are reasonably incidental thereto.
Each Lender hereby appoints DLJ as Documentation Agent for the Lenders and BofA
and DLJ as Syndication Agents for the Lenders. Notwithstanding any provision to
the contrary contained elsewhere in this Agreement or in any other Loan
Document, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set
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forth herein, nor shall the Administrative Agent have or be deemed to have any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the
Administrative Agent. Without limiting the generality of the foregoing sentence,
the use of the term "agent" in this Agreement and in the other Loan Documents
with reference to the Administrative Agent is not intended to connote any
fiduciary or other implied (or express) obligation arising under agency doctrine
of any applicable law. Instead, such term is used merely as a matter of market
custom, and is intended to create or reflect only an administrative relationship
between independent contracting parties.
(b) The Issuing Lender shall act on behalf of the Lenders with respect
to any Letters of Credit Issued by it and the documents associated therewith
until such time and except for so long as the Administrative Agent may agree at
the request of the Required Lenders to act for the Issuing Lender with respect
thereto; provided, however, that the Issuing Lender shall have all of the
benefits and immunities (i) provided to the Administrative Agent in this Article
X with respect to any acts taken or omissions suffered by the Issuing Lender in
connection with Letters of Credit Issued by it or proposed to be Issued by it
and the applications and agreements for letters of credit pertaining to the
Letters of Credit as fully as if the term "Administrative Agent", as used in
this Article X, included the Issuing Lender with respect to such acts or
omissions and (ii) as additionally provided in this Agreement with respect to
the Issuing Lender.
10.2 Delegation of Duties. The Administrative Agent may execute any of
its duties under this Agreement or any other Loan Document by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent shall
not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects with reasonable care.
10.3 Liability of Administrative Agent. None of the Agent-Related
Persons shall (a) be liable for any action taken or omitted to be taken by any
of them under or in connection with this Agreement or any other Loan Document or
the transactions contemplated hereby (except for its own gross negligence or
willful misconduct) or (b) be responsible in any manner to any of the Lenders
for any recital, statement, representation or warranty made by the Company or
any Subsidiary or Affiliate of the Company, or any officer thereof, contained in
this Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Administrative Agent under or in connection with, this Agreement or any other
Loan Document, or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document, or the existence,
creation,
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validity, attachment, perfection, enforceability, value or sufficiency of any
collateral security for the Obligations or for any failure of the Company or any
other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Lender
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of the Company or any
of the Company's Subsidiaries or Affiliates.
10.4 Reliance by Administrative Agent. (a) The Administrative Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
writing, resolution, notice, consent, certificate, affidavit, letter, telegram,
facsimile, telex or telephone message, statement or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons, and upon advice and statements of
legal counsel (including counsel to the Company), independent accountants and
other experts selected by the Administrative Agent. The Administrative Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless it shall first receive such advice
or concurrence of the Required Lenders as it deems appropriate and, if it so
requests, it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Administrative Agent shall
in all cases be fully protected in acting, or in refraining from acting, under
this Agreement or any other Loan Document in accordance with a request or
consent of the Required Lenders and such request and any action taken or failure
to act pursuant thereto shall be binding upon all of the Lenders.
(b) For purposes of determining compliance with the conditions specified
in Sections 5.1 and 5.2, each Lender that has executed this Agreement shall be
deemed to have consented to, approved or accepted, or to be satisfied with, each
document or other matter either sent by the Administrative Agent to such Lender
for consent, approval, acceptance or satisfaction, or required thereunder to be
consented to or approved by or acceptable or satisfactory to such Lender.
10.5 Notice of Default. The Administrative Agent shall not be deemed to
have knowledge or notice of the occurrence of any Event of Default or Unmatured
Event of Default, except with respect to defaults in the payment of principal,
interest and fees required to be paid to the Administrative Agent for the
account of the Lenders, unless the Administrative Agent shall have received
written notice from a Lender or the Company referring to this Agreement,
describing such Event of Default or Unmatured Event of Default and stating that
such notice is a "notice of default". The Administrative Agent will notify the
Lenders of its receipt of any such notice. The Administrative
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Agent shall take such action with respect to such Event of Default or Unmatured
Event of Default as may be requested by the Required Lenders in accordance with
Article IX; provided, however, that unless and until the Administrative Agent
has received any such request, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Event of Default or Unmatured Event of Default as it shall deem
advisable or in the best interest of the Lenders.
10.6 Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by the Administrative Agent hereafter taken, including any review of the
affairs of the Company and its Subsidiaries, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to the Administrative Agent that it has, independently and
without reliance upon any Agent-Related Person and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial and
other condition and creditworthiness of the Company and its Subsidiaries, and
all applicable bank regulatory laws relating to the transactions contemplated
hereby, and made its own decision to enter into this Agreement and to extend
credit to the Company hereunder. Each Lender also represents that it will,
independently and without reliance upon any Agent-Related Person and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Company. Except for notices, reports and other documents
expressly herein required to be furnished to the Lenders by the Administrative
Agent, the Administrative Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the business,
prospects, operations, property, financial and other condition or
creditworthiness of the Company which may come into the possession of any of the
Agent-Related Persons.
10.7 Indemnification of Agents. Whether or not the transactions
contemplated hereby are consummated, the Lenders shall indemnify upon demand the
Agents and the Agent-Related Persons (to the extent not reimbursed by or on
behalf of the Company and without limiting the obligation of the Company to do
so), pro rata, from and against any and all Indemnified Liabilities; provided,
however, that no Lender shall be liable for the payment to any Agent or
Agent-Related Person of any portion of the Indemnified Liabilities resulting
solely from such Person's gross negligence or willful misconduct. Without
limitation of the foregoing, each Lender shall reimburse each Agent upon demand
for its ratable share of any costs or
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out-of-pocket expenses (including Attorney Costs) incurred by the such Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that such Agent is not
reimbursed for such expenses by or on behalf of the Company. The undertaking in
this Section shall survive the payment of all Obligations hereunder and the
resignation or replacement of any Agent.
10.8 Administrative Agent in Individual Capacity. BofA and its
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with the
Company and its Subsidiaries and Affiliates as though BofA were not the
Administrative Agent hereunder and without notice to or consent of the Lenders.
The Lenders acknowledge that, pursuant to such activities, BofA or its
Affiliates may receive information regarding the Company or its Affiliates
(including information that may be subject to confidentiality obligations in
favor of the Company or such Affiliates) and acknowledge that the Administrative
Agent shall be under no obligation to provide such information to them. With
respect to its Loans, BofA and any Affiliate thereof shall have the same rights
and powers under this Agreement as any other Lender and may exercise the same as
though BofA were not the Administrative Agent.
10.9 Successor Administrative Agent. The Administrative Agent may, and
at the request of the Required Lenders shall, resign as Administrative Agent
upon 30 days' notice to the Lenders and the Company. If the Administrative Agent
resigns under this Agreement, the Required Lenders shall have the right, with
the consent of the Company so long as no Event of Default or Unmatured Event of
Default has occurred and is continuing (which consent shall not be unreasonably
withheld or delayed), to appoint from among the Lenders a successor agent for
the Lenders. If no successor agent is appointed prior to the effective date of
the resignation of the Administrative Agent, the Administrative Agent may
appoint, after consulting with the Lenders and the Company, a successor agent
from among the Lenders. Upon the acceptance of its appointment as successor
agent hereunder, such successor agent shall succeed to all the rights, powers
and duties of the retiring Administrative Agent and the term "Administrative
Agent" shall mean such successor agent and the retiring Administrative Agent's
appointment, powers and duties as Administrative Agent shall be terminated.
After any retiring Administrative Agent's resignation hereunder as
Administrative Agent, the provisions of this Article X and Sections 11.4 and
11.5 shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was Administrative Agent under this Agreement. If no successor
agent has accepted appointment as Administrative Agent by the date which is 30
days following a
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retiring Administrative Agent's notice of resignation, the retiring
Administrative Agent's resignation shall nevertheless thereupon become effective
and the Lenders shall perform all of the duties of the Administrative Agent
hereunder until such time, if any, as the Required Lenders appoint a successor
agent as provided for above. Notwithstanding the foregoing, however, BofA may
not be removed as the Administrative Agent at the request of the Required
Lenders unless BofA and any Affiliate thereof acting as the Issuing Lender or
Swingline Lender hereunder shall also simultaneously be replaced as the Issuing
Lender and Swingline Lender pursuant to documentation in form and substance
reasonably satisfactory to BofA (and, if applicable, such Affiliate).
10.10 Withholding Tax. (a) If any Lender is a "foreign corporation,
partnership or trust" within the meaning of the Code and such Lender claims
exemption from, or a reduction of, U.S. withholding tax under Section 1441 or
1442 of the Code, such Lender shall deliver to the Administrative Agent and the
Company:
(i) if such Lender claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, properly completed IRS
Forms 1001 and W-8 before the payment of any interest in the first calendar
year and before the payment of any interest in each third succeeding
calendar year during which interest may be paid under this Agreement;
(ii) if such Lender claims that interest paid under this Agreement is
exempt from United States withholding tax because it is effectively
connected with a United States trade or business of such Lender, two
properly completed and executed copies of IRS Form 4224 before the payment
of any interest is due in the first taxable year of such Lender and in each
succeeding taxable year of such Lender during which interest may be paid
under this Agreement, and IRS Form W-9; and
(iii) such other form or forms as may be required under the Code or
other laws of the United States as a condition to exemption from, or
reduction of, United States withholding tax.
Each such Lender agrees to promptly notify the Administrative Agent and the
Company of any change in circumstances which would modify or render invalid any
claimed exemption or reduction.
(b) If any Lender claims exemption from, or reduction of, withholding
tax under a United States tax treaty by providing IRS Form 1001 and such Lender
sells, assigns, grants a participation in, or otherwise transfers all or part of
the Obligations of the Company to such Lender, such Lender agrees to notify the
Administrative Agent and the Company of the percentage amount in which it is no
longer the beneficial owner of Obligations of the Company to such Lender. To the
extent of such
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percentage amount, the Administrative Agent and the Company will treat such
Lender's IRS Form 1001 as no longer valid.
(c) If any Lender claiming exemption from United States withholding tax
by filing IRS Form 4224 with the Administrative Agent and the Company sells,
assigns, grants a participation in, or otherwise transfers all or part of the
Obligations of the Company to such Lender, such Lender agrees to undertake sole
responsibility for complying with the withholding tax requirements imposed by
Sections 1441 and 1442 of the Code.
(d) If any Lender is entitled to a reduction in the applicable
withholding tax, the Administrative Agent or the Company, as the case may be,
may withhold from any interest payment to such Lender an amount equivalent to
the applicable withholding tax after taking into account such reduction. If the
forms or other documentation required by subsection (a) of this Section are not
timely delivered to the Administrative Agent, or the Company, as the case may
be, then the Administrative Agent or the Company, as the case may be, may
withhold from any interest payment to such Lender not providing such forms or
other documentation an amount equivalent to the applicable withholding tax
without deduction.
(e) If the IRS or any other Governmental Authority of the United States
or other jurisdiction asserts a claim that the Administrative Agent or the
Company did not properly withhold tax from amounts paid to or for the account of
any Lender (because the appropriate form was not delivered or was not properly
executed, or because such Lender failed to notify the Administrative Agent or
the Company of a change in circumstances which rendered the exemption from, or
reduction of, withholding tax ineffective, or for any other reason) such Lender
shall indemnify the Administrative Agent or the Company, as the case may be,
fully for all amounts paid, directly or indirectly, by the Administrative Agent
or the Company, as the case may be, as Tax or otherwise, including penalties and
interest, and including any Taxes imposed by any jurisdiction on the amounts
payable to the Administrative Agent or the Company, as the case may be, under
this Section, together with all costs and expenses (including Attorney Costs).
The obligation of the Lenders under this subsection shall survive the payment of
all Obligations and the resignation or replacement of the Administrative Agent.
10.11 Collateral Matters.
(a) The Administrative Agent is authorized on behalf of all the Lenders,
without the necessity of any notice to or further consent from the Lenders, from
time to time to take any action with respect to any collateral or the Collateral
Documents which may be necessary to perfect and maintain perfected the security
interest in and Liens upon the collateral granted pursuant to the Collateral
Documents.
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(b) The Lenders irrevocably authorize the Administrative Agent, at its
option and in its discretion, to release any Lien granted to or held by the
Administrative Agent upon any collateral: (i) upon termination of the
Commitments and payment in full of all Loans and all other obligations known to
the Administrative Agent and payable under this Agreement or any other Loan
Document; (ii) constituting property sold or to be sold or disposed of as part
of or in connection with any disposition permitted hereunder; (iii) constituting
property in which the Company or any Subsidiary owned no interest at the time
the Lien was granted or at any time thereafter; (iv) constituting property
leased to the Company or any Subsidiary under a lease which has expired or been
terminated in a transaction permitted under this Agreement or is about to expire
and which has not been, and is not intended by the Company or such Subsidiary to
be, renewed or extended; (v) consisting of an instrument evidencing Indebtedness
or other debt instrument, if the indebtedness thereby has been paid in full; or
(vi) if approved, authorized or ratified in writing by the Required Lenders or,
if required by Section 11.1(g), all the Lenders. Upon request by the
Administrative Agent at any time, the Lenders will confirm in writing the
Administrative Agent's authority to release particular types or items of
collateral pursuant to this subsection 10.11(b).
(c) Each Lender agrees with and in favor of each other (which agreement
shall not be for the benefit of the Company or any Subsidiary) that any security
interest in real property collateral received by a Lender in connection with the
extension of any loan or financial commitment between such Lender and the
Company or any of its Affiliates and not related to the transactions
contemplated hereby shall not constitute collateral for the Company's
obligations under this Agreement or any other Loan Document.
10.12 The Syndication Agents. The Syndication Agents shall have no
rights or duties in such capacities under this Agreement and the other Loan
Documents.
ARTICLE XI
MISCELLANEOUS
-------------
11.1 Amendments and Waivers. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by the Company therefrom, shall be effective unless the same shall be
in writing and signed by the Required Lenders and the Company and acknowledged
by the Administrative Agent, and then any such waiver or consent shall be
effective only if in writing and in the specific instance and for the specific
purpose for which given; provided that:
(a) no such waiver, amendment or consent shall increase or extend any
Commitment of any Lender (or
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reinstate any Commitment terminated pursuant to Section 9.2) without the written
consent of such Lender;
(b) no such waiver, amendment or consent shall postpone or delay any
date fixed by this Agreement or any other Loan Document for any payment of
principal (including any mandatory prepayment pursuant to Section 2.8) or
interest on any Loan without the written consent of the Lender holding such
Loan;
(c) no such waiver, amendment or consent relating to the definition of
"Mandatory Prepayment Event" or to any provision of this Agreement or any other
Loan Document which would result in any increased or decreased mandatory
prepayment of any Loan, or any increased or decreased mandatory reduction of any
Commitment, shall be made without the written consent of the Required Revolving
Lenders, Required Term A Lenders, Required Term B Lenders and Required Term C
Lenders;
(d) no such waiver, amendment or consent shall reduce the principal of,
or the rate of interest specified herein on, any Loan shall be made without the
written consent of the Lender holding such Loan;
(e) no such waiver, amendment or consent shall (subject to clause (m)
below) reduce any fees payable hereunder or under any other Loan Document, or
postpone or delay any date fixed by this Agreement or any other Loan Document
for the payment of fees or any other amounts due to any Lender hereunder or
under any other Loan Document, without the written consent of the Lender to whom
such fee or other amount is owing;
(f) no such waiver, amendment or consent shall (v) change the aggregate
percentage of the Total Percentage which is required for the Lenders or any of
them to take any action hereunder without the written consent of all Lenders,
(w) amend the definition of "Required Revolving Lenders" without the written
consent of all Revolving Lenders, (x) amend the definition of "Required Term A
Lenders" without the written consent of all Term A Lenders, (y) amend the
definition of "Required Term B Lenders" without the written consent of all Term
B Lenders or (z) amend the definition of "Required Term C Lenders" without the
written consent of all Term C Lenders;
(g) no such waiver, amendment or consent shall release the Guaranty or
any Guarantor or release all or substantially all of the collateral securing the
Obligations without the written consent of all Lenders;
(h) no such waiver, amendment or consent shall amend or waive any
provision of this Section or Section 2.15, or any other provision herein
providing for consent or
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other action by all Lenders, without the written consent of all Lenders;
(i) after the making of the Term Loans, Section 2.3, 2.4 (as it relates
to conversions and continuations of Revolving Loans), 2.6, 2.7 (as it relates to
an optional prepayment of Revolving Loans), 2.8(b) or 2.9(d) or Article III may
be amended, or the rights or privileges thereunder waived, with the written
consent of the Required Revolving Lenders (or, in the case of Section 2.9(d),
all of the Revolving Lenders), the Company and the acknowledgment of the
Administrative Agent;
(j) no amendment, waiver or consent shall, unless in writing and signed
by the Issuing Lender in addition to the Required Lenders or all Lenders, as the
case may be, affect the rights or duties of the Issuing Lender under this
Agreement or any L/C-Related Document relating to any Letter of Credit Issued or
to be Issued by it;
(k) no amendment, waiver or consent shall, unless in writing and signed
by the Swingline Lender in addition to the Required Lenders or all Lenders, as
the case may be, affect the rights and duties of the Swingline Lender under this
Agreement;
(l) no amendment, waiver or consent shall, unless in writing and signed
by the Administrative Agent in addition to the Required Lenders or all Lenders,
as the case may be, affect the rights or duties of the Administrative Agent
under this Agreement or any other Loan Document; and
(m) the Fee Letter may be amended, or rights or privileges thereunder
waived, in writing executed by the parties thereto.
11.2 Notices. (a) All notices, requests and other communications
hereunder shall be in writing (including, unless the context expressly otherwise
provides, by facsimile transmission, provided that any matter transmitted by the
Company by facsimile (i) shall be immediately confirmed by a telephone call to
the recipient at the number specified on Schedule 11.2, and (ii) shall be
followed promptly by delivery of a hard copy original thereof) and mailed, faxed
or delivered to the address or facsimile number specified for notices on
Schedule 11.2; or, as directed to the Company or the Administrative Agent, to
such other address as shall be designated by such party in a written notice to
the other parties, and as directed to any other party, at such other address as
shall be designated by such party in a written notice to the Company and the
Administrative Agent.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered, or
transmitted in legible form by facsimile machine, respectively, or if mailed,
upon the third
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Business Day after the date deposited into the U.S. mail; except that notices to
the Administrative Agent pursuant to Article II, III or X shall not be effective
until actually received by the Administrative Agent, and notices pursuant to
Article III to the Issuing Lender shall not be effective until actually received
by the Issuing Lender at the address specified for the "Issuing Lender" on
Schedule 11.2.
(c) Any agreement of the Administrative Agent and the Lenders herein to
receive certain notices by telephone or facsimile is solely for the convenience
and at the request of the Company. The Administrative Agent and the Lenders
shall be entitled to rely on the authority of any Person purporting to be a
Person authorized by the Company to give such notice and the Administrative
Agent and the Lenders shall not have any liability to the Company or any other
Person on account of any action taken or not taken by the Administrative Agent
or the Lenders in reliance upon such telephonic or facsimile notice. The
obligation of the Company to repay the Loans and L/C Obligations shall not be
affected in any way or to any extent by any failure of the Administrative Agent
and the Lenders to receive written confirmation of any telephonic or facsimile
notice or the receipt by the Administrative Agent and the Lenders of a
confirmation which is at variance with the terms understood by the
Administrative Agent and the Lenders to be contained in the telephonic or
facsimile notice.
11.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay
in exercising, on the part of the Administrative Agent or any Lender, any right,
remedy, power or privilege hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege.
11.4 Costs and Expenses. The Company shall:
(a) whether or not the transactions contemplated hereby are consummated,
pay or reimburse the Agents and the Arrangers and their Affiliates (including
BAI in its capacities as Swingline Lender and Issuing Lender) within five
Business Days after demand (subject to subsection 5.1(e)) for all reasonable and
documented costs and expenses incurred by the Agents and the Arrangers and their
Affiliates in connection with the preparation, delivery, administration and
execution of, and any amendment, supplement, waiver or modification to (in each
case, whether or not consummated), this Agreement, any Loan Document and any
other document prepared in connection herewith or therewith, and the
consummation of the transactions contemplated hereby and thereby, including
Attorney Costs incurred by the Agents and the Arrangers with respect thereto;
and
(b) pay or reimburse the Administrative Agent and each Lender within
five Business Days after demand (subject to
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subsection 5.1(e)) for all costs and expenses (including Attorney Costs)
incurred by them in connection with the enforcement, attempted enforcement or
preservation of any right or remedy under this Agreement or any other Loan
Document during the existence of an Event of Default or after acceleration of
the Loans (including in connection with any "workout" or restructuring regarding
the Loans and including in any Insolvency Proceeding or appellate proceeding).
11.5 Company Indemnification. Whether or not the transactions
contemplated hereby are consummated, the Company shall indemnify and hold the
Agent-Related Persons, each Agent and each Lender and each of their respective
officers, directors, employees, counsel, agents and attorneys-in-fact (each an
"Indemnified Person") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses and disbursements (including Attorney Costs) of any kind or
nature whatsoever which may at any time (including, at any time following
repayment of the Loans, the termination of the Letters of Credit and the
termination, resignation or replacement of the Administrative Agent or
replacement of any Lender) be imposed on, incurred by or asserted against any
such Person in any way relating to or arising out of this Agreement or any
document contemplated by or referred to herein, or the transactions contemplated
hereby or thereby, or any action taken or omitted by any such Person under or in
connection with any of the foregoing, including with respect to any
investigation, litigation or proceeding (including any Insolvency Proceeding or
appellate proceeding or any investigation, litigation or proceeding related to
any environmental cleanup, audit, compliance or other matter relating to the
protection of the environment or the Release by the Company or any of its
Subsidiaries of any Hazardous Material) related to or arising out of this
Agreement or the Loans or Letters of Credit or the use of the proceeds thereof,
whether or not any Indemnified Person is a party thereto (all the foregoing,
collectively, the "Indemnified Liabilities"); provided that the Company shall
have no obligation hereunder to any Indemnified Person with respect to
Indemnified Liabilities resulting solely from the gross negligence or willful
misconduct of such Indemnified Person. The agreements in this Section shall
survive payment of all other Obligations. Each Agent-Related Person and each
Lender agrees that in the event that any investigation, litigation or proceeding
is asserted or threatened in writing or instituted against it or any other
Indemnified Party, or any remedial, removal or response action which is
requested of it or any other Indemnified Party, for which any Agent-Related
Person or Lender may desire indemnity or defense hereunder, such Agent-Related
Person or such Lender shall notify the Company in writing of such event;
provided that failure to so notify the Company shall not affect the right of any
Agent-Related Person or Lender to seek indemnification under this Section.
11.6 Payments Set Aside. To the extent that the Company makes a payment
to the Administrative Agent or the Lenders, or
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the Administrative Agent or the Lenders exercise their right of set-off, and
such payment or the proceeds of such set-off or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
(including pursuant to any settlement entered into by the Administrative Agent
or such Lender in its discretion) to be repaid to a trustee or receiver, or any
other party, in connection with any Insolvency Proceeding or otherwise, then (a)
to the extent of such recovery, the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such set-off had not occurred and (b)
each Lender severally agrees to pay to the Administrative Agent upon demand its
pro rata share of any amount so recovered from or repaid by the Administrative
Agent.
11.7 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that the Company may not assign or transfer any
of its rights or obligations under this Agreement without the prior written
consent of the Administrative Agent and each Lender.
11.8 Assignments, Participations, etc. (a) Any Lender may, with the
written consent of the Company at all times other than during the existence of
an Event of Default and with the written consents of the Administrative Agent
and the Issuing Lender and the Swingline Lender, which consent of the Company
shall not be unreasonably withheld or delayed, at any time assign and delegate
to one or more Eligible Assignees (provided that no written consent of the
Company, the Administrative Agent, the Issuing Lender or the Swingline Lender
shall be required in connection with any assignment and delegation by a Lender
to a Person described in clause (iii) of the definition of Eligible Assignee)
(each, an "Assignee") all, or any part, of the Loans, the Revolving Commitment,
the L/C Obligations and the other rights and obligations of such Lender
hereunder, in a minimum amount of $5,000,000 (or, if less, all of such Lender's
remaining rights and obligations hereunder); provided, however, that (A) the
Company, the Administrative Agent, the Issuing Lender and the Swingline Lender
may continue to deal solely and directly with such Lender in connection with the
interest so assigned to an Assignee until (i) written notice of such assignment,
together with payment instructions, addresses and related information with
respect to the Assignee shall have been given to the Company and the
Administrative Agent by such Lender and the Assignee, (ii) such Lender and the
Assignee shall have delivered to the Company and the Administrative Agent an
Assignment and Acceptance in the form of Exhibit L (an "Assignment and
Acceptance") together with any Note or Notes subject to such assignment and
(iii) the assignor Lender or the Assignee has paid to the Administrative Agent a
processing fee in the amount of $3,500 and (B) the Company shall not, as a
result of any assignment by any Lender to any of such Lender's Affiliates, incur
any increased liability for Taxes, Other Taxes or Further Taxes pursuant to
Section 4.1.
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(b) From and after the date that the Administrative Agent notifies the
assignor Lender that it has provided its consent, and received the consents of
the Swingline Lender, the Issuing Lender and (if applicable) the Company, with
respect to an executed Assignment and Acceptance and payment of the
above-referenced processing fee, (i) the Assignee thereunder shall be a party
hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, shall have the rights
and obligations of a Lender under the Loan Documents, and (ii) the assignor
Lender shall, to the extent that rights and obligations hereunder and under the
other Loan Documents have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations under the
Loan Documents.
(c) Any Lender may at any time sell to one or more commercial banks or
other Persons not Affiliates of the Company (a "Participant") participating
interests in any Loan, the Revolving Commitment of such Lender and the other
interests of such Lender (the "originating Lender") hereunder and under the
other Loan Documents; provided, however, that (i) the originating Lender's
obligations under this Agreement shall remain unchanged, (ii) the originating
Lender shall remain solely responsible for the performance of such obligations,
(iii) the Company, the Swingline Lender, the Issuing Lender and the
Administrative Agent shall continue to deal solely and directly with the
originating Lender in connection with the originating Lender's rights and
obligations under this Agreement and the other Loan Documents and (iv) no Lender
shall transfer or grant any participating interest under which the Participant
has rights to approve any amendment to, or any consent or waiver with respect
to, this Agreement or any other Loan Document, except to the extent such
amendment, consent or waiver would require unanimous consent of the Lenders or
the consent of a particular Lender or the consent of the Required Revolving
Lenders, Required Term A Lenders, Required Term B Lenders or Required Term C
Lenders, in each case as described in clauses (a) through (h) of the proviso to
Section 11.1. In the case of any such participation, the Participant shall be
entitled to the benefit of Sections 4.1, 4.3 and 11.5 as though it were also a
Lender hereunder (provided, with respect to Sections 4.1 and 4.3, the Company
shall not be required to pay any amount which it would not have been required to
pay if no participating interest had been sold), and if amounts outstanding
under this Agreement are due and unpaid, or shall have been declared or shall
have become due and payable upon the occurrence of an Event of Default, the
Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement. Each Lender may furnish any information concerning
the Company and its Subsidiaries in the possession of such Lender from time to
time to participants and prospective participants and may furnish information in
response to credit inquiries consistent with general banking practice.
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(d) Notwithstanding any other provision in this Agreement, any Lender
may at any time create a security interest in, or pledge all or any portion of
its rights under and interest in this Agreement and any Note held by it in favor
of any Federal Reserve Bank in accordance with Regulation A of the FRB or U.S.
Treasury Regulation 31 CFR ss.203.14, and such Federal Reserve Bank may enforce
such pledge or security interest in any manner permitted under applicable law.
11.9 Confidentiality. Each Lender agrees to take, and to cause its
Affiliates to take, normal and reasonable precautions and exercise due care to
maintain the confidentiality of all non-public information provided to it by the
Company or any Subsidiary, or by the Administrative Agent on the Company's or
any Subsidiary's behalf, under this Agreement or any other Loan Document, and
neither such Lender nor any of its Affiliates shall use any such information
other than in connection with or in enforcement of this Agreement and the other
Loan Documents or in connection with other business now or hereafter existing or
contemplated with the Company or any Subsidiary, except to the extent such
information (i) was or becomes generally available to the public other than as a
result of disclosure by such Lender or (ii) was or becomes available on a
non-confidential basis from a source other than the Company (provided that such
source is not bound by a confidentiality agreement with the Company or any
Subsidiary known to such Lender); provided, however, that any Lender may
disclose such information (A) at the request or pursuant to any requirement of
any Governmental Authority to which such Lender is subject or in connection with
an examination of such Lender by any such authority, (B) pursuant to subpoena or
other court process, (C) when required to do so in accordance with the
provisions of any applicable Requirement of Law, (D) to the extent reasonably
required in connection with any litigation or proceeding to which the
Administrative Agent or any Lender or any of their respective Affiliates may be
party, (E) to the extent reasonably required in connection with the exercise of
any remedy hereunder or under any other Loan Document, (F) to such Lender's
independent auditors and other professional advisors, (G) to any Participant or
Assignee, actual or potential, provided that such Person agrees in writing to
keep such information confidential to the same extent required of the Lenders
hereunder, (H) as to any Lender or its Affiliate, as expressly permitted under
the terms of any other document or agreement regarding confidentiality to which
the Company or any Subsidiary is party or is deemed party with such Lender or
such Affiliate and (I) to its Affiliates.
11.10 Set-off. In addition to any right or remedy of the Lenders
provided by law, if an Event of Default exists, or the Loans have been
accelerated, each Lender is authorized at any time and from time to time,
without prior notice to the Company, any such notice being waived by the Company
to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held by, and other indebtedness at any time owing by, such
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Lender to or for the credit or the account of the Company against any and all
Obligations owing to such Lender, now or hereafter existing, irrespective of
whether or not the Administrative Agent or such Lender shall have made demand
under this Agreement or any other Loan Document and although such Obligations
may be contingent or unmatured. Each Lender agrees promptly to notify the
Company and the Administrative Agent after any such set-off and application made
by such Lender; provided that the failure to give such notice shall not affect
the validity of such set-off and application.
11.11 Automatic Debits of Fees. With respect to any commitment fee,
arrangement fee, agency fee, letter of credit fee or other fee, or any other
cost or expense (including Attorney Costs) due and payable to the Administrative
Agent, the Swingline Lender or the Issuing Lender under the Loan Documents, the
Company hereby irrevocably authorizes BofA (and, if requested by BofA, BAI) to
debit any deposit account of the Company with BofA or BAI in an amount such that
the aggregate amount debited from all such deposit accounts does not exceed such
fee or other cost or expense. If there are insufficient funds in such deposit
accounts to cover the amount of the fee or other cost or expense then due, such
debits will be reversed (in whole or in part, in BofA's sole discretion) and
such amount not debited shall be deemed to be unpaid. No such debit under this
Section shall be deemed a set-off.
11.12 Notification of Addresses, Lending Offices, Etc. Each Lender shall
notify the Administrative Agent in writing of any change in the address to which
notices to such Lender should be directed, of addresses of any Lending Office,
of payment instructions in respect of all payments to be made to it hereunder
and of such other administrative information as the Administrative Agent shall
reasonably request.
11.13 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of which taken together shall constitute but one and the same
instrument.
11.14 Severability. The illegality or unenforceability of any provision
of this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or such instrument or agreement.
11.15 No Third Parties Benefited. This Agreement is made and entered
into for the sole protection and legal benefit of the Company, the Lenders, the
Administrative Agent and the Agent-Related Persons, and their permitted
successors and assigns, and no other Person shall be a direct or indirect legal
beneficiary of, or have any direct or indirect cause of action or claim in
connection with, this Agreement or any other Loan Document.
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11.16 Governing Law and Jurisdiction. (a) THIS AGREEMENT AND ANY NOTES
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAW OF THE
STATE OF NEW YORK; PROVIDED THAT THE ADMINISTRATIVE AGENT AND THE LENDERS SHALL
RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF
THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH OF THE COMPANY, THE ADMINISTRATIVE AGENT AND
THE LENDERS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF SUCH COURTS. EACH OF THE COMPANY, THE
ADMINISTRATIVE AGENT AND THE LENDERS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT
RELATED HERETO. THE COMPANY, THE ADMINISTRATIVE AGENT AND THE LENDERS EACH WAIVE
PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE
BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW.
11.17 Waiver of Jury Trial. THE COMPANY, THE LENDERS AND THE
ADMINISTRATIVE AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY
ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON,
PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS OR
OTHERWISE. THE COMPANY, THE LENDERS AND THE ADMINISTRATIVE AGENT EACH AGREE THAT
ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A
JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR
RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO
ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART,
TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENT, RENEWAL, SUPPLEMENT OR MODIFICATION TO THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS.
11.18 Entire Agreement. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the Company,
the Lenders and the Agents, and supersedes all prior or contemporaneous
agreements and understandings of such Persons, verbal or written, relating to
the subject matter hereof and thereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
RAYOVAC CORPORATION
By: /s/ David A. Jones
------------------------------------
Title: President/Chief Executive Officer
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Administrative Agent and
Syndication Agent
By: /s/ Eric A. Schubert
------------------------------------
Title: Managing Director
BANK OF AMERICA ILLINOIS, as
Issuing Lender
By: /s/ Eric A. Schubert
------------------------------------
Title: Managing Director
BANK OF AMERICA ILLINOIS, as
Swingline Lender
By: /s/ Eric A. Schubert
------------------------------------
Title: Managing Director
BANK OF AMERICA ILLINOIS, as a Lender
By: /s/ Eric A. Schubert
------------------------------------
Title: Managing Director
DLJ CAPITAL FUNDING, INC., as
Documentation Agent,
Syndication Agent and as
a Lender
By: /s/ Harold Philipps
------------------------------------
Title: Managing Director
SCHEDULE 1.1
COMMITMENTS AND PERCENTAGES
Total Revolving Revolving Term A Term A Term B
Name of Lender Percentage Commitment Percentage Loan Percentage Loan
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